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Sherwood's Soapbox

Bailouts

Fool me once, shame on you. Fool me twice, shame on me.

The bailouts are necessary, but I think we need to learn a lesson from them.

We must never be in a position that the welfare of a single company is critical to the welfare of a nation.

Ruminating on this, I see the following implications:

1.  The antitrust laws need to be enforced on any company that is getting 

so big that they are in danger of becoming critical to the country's welfare. Applying this in reverse: Any company that receives a bailout is automatically too big, and must be broken up.

2.  For companies above a certain size, the scope of their activities in a

given sector need to be restricted. E.g. Banks should not also be stock companies. Banks should not be insurence companies.

So: GM wants a bailout: It may get one, but after it will be GM Trucks, and Chevy Cars. Further: No company officer could own shares in the other company. No director could server on both boards. Anyone who had more than 10% of the shares of either would have to divest one. That is, you can't be a major stockholder in both companies at once.

Microsoft wants a bailout. They are split into an operating system company, a games company, an office software company, and an internet company.

Even as an Operating system company they have way too large an interest. Therefore, until their market share drops below 33%, they are treated like a utility company with a public board that regulates prices.

It may not work, but it would warm the cockles of my heart.

Comments: Drop me a line at soapbox@sherwoods-forests.com

Unless you state otherwise in your email, I will assume that it is for publication. Not that I will publish all letters.