Tuesday, August 26, 2008

A Modest Proposal

Whenever the government deems a large corporation too important to the national interest to be allowed to fail, it invariably rides to the rescue on truckloads of taxpayer’s money. It’s the government’s way of rewarding corporate ineptitude, malfeasance and greed.

But a government-assisted bailout for private businesses is bad policy, and government should not engage in providing financial support or assistance to corporations that suffer from inept management or the malfeasance of highly positioned corporate insiders. Government’s proper role is to provide regulatory and oversight functions, to enforce corporate compliance with established rules and regulations, and to protect the citizens it governs from corporate irresponsibility and excess.

Instead of allowing corporations that privatize profits to get a free ride at public expense when calculated risk goes awry, government should intervene on behalf of the public. If a business is truly crucial to national interests, at the first signs of financial collapse government should step in—quickly and decisively—and nationalize the business.

Were this policy put into widespread practice, I think we’d see many fewer incidences of corporate shenanigans and much more corporate responsibility. The threat of nationalization would almost certainly cause most—if not all—corporate leaders to clean up their act.

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