A Failed Analogy
I enjoyed this essay on the many failures of Steve Jobs, by Nick Schultz at NRO. But I think he misses the point with this cautionary tale for Washington:
There’s a moral here for a Washington culture that fears failure too much. In today’s Washington, large banks aren’t permitted to fail; nor are large auto firms. Next up will be too-big-to-fail hospital systems. Steve Jobs is a reminder that failure is a good and necessary thing. And that sometimes the greatest glories are born of catastrophe.
The analogy would have more meaning if thousands of Steve Jobses of varying degrees of quality had been bundled and securitized in the most opaque of ways, given ratings by agencies that were on the take, and funded by enormous amounts of debt backed by minimal capital. We didn't have that and thus we had very little to fear from failure on anyone of the many ideas Steve Jobs launched.
Uh, Where was Jobs's failure
Leaving the company John Sculley wasn't capable of running isn't a mark of failure. (If Carly Fiorina didn't exist, Sculley would go down in history. Actually, that's unfair to Sculley, who was a success at KO, while Fiorina destroyed two firms.)
Selling 20% to MSFT and then being able to tell them to stay the **** away except for providing APIs for compatibility isn't a mark of failure.
If there's an economic lesson to be learned about "failure," it's that, on rare occasions, complete product control is a better long-term strategy that cooperation that expands your product base. Now, if you apply that to outsourcing manufacturing capability...
And why did we have those things?
Bundled and securitized sub-prime mortgages, ratings agencies on the take and debt fueled by minimum capital?
Becuase the government allowed and encouraged them by distorting the markets with regulation.
And why did we have those things?
Those instruments were not regulated-- How can NOT regulating these things become what you call "distorting the markets with regulation"? It was in many cases a failure of regulation-- by government and by "self regulating" markets, banks, insurance companies, lenders, and the many intermediaries involved in securitized lending of all types-- default swaps, and housing financing, and commercial real estate financing through securitized pools of debt.
In states like Texas where these things were regulated there were no or much fewer problems, and in industries and countries where regulation occurred, there likewise were almost no problems.
Yes they were regulated, indirectly
The government allowed regulated banks to create and trade them. The hazard here is the mix of banking regulation and the regulators allowing banks to proceed in a manner that turned out to be hazardous to the bail-out systems the government put in place as incentive to gain regulatory control over the banks in the first place.
If there was no explicit and implicit government bailout guarantees that the banks could rely on, they wouldn't have engaged in such risky behavior.
Failing/Regulation
A better example might be Rick Perry's Texas, where intelligent interference regulation helped them to avoid the worst excesses of the real estate farrago. I don't know that he is taking credit for it yet, though.