Too Big to Fail Viewing Guide Full Key
- The story of the East India Company highlights how easy it is to divert public resources for private gain.
- It was East India Company tea that was thrown into the harbor at Boston.
- Now, it might be too much of an exaggeration to say that the East India Company's monopoly caused the American Revolution, but it was definitely a factor.
- Lobbying pays very well. And not just for the lobbyists. The real payoffs go to the corporations they represent.
- But now almost 40% of the nation’s corn crop goes into making ethanol, which has driven the price of corn way up.
- It makes corn farmers and processors happy because it gives them a guaranteed profit. But all of us have to pay more for foods that use corn, especially meat and poultry.
- This is Adam Smith’s key insight: Competition is not a way of giving power to companies. It’s a way of giving us power over them.
Read the entire passage first. Then fill in the blanks with words from the table above:
Eighteenth-century London didn’t have cars or buses, but it was a huge, vibrant metropolis; and the center of important political debates. The problems of Smith’s day were very similar to ours: poverty and unemployment, political pork, foreign conflict, runaway spending, and a burgeoning national debt. Some of that debt can be blamed on the monopolistic East India Company. The company had its own army and navy and merchant ships, and accounted for much of the world’s trade. The company even minted its own coins. But the East India Company was not very profitable, in part because of its military conquests in India. As a result, the British government stepped in to help. The British government allowed the company to sell tea to the American colonies at a lower tax rate than local merchants could. This led to the Boston Tea Party. Governments still give breaks to some businesses, usually the ones that lobby government officials for help or protection from competitors. Sometimes governments give companies tax breaks, other times they help them by limiting competition. Often, government claims these businesses are too big to fail. But helping certain businesses is done at the expense of other businesses and consumers. This is called crony capitalism. Nearly 250 years ago, Adam Smith pointed out the problems that resulted from such behavior. Yet today, the behavior continues.
- What was the most important lesson you learned after watching this video?