Is it good that America allows large and successful firms to fail?

[Olga Markova]

In the first chapter, we read that "as America spawns more unicorns than other countries, it also is more lenient in allowing large and successful firms to fail". I think that allowing big, successful businesses to fail is a double-edged sword. On the one hand, it is bad as it can cause massive layoffs, increasing pressure on the people who become unemployed and on the social insurance system. On the upside, it creates the need for big and successful businesses to keep on their toes for any external and internal threats to their success and existence. Had there been no such threat, the big businesses could stagnate and impede economic progress.

[Cristina-Ioana Toader]

The idea that the U.S. fosters an environment where even large, successful firms can fail reflects the commitment to competition and innovation that is often cited as a hallmark of American capitalism.

The downside, as mentioned, includes the potential for job loss and the subsequent strain on the social safety net and individuals' livelihoods. This aspect raises important questions about economic stability and the social impact of business failures.

Conversely, the possibility of failure, even for established firms, serves as a catalyst for continuous improvement, adaptability, and vigilance against complacency. It suggests that businesses must consistently deliver value to their customers and stay ahead of innovation to survive. This competitive pressure can drive economic progress by encouraging the development of new technologies, services, and business models.

[Sbitan Mohammad]

That decision goes both ways, as much as it allows the companies perform their best, the pressure on unemployment has to be considered. A sanction instead should be implemented to keep failing companies on their toes.

[Amy Luman]

Sure, it is. Just because a business is successful, and probably because it is big, doesn’t mean it is always the best at the job. If a smaller business doing the same thing is better it should get the prosperity. I think that being the best at what you do is better than size.

[INZAMAMUL HAQUE3]

In American capitalism, competition and innovation are highly valued, even if it means that established firms may fail. While this approach may have its drawbacks, it creates a culture of continuous improvement and adaptability. The pressure to constantly deliver value and stay ahead of innovation drives economic progress and encourages the development of new technologies, services, and business models. It reminds us that being the best at what we do is more important than the size of our business, and rewards those who strive for excellence.

[Sheen Jenny]

Yes it is, allowing large and successful firms to fail can be seen as beneficial for promoting competition, innovation, and preventing moral hazard.

[Amos Osinya]

As well illustrated in the first chapter, America's entrepreneurial and political economy is a great fit as it is stable and secure to attract investment and competition that challenge incumbent companies. By allowing large companies to fail, America's economy allowing large companies to fail, two sides of the coin are illustrated. One, the exit of established firms, could leave behind a huge gap in the market in terms of the provision of competent services from experienced firms. such exit also means unemployment to employees of the firms that fail.
On the other hand, allowing big firms to fail, is a wake-up call to large firms to be innovative enough to remain competitive in the market. Big firms will remain focused on providing excellent services as they know that should they lower their standards, they will succumb to competition from startup firms as t there is no favoritism.

[Ije Bons]

I don't think that it is good. America has their way of doing things. It helps if they do that and they seem to be benefitting from it.

[Abiodunakinola]

Allowing large and successful businesses to fail can have both positive and negative consequences. On one hand, it promotes competition and innovation by creating space for new businesses to emerge and thrive. It prevents the concentration of economic power in the hands of a few corporations, fostering a more dynamic and diverse marketplace. On the other hand, it can lead to short-term economic disruptions, job losses, and financial instability, which may require government intervention to mitigate. Ultimately, finding the right balance between allowing market forces to operate and safeguarding against systemic risks is crucial for a healthy economy.

[Julie Basil]

I believe that the fact that America allows large businesses to fail helps keep those businesses accountable and innovative, while agreeing with others comments that the major downside to this can be unemployment for those who work for the big businesses that are allowed to fail.

[Ajain12]

Allowing large and successful firms to fail can have both positive and negative aspects. On one hand, it promotes competition and innovation by allowing new, more efficient companies to emerge. It also discourages risky behavior and moral hazard among firms, as they know they won't be bailed out. However, the failure of such firms can lead to job losses, economic disruptions, and potential systemic risks, especially if they are deeply interconnected with other parts of the economy. Balancing these factors is crucial for policymakers in deciding when and how to intervene in such situations.

[Bradley Twesten]

I can't help but think of Boeing's recent failures and how they keep manifesting in problems on United and Southwest flights. 346 people died due to Boeing's pursuit of the dollar over safety and quality from the 737 Max program. Where did that get them? Nearly two years of grounded planes and halted manufacturing. As the huge incumbent, have they learned their lessons? Are they continuously improving? Nope. Door and wheels falling off mid-flight. No documentation to back it up. Camera footage deleted of the manufacturing process.

Have they been successful? Absolutely, for the shareholders. But, a not insignificant number of air travelers are now checking if their flights will be on Airbus or Boeing planes. That's nearly unheard of! A plane was a plane, as long as it got you where you needed to be. Booking companies have even added a filter to determine who the plane manufacturer is.

Boeing has been given several opportunities. I think it may be time for them to fail and let the upstarts bring new innovation like blended wing and supersonic flight to consumers.

[Sushan Ekanayake]

That's an insightful observation! The dynamics of allowing large firms to fail indeed play a significant role in maintaining a competitive and innovative market landscape. This policy not only encourages companies to continually improve and adapt but also paves the way for new ventures to emerge, potentially leading to breakthrough innovations and job creation. However, the fallout from such failures—like job losses and economic ripple effects—can't be overlooked. It's a complex balance between fostering a resilient economy and ensuring social stability. Ultimately, these dynamics underscore the importance of having robust social safety nets and economic policies that can adapt to both support and cushion the impacts of such corporate failures.

[Muhammad Haikal Birton]

The question of whether it is acceptable for large companies to go bankrupt is a complex one. Some argue that it is necessary in a competitive free market, while others believe it leads to unemployment and economic instability. The recent bankruptcy of Friendly's restaurant chain, acquired by private equity firm Sun Capital, highlights the issue. Sun Capital burdened Friendly's with debt and ultimately forced it into bankruptcy, demonstrating how private equity firms can profit at the expense of communities and employees. Whether bankruptcy is beneficial or detrimental for large companies depends on individual perspectives.

[Jim Zosson]

No, it is not good. However, the government will always do what benefits them. So at the end of the day, they do what they want.