Bailout is ultimately harmful to the economy

[Byron]

In capitalism, natural selection weeds out the superfluous, broken, and unneeded companies, in order to maintain the health of the whole economy.

If the process of natural selection, and the natural stressor of a recession, is one of the mechanisms by which the weak and broken companies are intended to die,

then how would a bailout be either natural to this economy, or beneficial in the long run?


This is the equivalent of injecting blood into a tumor.


Neither dying industries, inferior cars, nor derivative banking and trading is necessary.


Why don't the companies just liquidate and focus on building new industries, that the country and world can actually use?

[ggwbach]

they've taken the wrong perspective ... if the industries are struggling in the US, its because its being done better / cheaper overseas. In _Global Terms_ a regional bailout is BAD, because it maintains an in-efficiency in the world system.

seen, of course, from the eyes of a single government (the US in this case) local failure means more unemployed --> more benefits paid. So a short term hit would be ultimately beneficial overall.

but regionalism still wins out.

the basis of all protectionism; protect the local electorate. But Detroit has been a major slide since at least the 70's ...

economics and politics make a strange beast indeed.

[Brutha]

In the long run most societies collapse.

If you have 1000 banks and one bank collapses there isn't much of a problem.
If you have only a single bank and that bank collapses you have a giant problem but a single bank is more efficient than 1000 banks as long as the single bank works.

if the industries are struggling in the US, its because its being done better / cheaper overseas.

The financial crisis isn't limited to the US. All over the world industries struggle.

[Subscreet]

I hate to sound like a dick, but unless you have studied economics extensively and have at least a BA in the field, then you're really not even close to qualified to make that sort of statement. Economics isn't simple and your tumor analogy is almost comically inept at describing the situation.

[Barcs]

^Perhaps you can enlighten us then, since you seem to know that he is wrong?

I feel that people need to embrace this recession. It was caused because of excessive spending using credit over the last 10 years or so. Now people are starting to save instead of spend and things are going down. Give it a few years and spending will come back again and there will be an economic boom. In the meantime we shouldn't be bailing out every single industry that fails. That is socialism, not capitalism and I feel it's only going to prolonge the problems and could potentially cause an even bigger collapse.