Financial Times columnist John Kay writes one of the best-reasoned explanations I’ve seen for why “too big to fail” can’t be tolerated.

The essential reason is that these behemoths are unaccountable (emphasis mine):

Liberal democracies of the modern world based on lightly regulated capitalism acknowledge two mechanisms of accountability – the marketplace and the ballot box. In the marketplace, organisations that do not meet, or respond to, the needs of society are ground between the twin pressures of their customers and their investors. At the ballot box, politicians that do not meet, or respond to, the needs of society suffer popular rejection.

… An organisation exempt from either of these disciplines represents an unaccountable concentration of power. As we have today at Citigroup, Barclays and Deutsche Bank.

“Unaccountable concentration of power” should be like catnip to journalists. But I just don’t think this issue has been covered properly.

Fortunately Kay’s on the case, and he upends the mealy-mouthed assertion that we don’t need to worry about “too big to fail” companies because we’ll better-regulate them:

The assertion that in future we will supervise the activities of large banks so that their businesses do not fail represents a refusal to address the issue. Even if that assertion were credible – and it is not – the outcome would not deal with either the political problem or the economic problem. Such regulation fails to call managers effectively to account, while supervision that ruled out even the possibility of organisational failure would kill all enterprise.

It’s also important that he doesn’t limit his discussion to the financial industry. Specifically, he mentions General Motors as a company that’s too big to fail and notes that “Any form of selective government support distorts competition.”

This is a key concept. Companies that are too big to fail are effectively being subsidized by taxpayers, both through the actual tax system and through the distortions in the market caused by the tacit government support and by the actual concentration of economic clout in one company’s hands. I think people on the right and the left both get this.

It’s a bad sign, then, that the political system isn’t able to come together and deal with it. I’ll refer you to Simon Johnson’s excellent piece in last month’s Atlantic for more on why that might be.

Kay recommends some sort of resolution framework to facilitate the failure of these giant companies without their melting down the whole system. This is where he goes off track a little bit. Why live with these giants at all? Break them up. There’s really no need to have a bank the size of Citigroup.

If they’re too big to fail, they’re too big to exist.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.