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An Irrational Fear Of Failure

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By SHAWN LeMOND

Special to the Tribune

Published: January 25, 2009

The past several months have brought a new emotion into every home in America: fear. Fear that this economic meltdown will expose the core truth of a consumer society; a truth foretold in the old Southern expression, "Pigs get fed; hogs get slaughtered."

Although fear of our past indulgences is justified, history teaches us that crisis is the very moment when we must be on meticulous guard not to incorporate seeds of the next calamity into our solution. A case example is that the seeds to the rise of Nazi Germany were planted in the Allied victory conditions that ended World War I. The solutions to a grisly World War I only led to a more horrible World War II.

Repeatedly in the past few months, I have heard a term that made my economics degree shudder in its frame. Both the Bush and Obama administrations have used the term "too big to let fail" when describing companies of gargantuan magnitude whose failure seems apocalyptic. But let's take a moment - breathe - and think a bit about what "too big to fail" congeals into in reality.

First and most obvious is the distortion of the risk-benefit dimension. Making a corporation immune to economics means making it immortal. If you are immortal, to hell with worrying about drinking, smoking and having unprotected sex. Do we really expect more restraint from Bank of America under the same circumstances? After all, the bank did not hesitate to slurp up $25 billion in taxpayer money only to fully fund management's payroll, coldly fire 35,000 of those taxpayers for "the company's sake" and still join in crushing the economy by cutting off credit.

Second, "too big to let fail" shifts the relationship of government, the people and corporations. "Too big to let fail" by proxy means the government, and the people that government represents, now assume a submissive role to those corporations' survival. This means government is no longer "by the people, for the people." In the new paradigm, government is now "for the 'too big to let fail,' paid for by the people."

The third characteristic of "too big to let fail" is its ugly flip side. It means some of us are not too big to let fail. AIG and Bank of America get the privileged status as "too big to let fail." Joe the Plumber, Lehman Brothers, Merrill Lynch, your family and mine fall into the "too small to give a damn about" category.

Forgive me if, as a voter, taxpayer and business owner, I take exception this new status quo.

I'm not opposed to trying to fix the economy, I just want us to take a moment and make deliberative decisions to assure we're not selling ourselves into surrogate economic slavery. Because under the "too big to let fail" ideology, "the people" can and will be forced to support "too big to let fail" corporations, even to the extent of bankrupting "the people."

At the least, this casts us into the role of conscripted economic serfs and establishes two economic classes: the immortals and the mere mortals.

Crisis always opens the door to change. President Barack Obama's focus on a sustainable and humane economy is laudable and genuine. But among the turmoil, chaos and congressional noise, let us be cautious not to plant seeds we would dread to see grow.

I think a new species of immortal corporations fits into that category.

Shawn LeMond of Elizabeth City, N.C., is a decorated Navy veteran, former North Carolina legislator and former mayor of Matthews, N.C. He is CEO of ECG Inc., a glass-recycling company.

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