John Silvia, the chief economist for Wells Fargo, was recently asked about the fact that banks were now “too big to fail,” a common belief these days among people focused on the economy. His response was interesting in that he argued that banking was not “the only industry which was too big to fail.” So who are the other industries ?
For one, the oil industry. We cannot come up with government policy that will help us seriously face the increasing problems associated with global warming and climate change. The oil companies — and especially Chevron — have been dominating the debate, if you include the number of times their commercials play about their Human Energy theme. Copenhagen produced few results and though there have been incentive gestures made both in California and federally, we are miles away from seriously addressing the problem.
The fact that Chevron owns the company Cobasys that holds the patent on the electric car battery technology, the NiMH (nickel-metal-hydride) batteries should have elected officials jumping on tables and crying “conflict of interest.” The environmental community is equally as polite on this issue. This along with their WaveBob.com investments, seem to protect the oil giant from a decrease in demand for their product, which is equal to “too big to fail” protection.The fact that China’s oil industry is not privately controlled may have a lot to do with their moving way ahead of us in clean energy technology.
The military budget and its contractors is a second example of a sacred industry. While cuts will be made to other services provided by the government, our military budget and the legions of Department of Defense contractors will be exempt from spending deductions. We spend more on military than the rest of the world combined! More and more of that military spending is being outsourced to private companies — and during the economic downturn we’re kicking up their allotments. Our closest military rivals spend about one tenth what we spend on military. China spends about $60 billion, Russia $55 billion. They are followed by the U.K., France, and Japan , who all spend in the low $40 billions, followed by Germany at $32 billion, and Italy at $28 billion. Our military contractors are in their own world compared to other countries. With over 700 bases throughout the world, too big to fail as well.
And after a long, frustrating fight over health care , we are now left with a range of proposals that do not include the public option. This in many ways is another example of too big to fail. Republicans and Blue Dog Democrats fought tooth and nail to make sure the big insurance companies were protected from a completive environment where they may have been open to competition and the possibility of failing in a competitive environment. Big Pharma cut a deal at the beginning of the debate, allowing an exemption from competition from Canadian imports. Over 200 Democrats were in what are considered “safe” districts yet even the mention of Single Payer was too bold a gesture in the media or halls of Congress.
Are we at a “Too Big to Fail” stage of capitalism or is it corporate socialism where the companies and the CEOs at the top of the system are guaranteed profits and the bonuses and perks that come with being top dogs. Businesses are constantly in competition, but at some point, as they evolve, either one or a small group of companies often control most of market share. Combine that with a money-driven political system and you have industries too big to fail and a powerless population to weak to succeed.