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seems to me, intuitively, to be a major part of the governance problem. (It's possible that this is pure prejudice on my part, I bought into the "small is beautiful" meme at an early age.)

Any attempt at limiting corporate size would probably be tax-based. A European company tax could be progressive : that would help to level the economic playing field.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Mon Nov 14th, 2011 at 07:00:27 AM EST
Unfortunately, "efficiency" has been used to justify consolidation which has let to monopoly profits. This will, shortly, be shown, again, to lead to instability. We need to understand that "efficiency" and "stability" exist on a continuum and that the goal must be a balance. Hyman Minsky understood this and pointed out how long periods of apparent stability will lead most to conclude that stability is the natural order of things. When policy and law is changed so as to be based on this understanding the stage is set for collapse. And so it was from 1970 to today.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 09:43:35 AM EST
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There is now an obvious public interest in eliminating existing and preventing future TBTF institutions. A progressive tax on corporate profits and on capital gains could limit that, though steps would have to be taken to prevent a proliferation of de facto subsidiaries masquerading as independent companies. Limits to or a ban on individuals serving on multiple boards would help. Chris Cook has suggested how having the same executives both in Goldman and BP probably served to facilitate the development of forward leasing of oil in the ground to commodities markets with the result of bringing the typical price of oil up near the demand destruction boundary rather than letting it drift down to the capacity destruction boundary. While a balance between the boundaries is needed it is hard to see a PUBLIC interest in the situation that has obtained.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 14th, 2011 at 09:54:01 AM EST
[ Parent ]
Well, big is not necessarily bad. Most computer hardware (most that doesn't break when you look at it funny, anyway) is made by maybe a handful of companies. That works just fine. Most wind turbines in Europe are made by a handful of companies. That doesn't seem to be a great impediment to the functioning of the industry.

Big can be a requirement for the sort of capital concentration and market power required for technically sophisticated industrial processes. Big only becomes a problem when people start pretending that big companies are not political entities that need to be subject to political checks and balances.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 14th, 2011 at 11:34:28 AM EST
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I think the key is to identify which economic and industrial sectors benefit from a degree of size, and which don't.  Some people might argue that aerospace, automotives, steel, and whatnot should be broken up, but I'm not so sure.  I think it's worth noting, though, that many big industrial companies aren't dong all that hot these days - they're not the ones draining the blood from the economy, and they're as much hurt by the pressure for insane returns as anyone.

Banks, on the other hand, seem to provide no obvious economic advantages from concentration - much the opposite.

Retail is another example.  Sure, Walmart is able to offer greater supply chain efficiencies, but this just means that more profit is sucked out of consumer pockets and concentrated into the hands of the Waltons.  An ecology of small and local retail outfits is a key part of a prosperous middle class, as small shopkeepers tend to be solid members of local communities, and employ people.  Furthermore, who really thinks that the complete and total domination of entire national markets by just a couple chains is a good thing?

Media is the final example.  I really see no good coming from nationalized media, given that there are so many people of talent and ability in all aspects of the creative fields who are desperate for employment, and so many regions and communities which are more or less ignored by the nationalized media.  Further, media concentration brings message discipline, with obvious and disastrous effects on political discourse.  Diversity is an unchallengeable good, more so in the modern era of low-cost production than ever.

by Zwackus on Mon Nov 14th, 2011 at 08:21:22 PM EST
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