31 October 2009

To Big to Fail is a Dumb Idea

The essential dynamic of the market economy is that good businesses succeed and bad ones do not. There is a sense in which the bankruptcy of Lehman was a triumph of capitalism, not a failure. It was badly run, it employed greedy and overpaid individuals, and the services it provided were of marginal social value at best. It took risks that did not come off and went bust. That is how the market economy works.
John Kay at the Financial Times on Too big to Fail is too Dumb an Idea to Keep.

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