My Big Fat RantAIG or How I Learned to Stop
Worrying and Love the Recession
I already did a rant on AIG/21st Century and you can read that here. So why am I talking about it again? I had a recent conversation with a friend over my rant and some things came to light that I thought were worth mentioning. Beyond AIG just being a big-bloated-sack-of-crap-full-of- inept-numskull-executives that the American tax payers had to save, it is also a massive corporation in the number of smaller companies it owns and in how much money it makes. You could almost say it is a Monopoly. Now, quite honestly, I have no idea if it qualifies as a monopoly under any antitrust law. It may well not be, but if you put a little thought into the United States current economic situation (as well as most of the worlds) and add that up with President Obama's recent statement about putting and end to the "endless cycles of bubble and bust" you can start to come up with some interesting ideas. For starters I don't think it's possible to completely escape the "bubble and burst" economic cycle in a capitalist free market. I do think it's possible to reduce the impact of such a cycle. How, by reducing the amount of mega-corporations holdings or at least breaking them up into separately managed holdings. What for? Quite simple: when you have mega-corporation such as AIG start to go under you take 100,000 plus US jobs with as well having a huge negative financial effect on the entire worlds economy. This leaves no choice, but to bail them out with 168 billion dollars they don't deserve or suffer the results. On the other hand if you have 100 smaller companies, some with good business practices and some without, you have the option of letting the badly managed ones go under and helping out some of the borderline ones. At the same time the ones that have planned and invested wisely will be rewarded with more business and profit from new customers (those people who need say a new insurance company because their last one tanked).
So the "bubble and burst" doesn't disappear, but it is softened by the effect being spread out over several smaller companies instead of one massive company and only some of those collapsing. This possibly means more or new antitrust laws or simply the enforcement of some old ones. Yeah, I know, it means more government involvement in the free market. So maybe it's not perfect, but sad enough neither is a capitalist fee market, in fact there is no perfect market system. Also if you consider that by bailing out large mega-corporations we effectively eliminate one of the essential pillars of a capitalist free market: Competition. We are creating publicly funded private companies. While at the same time quashing the possibility of smaller companies with better ideas and better management (not always) from taking the place of those that didn't. For example: who knows what type of great new American car companies would've arisen from the ashes of the Big 3. Possibly a car company that made autos that could actually compete with foreign car companies or maybe more environmentally friendly cars. Now we may never know.
In short a recession or "burst" should not be a bad thing. It is something that weeds out the mismanaged companies that for the overall health of the financial system need to go under. I don't think it applies to every business out there, just some of them. In all reality AIG should have gone under. If you don't remove a cancerous tumor from a system it simply continues to spread and grow to other parts of the body. I can promise you that if we don't fix this we will see the same issues arise in future recessions. If you don't believe monopolies are evil read one of the books I listed below. I think with Upton Sinclair's The Jungle you can easily start drawing some parallels to how some of these mega-corporations today are taking over every aspect of our lives and in the process taking our money and our liberty. Be aware, be fearful, but most of all be active.