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
It depends on the company/industry.
Banking is sort of fundamental to the economy (for example). Without functioning banks, the rest of the economy would crumble and the government loses control. Since banks are quite tightly regulated, the government will intervene in cases of major systemic risk.
Certain companies employ lots of people, take many decades and billions of dollars to establish. Things like transportation tend to be fundamental to economies too. And, in some cases, things like pandemics or banking crises affect these companies in ways that the company itself cannot do anything about. Rather than allowing hundreds of thousands of working Americans lose their jobs (and the government on the hook for unemployment and welfare) bailing out some firms is a much less costly and disruptive solution.
Other critical services – energy/electricity, hospitals, insurance, pension funds etc are regulated and are essential for the welfare of citizens broadly.
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