Should Government Put A Cap On Company Size?

It certainly feels like we have a “Domino Economy” doesn’t it?

Which (of course) begs the question: might it be a good idea to place growth restrictions on certain companies, so that they don’t become so entrenched into the domestic (if not global) economy that they’re in a position to take the economy down with them if they fail? While I’m very wary of the government getting involved in business and/or the concept of placing restrictions on how large a business can grow, I also don’t think it’s a good idea for a single company to have the fate of the domestic (or global) economy in its hands either.

Understandably the failure of any large multi-national company will always pose some significant economic risks if it fails, but there is a difference between “some risk” and risks so large that the only options are economic cataclysm and a bailout.

I.e. let’s do what we can to prevent AIG Pt. 2 from happening, via putting safeguards in place that will prevent another company from being in a position to take down the economy if it were to fail.

I’m sure this sounds radical or even ridiculous to some, but let’s not forget that many of the events of the past 12-14 months could’ve been prevented had the right regulations and policies been put in place.

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

Posted in Categories: Contributor, Economy, External Research, Politics.

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