Being too big to fail, if true, couples a concentration of power (bigness) with a corruption of the free market ideal. The same concentration of power seems to inherently lead to other corruption as well. Mancur Olson's research and thought regarding the nature of special interests groups makes it seem inevitable to me that mega-corporations, especially in slow changing industries, will (continue to) form symbiotic relationships with the State that further strengthens both the mega-corporation and the State, to the detriment of the rest of the citizenry. We're seeing exactly that with GM, Chrysler, Steel protectionism, banks, etc., etc., etc.
So, given this seemingly inevitable sequence away from an ideal free market economy and towards Corporatism, exacerbated by the existence of huge business, is there anything that can be done to slow it down?
I think that reducing the number and size of large corporations would be helpful. However, giving the Federal government the directive to do such a thing by fiat would be a cure far worse than the disease. The method of reducing the number of large corporations, in order to avoid even more corruption and waste, would have to be formulaic and not subject to the whims of the President, Congress or regulatory agency bureaucrats.
What do you think?