In a thoughtful article appearing in Slate, Eliot Spitzer says that the “$7.8 trillion in equity, loans, and guarantees so far — may merely perpetuate a fundamentally flawed status quo.”.
Spitzer says, “So far, at least, we are simply rebuilding the same edifice that just collapsed. None of the investments has even begun to address the underlying structural problems that are causing economic power to shift away from the United States, sector by sector”
Indicators of structural problems, according to Spitzer, include our $700 billion yearly trade deficit, our zero savings rate, our deteriorating intellectual advantage.
Spitzer advocates that the government encourage the breakup of institutions “too big to fail,” and, instead, stimulate more competition. He writes, “Imagine if we had never placed ourselves in a position in which so many institutions were too big to fail. The bailouts might have been unnecessary.”
He says, “It is time we permitted the market to work: This means true competition with winners and losers; companies that disappear; shareholders and CEOs who can lose as well as win; and government investment in the long-range competitiveness of our nation, not in a failed business model of financial concentration and failed risk management that holds nobody accountable.”
