Hello all,
I am not the most well versed in economics and am curious why the government bails out big businesses (like airlines etc.). On one hand I see posts and articles arguing it’s because those big conglomerates are in league with the government and then on the other hand I see it’s to protect workers/employment. In the grand scheme of the US economy, is it that bad to let businesses/corporations fail? (Regardless of whether those corporations are greedy/poorly ran.)
Thank you!
In: Economics
In general, it’s good to let businesses fail when they are poorly run. However sometimes when there is a powerful external shock to the system that is affecting the entire industry, it makes sense to have a bailout. For example, the 9/11 terrorist attacks which involved hijacked planes made people afraid of flying on planes. Airline industry revenues dropped of a cliff. This is not a type of event that companies are expected to be prepared for. However, the airlines themselves could still be profitable in the long run once the market returned to normal. In those circumstances, it made sense to give the airlines a bailout to ride out the storm.
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