Tag Archives: big business

Bailout Companies That Keep Workers

I was listening to Alan Chartock on WAMC interviewing Bernie Sanders on Tuesday. And I was thrilled to hear Bernie Sanders say that a business should not exist if it is too large to fail. That is so true!

It should be obvious to all of our leaders that big businesses subvert free market economies like ours; especially when those businesses are too big to fail.

Let me add that even though we are now being forced to bail out those big businesses, we should at least demand that these businesses help the economy… now. They should not be allowed to lay off any of their employees until they return the bailout money. And those big financial companies should not be given another cent until they hire back all of the employees they recently laid off.

That bailout money should have first gone to maintaining the payroll for regular employees. Instead they used the bailout money to maintain the payrolls of highly paid executives who laid off regular workers.

These bailouts are supposed to help regular people. We should not be bailing out companies that are laying off their workers. And if a company comes forward for a bailout saying that it is too large to fail, then we should break that company up.

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Congress Abandons Consumers

The reason why the economy is collapsing is because too many average consumers have lost their purchasing power. From the beginning of the crisis this has been obvious. So why are policymakers concentrating on implementing a trickle-down approach to rescuing the economy?

They have put their faith in the directors of big businesses to save our economy. Almost all of the cash meant to rescue the economy, (last count = more than 2.7 trillion), has been given to them. This is despite the widespread belief that free markets most efficiently direct investments to where they would be most useful. Our leaders need to remember why free markets work well.

Free markets democratize the economy. They give consumers the power to direct the economy. Consumers do this with their purchasing power. They give money to sellers and investors who offer the best deals for the things consumers want. In a free market anyone can hope to become a self-made business magnate. And the customers get to choose them. Free market economies serve the will of the people.

Our free market economy is quickly disappearing. The people have lost their purchasing power and Congress has abandoned them. Money for saving the economy has been given to the leaders of big businesses. They are not investing that money in people who would compete against them. The directors of big businesses are using their purchasing power to help themselves.  Regular consumers are left to fend for themselves.

Congress’s mistake must be corrected soon. The bailout money is being hoarded by big businesses that are laying off employees. More consumers are losing their purchasing power. If centralized control over the economy remains for the long term, then innovation would probably be stifled by timid bureaucrats and big business leaders eager to protect their profit margins. The situation is getting worse.

Policymakers and Congress can easily correct this situation. Simply direct the bailout money to average consumers. Let them choose which businesses deserve a bailout. Chances are almost everyone will get what they want.

Break Up Bailed Out Businesses

This should be self evident: Businesses that are too large to fail should not exist in a free market economy.

A business that becomes too large to fail also becomes a liability for the rest of society.  The benefits of economies of scale for society are outweighed by the inefficient monopolistic tendencies of businesses that dominate markets.  And the implicit guarantee of a government bailout encourages too much risky behavior.  It even encourages directors and executives of companies to strategically engineer the need for bailouts.  When a business becomes that large it should be broken up into competing businesses that don’t dominate markets.

We are being told that the government bailouts are supposed to preserve our free market economy.  But the only thing the bailouts are preserving is the freedom of over-sized businesses to dominate a market economy that could otherwise be truly free.  Break up the bailed out businesses.

States Governments More Worthy for Bailout

State governments should be bailed out for the same reason that businesses that are too large to fail have been bailed out.  If those banks are too large to fail, then certainly State and many county governments are too large to fail.  More people have more at stake in most state governments than there are people with a stake in any particular company.  If there is any private business that is too important to fail, then certainly state governments are too important to fail too.