I believe that since the financial crisis in 2008, people have been afraid that companies will become too big to fail and that even one is in danger of going under, that it will be rescued by government measures and compensated for by austerity policies for individual citizens.

I am more concerned about actual government bailouts than fears about bailouts. Yes, fears about bailouts might hinder some otherwise productive activities, but actual bailouts reward mismanagement and prop up businesses that are not genuinely creating value for consumers.

Typically, what’s happened (with “too big to fail” business) is the government regulatory apparatus has stifled competition within the given industry, allowing mismanaged companies to grow ever bigger because would-be competitors are locked out by onerous regulations. That allows poorly managed companies to grow bigger even though they should be continually shrinking into irrelevance (and being slowly replaced by entrepreneurial firms finding better ways to satisfy consumer wants).