On Aug. 3 the Portuguese government announced a €4.9 billion ($6.55 billion) bailout for Banco Espírito Santo, another reminder that the "too big to fail" doctrine still prevails six years after the financial crisis. At least in this case junior bondholders—those who invested less than a year ago—and shareholders were forced to take a haircut. That's progress for those who argue that economic recovery is impeded when monetary and fiscal authorities rescue private institutions from the consequences of their decisions.

Too...