Should the federal government bail out corporations that go bankrupt?

Question

Why or why not?

Pip you're correct but do you also hold to the necessary corollary?

Answer 1

wouldn't that be the opposite of the free market?

anyway.. only reason the government should ever step in is if there is a true.. and significant.. threat to the day to day lives of Americans by a company going under... like if all the oil companies flopped tomorrow or something....


That's it.

Answer 2

No, absolutley not, under any circumstances. Competition is the fuel of innovation... preventing companies from failing makes those companies complacient... and if a company... lets say Chrystler (for historical and contemporary reasons) cannot compete in the open market, why should the government steal (because taxation IS theft, albeit necessary theft) money from everyone who didn't want to buy a Chrystler in the first place to give it to a company who cannot get people to buy their products, or manage their company well.

Being allowed to fail is part of the creative distruction of the capitalist system which keeps the system efficient. Look what happens every time the government meddles in business... government and business make bad bedfellows. It's sad to see people out of work because a company, like say TWA or Montgomery Wards, goes out of business, but thats life... those workers will eventually find other work, and other companies will fill the vaccum that was created by the business going out of business... there is no need for the government to provide a "safety net" for corporations...

And to the concept of "sensitive industries", or "necessary companies", I must ask, what are these companies? What business is so necessary that if it went out of business it would spell the end of the United States? The only half way diecent answer to this question is the banking and insurance industry... for which the US government should exist as the insurer of last resort for these businesses customers... programs like the FDIC, however, already provide a sence of security for the financial market, and help to facilitate a powerful economy... beyond that, however, if a bank cannot compete the government should not prop them up either... just bail out the customers and have them go to a competing bank... after all there is no shortage!

pip -

If all the oil companies flopped tomorow, it would obviously mean that there was no longer any use for oil...

Answer 3

Polosi should donate her mansion and vineyards to the State of California in a spread the wealth kind of act.Or she could let California use the water for crops instead of saving a little bunch of bottom feeder minnows.Its hard to feel sorry for California when so many things are being done to cause this bankrupted State.Octomom is sucking the gov.teat with 14 kids.

Answer 4

No ! The federal government should be frugal when spending our money. How much money do you want to give to the people who are devastated by natural disasters? Our responsibility is to maintain the infrastructure, not act as an insurance company. Today it seems that government is buying votes with tax payer money and what they don't give away on a war to keep oil from being obsolete, they just steal. I think we should help people with education, and health issues, but not their fiscal health.

Answer 5

No.

A company going under is a crystal clear signal from the market that that companies' resources could be better utilized elsewhere in the economy.

The government should at no time be in the business of distorting market signals, including minimum wage, rent control, bankruptcy bailouts, etc.

Answer 6

Unless that bankruptcy was created by our own federal government, NO! Would they bail me out if I bankrupted? I think not.

Answer 7

Sure, they can always print more money! :)

Like how they bailed out the airlines after Sept 11, which I don't really see a problem with (as they failed to avert the attack). I do have a problem with leaving 100,000+ airline employees out to dry.

Some of the other answers are much better than mine, so I won't repeat what they said.

Answer 8

Well, since Bush and pals made it very difficult for individual Americans to declare bankruptcy, then, definitely, we should bail out corporations that have been ripping off their employees and reaping record profits.

Answer 9

Lets say Wal-Mart goes under.

Everyone who was working for them is now going to collect unemployment. They will no longer be supplying the govet. with taxes from their paychecks. This means less money in the govt hopper.

Then you have all the people who invested in Wal-Mart. The stock falls to zero, and all investors take a big hit.

Less money flowing in the economy. That means few tax dollars. that means budget cuts.

Our economy is a system. If a big piece falls out, the rest will go. Like it or not, it is all connected.

The people who say the govt shouldn't need to educate themselves about how an economy works.

Why did the govt create welfare, or pay food stamps, or AFDC? It wasn't because the govt wanted to be nice, it was to stimulate the economy.

Yes, they need to be bailed out.

Answer 10

NO! It "undermines" the very concept of a "Free Market Economy" and provides businesses the possibility of not being "responsible" to their business and employees!