What Can We Do About “Too Big to Fail”?

Question: What needs to happen so that we will have no companies “too big to fail”?

Paul Solman: Come up with incentives that induce big companies to slim down, or disincentives that punish them if they don’t. What’s startling at the moment is the consensus: “Too big to fail” is a huge problem and should be fixed. HOW to do it remains the issue, especially if it isn’t done on a global scale. (Because if it isn’t, offshoring is the obvious way around any new laws.)

Legislation is complicated and difficult, especially in a bifurcated democracy like ours, with business and Wall Street so influential, due to the role of money in the political process. But even so, it’s surprising to me that, given the too-big-to-fail consensus, so little has been done about it.