There is something to be said for economic Darwinism. Survival of the fittest ensures companies that can make more from less will thrive.

Our unwillingness to reward failure is less about a primordial and ruthless of survival of the fittest. Rather, it reflects the fact that we all pay a heavy price when we coddle our major corporations.

However, companies that cannot survive without economic protections from a greater society should have one of two destinies.

If companies are in their infancy with likely bright and productive futures ahead of them, perhaps we should nurture and protect them until they can stand on their own two feet. Mature corporations that have seen their better days of innovation come and go, and now survive solely through accumulated power rather than performance, do not deserve the benevolence of a kinder and gentler economy.

Certainly we all agree that there is a double standard. When your neighbor stumbles and misses a mortgage payment in hard times, there is no bailout. And, when our local companies go bankrupt, the New York Federal Reserve is not at their doors offering cash and arranging mergers.

No, these actions are reserved only for those too big to fail. Certainly at times, especially those most recently, the cost to us all for a mega-failure is too high a price to pay. For that reason, we should advocate for policies that prevent companies from either becoming too big to fail or from taking inordinate risks once they become too big to fail.

You see, when we are forced to bail out or prop up such corporate dinosaurs, we pay a number of prices. We pay the actual cost of the bailout, certainly. Sometimes, we get that cost back, even with interest. And, sometimes we do not.

We also pay in concessions to pension plans, preferential regulation, and in greater corporate and labor uncertainty. These, too, are high prices.

The highest price of all, though, is that we engender irresponsible risk taking. These bailouts and defenses of companies act as a subsidy. We indemnify some of the worst corporate players to act in a way that is not in the public interest and certainly is not something we would be permitted to do as individuals.

This subsidy for mega-rich companies sends out a terrible message. It tells companies that they can engage in risky behavior and still profit fantastically. And, when their Faustian deals occasionally go awry, taxpayers insure their losses.

In other words, there are privatized profits and socialized losses.

This mechanism is dangerous. It is certainly not what free markets are all about. And, it induces individuals representing these companies to behave in ways that they never would with their own money.

Economists have treated a whole range of similar problems. These problems of moral hazard originated with insurance markets. An insurance company is willing to pool the risk of hundreds or thousands of individuals. This permits each of us to pay a little each year over a lifetime to avoid a debilitating loss once or twice in a lifetime.

However, insurance companies also recognize that one who is very well insured may decide to exercise less prudence and care. By doing so, the individual's cost of being careful is reduced, and the cost of more frequent accidents or calamities, or greater damages, are paid by others in the insurance pool.

This moral hazard problem in insurance markets has a number of solutions. First, an insurance company may require us to pay a deductible so we do not make frequent and frivolous claims.

Second, insurance companies will require the insured to demonstrate appropriate care and avoid negligence.

And, third, those with frequent claims may be kicked out of the insurance pool. Instead, they may find themselves in a pool of other insured individuals who are of higher risk and, hence, must pay greater premiums.

Bailouts of very large companies also exhibit all the problems of moral hazard. Companies that know they are too big to fail can take inordinate risks, knowing they will not be tossed over the side of the economic boat. The great profits they earn they get to keep. And the great losses they incur are spread among us all.

Likewise, the executives of these companies earn great bonuses when times are good and still pretty good bonuses when times are bad. The argument is that these individuals would go elsewhere if they were not rewarded in good times and in bad. However, if all high rolling companies were under the same requirements to pay bonuses only when deserved, there would be nowhere else for their executives to go.

And, if companies must occasionally rely on the indemnification of the greater public when they screw up, perhaps they should also be paying the equivalent of insurance premiums all along. It is true that these premiums might just cut in to the bonuses and rewards their executives receive. However, such a tax seems appropriate in this circumstance.

In the aftermath of the Great Crash II, there is a lot coming out about the misbehavior of those we entrust with our financial futures. AIG and Goldman Sachs may respond that they limit their gamesmanship to each other and they are all big boys. That is fine. Let them beat each other up. They may take their pound of flesh from each other. Unfortunately, it is our blood that spills.

We will hear more in these coming months about what they knew and how they profited. And, the picture will not be pretty. Unfortunately, our regulatory responses will likely be anemic, at best. There is just too much to gain for a few well-connected billionaires to harbor any hope we can roll back to the days before banking deregulation and due to the repeal of the Glass Steagall Act and this Genie was let out of the bottle.

Colin Read is the former dean and now teaches economics and finance in the School of Business and Economics at SUNY Plattsburgh. His fifth book, "The Rise and Fall of an Economic Empire," will be published by MacMillan Palgrave next fall. He also runs an economic and business consulting company and can be reached through his Web site www.economicinsights.net.