Wednesday, February 18, 2009

Louis Brandeis on "Too Big to Fail"

A quick thought this morning on reading the latest plea from Detroit for a $20 billion taxpayer handout to keep General Motors and Chrysler from bankruptcy:

Before joining the Supreme Court in 1916, Louis Brandeis, one of the true great minds of Twentieth Century America, wrote a wonderful rant against the big money powers of his time called Other People’s Money: And How the Bankers Use It. In it, Brandeis described what he called the “Curse of Bigness,” which was his way of describing the big monopolistic banks, railroads, and steel companies that threw their muscle around back then to intimidate Washington, Main Street, and the public. “Size, we are told, is not a crime,” Brandeis wrote. “But size may, at least, become noxious by reason of the means through which it is attained or the uses to which it is put.”

Brandeis’s book became a big seller in 1913. It earned him the lasting hatred of Wall Street tycoons like J. P. Morgan, but it also helped create public demand for a Federal Reserve System. Brandeis’s political hero was Theodore Roosevelt, who as President happily used the new Antitrust Laws to fight "bigness" by busting trusts when he saw fit.

Today, in our modern fiscal collapse, Brandeis’s “curse of bigness” has come back to haunt us under the guise of a new doctrine: Too Big to Fail. We now see a dizzying, growing list of malefactors hiding behind its skirts:

Wall Street banks are too big to fail;
Main Street banks are too big to fail;
Detroit automakers are too big to fail;
The $700 billion bailout package was too big to fail;
The drug-taking third baseman for the Yankees is too big to fail.

Who’s next? What’s next? What kind of monster have we created?

Louis Brandeis got it right back in 1913. Bigness can be a curse, and we are paying for it now. What ever happened to the Antitrust laws? They made perfect sense to Theodore Roosevelt. Maybe it’s time to bring them back.


Margaret Heitz said...

You are WONDERFUL! I've been promoting Louis Brandeis for the last 9 months, since I read the Philippa Strum's biography of him. I'm now reading the Alpheus T. Mason biography of Brandeis. Brandeis is a giant and we have a lot to learn from him.
David Ignatius of the Wash. Post responded to an e-mail I sent him about Brandeis. He said it was a "wonderful suggestion" to do an Opinion featuring Brandeis. Also, Melvin Urofsky, a Brandeis scholar at VA Commonwealth University, tells me that I should keep talking up Brandeis. (Mel has a new bio of LDB due out in Sept.)
Glad you're on board; let's cooperate.
Margaret Heitz, Lexington MA

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