Eventually, the company gets too big and cocky, does a massive mistake and goes out of business/downscales. Like, you know, bad investments of 2008.

The economy must go in growth/bust cycles, where growth brings out new ideas, and bust cleans up the inefficiency. And keeping it decentralized keeps busts manageable.

But if you instead let everyone merge during good times, and then bail them out during bad times, the next good times will never happen - the incentives are all wrong!