So after watching the Second American Revolution video, I got to thinking about our current bailout situation. In the video Thomas Paine quotes Aristotle saying, “Tolerance is the last virtue of a dieing society.” Do you think that tolerance could also be the last virtue of a dieing economy?
I have always thought the bail out to be a necessary evil. Although I do not believe saving large companies for making poor decisions is a good idea, I have often recognized that job loss incurred by failing to salvage such companies would be tremendous. However, we have always been a capitalist nation. We have proven over the years that a capitalist system is effective. As we learned in AP Euro, it was capitalist tendencies that gave rise to an increased standard of living for a great majority of people in Europe. A capitalist system has for a long time served us well as a nation, and our economic success in the past is largely attributable to the system. We also have seen the problems of socialism historically, looking back to the ultimate collapse of the USSR. And so I pose this question. Do you believe that by keeping poorly run companies alive we are in effect doing a disservice to the future economy?
In Darwin’s great essay, “The Origin of Species,” he strongly emphasized the theory of natural selection; that is to say “survival of the fittest.” Just look at GM, we gave them 14 billion dollars only a few short months ago, and they have already blown it. How long will it be before we stop throwing money into that furnace? It has always been the philosophy of our capitalist system that when one company fails, a stronger one will ultimately have increased success and will take its place. If this is true, why are we letting the inept to stay afloat? Why do we not let those businesses that have failed fail? Would not the decreased competition allow for new businesses to expand and take their place; businesses that wouldn’t lose money, businesses that wouldn’t waste tax payer dollars?
Do you believe we are making a mistake by keeping companies that poorly manage their money alive? After all, if I open a small business, no ones going to bail me out. Why should big business be any different? What do you guys think? Would you not agree that by being tolerant of poor business practice, we are keeping afloat those which do not deserve to survive? And if you do agree, would you also agree that by keeping such failures afloat, we are ultimately going to hurt our economic situation at home and abroad? After all, what good is a company that loses money? And if they failed once, what’s to stop it from happening again?
(Kevin Trainer)
5 comments:
I don't think that the initial bailout was necessarily a mistake. Those certain companies proved to be an important role in our economy. Therefore, if we have the chance to save such an important part, shouldn't we at least try to save it? I think those companies deserved that second chance. Also, I think that the government is greatly concerned with the number of people that would be affected by the sudden disappearance of this company. By keeping it afloat for at least a little longer, more people are able to take measures to make sure that their lives are secure even with such a disappearance.
At the same time, I don't think that we should be giving too many chances. It's a waste to give large sums of money to companies that are unable to stand on their own two feet after being given a second chance. Allowing many more chances just ends up hurting a greater number of people economically than if the company were allowed to fail the first time.
The question isn't what we want to do, it's what we need to do.
Certainly, I don't like the idea of giving our hard-earned tax dollars to ailing companies to help keep them afloat. I believe that if a company is genuinely inept, such as GM, it should be allowed to die. However, I also recognize that the failure of a large company such as AIG would have tremendous ramifications for the economy, much worse than what we have right now. Subscribing to the "let the strong only survive" ideology, we let Lehman Brothers fail. Today many analysts agree that the failure of that large company only worsened the crisis and helped spread it to the rest of the world.
Every measure we take right now, such as partial nationalizations and bailouts, will have long lasting effects on our economic system in the future. However, the alternative is much worse.
-Eric W
The alternative also means keeping alive the practice of rewarding failure and waste, which could have just as bad ramifications in the long run. The bailout and stimulus plan in general has been poorly handled, especially regarding the automakers. They set out for this course decades ago when foreign manufacturers such as Toyota came onto the scene and did nothing to right themselves. The only major decision GM's late CEO made was to mass produce the Hummer. We all know how well that worked out...
(Steve Szumski)
This is truly an interesting conflict. On the one hand, it seems only fair to punish large companies that have been mismanaged and corrupted to the point of bankruptcy. In the fashion of a laissez faire economy, one makes or breaks their own fiscal destiny. But unfortunately, reality just isn't that black and white.
Consider who you are hurting by not bailing out behemoth corporations with thousands upon thousands of employees. The higher-ups at this point have either long since left their sinking ships, or are wealthy enough as to not be affected. The only people hurt are the workers, the true blue Americans who keep industry afloat (sorry for the all the nautical metaphors). They are now forced to look for increasingly scarce jobs as more and more large employers go under. A large scale domino effect insues, leaving the economy much worse for ware.
The argument that saving dying companies promotes poor business practice in the future seems to be a valid one, until we consider the nature of a free market. Graft and greed are almost impossible to regulate. Because of this fact, sub par ethics will always exist... especially in a market that is not monitored by the government.
Also, be careful as to how you apply evolutionary theory to other aspects of social life. You might fall down the slippery slope of social darwinism, or dare i say, eugenics...
Taylor Burke
Once again, I lack much knowledge in economic discussion, but here goes..
Since we are little Lockians, since we follow the capitalist system, shouldn't the government (ideally) steer clear of the govenment? Aren't they two independent institutions based on, as Taylor mentioned, laissez-faire economics? I mean, aren't our tax dollars collected through the government and given to the failing companies that way?
While economic crises are dangerous, don't you feel that we somehow defy the "American mentality" when we refuse to continue giving corporations a second, third, fourth chance? Isn't this the nation where we try time and time again in order to attain success?
(Sam Maliha)
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