Because ineffective corporations continuing to exist is less bad in terms of human suffering than major economic collapse.
Raising the spectre of “major economic collapse” at the notion that big corporations might have to operate under the same market conditions and risks as everyone else seems like an argument straight from a corporate lobbyist.
Don’t government rescues reward poor management and incentivise excessive risk, thus leading to economic troubles which necessitate them in the first place? It is not at all clear to me that the hypothetical world in which bailouts don’t happen and corporations know it and act accordingly contains more suffering.
Especially after you consider the costs imposed on the competent to rescue the failures, and the cost to the economy from uneven competition (between those who can afford to take bigger risks, or simply manage themselves sloppier, knowing that they are “too big to fail”, and those who cannot).
Raising the spectre of “major economic collapse” at the notion that big corporations might have to operate under the same market conditions and risks as everyone else seems like an argument straight from a corporate lobbyist.
Calling it a spectre makes it sound mythical, but it has been known to happen. The fallacy lies in not having sufficient evidence it will happen in any particular case.
Don’t government rescues reward poor management and incentivise excessive risk, thus leading to economic troubles which necessitate them in the first place?
You can reduce risky behaviour by regulation. Baillouts without regulation is the worst possible word.
Especially after you consider the costs imposed on the competent to rescue the failures, and the cost to the economy from uneven competition (between those who can afford to take bigger risks, or simply manage themselves sloppier, knowing that they are “too big to fail”, and those who cannot).
Bailouts involve disutility. My argument is that by spreading the costs over more people and more time, they entail less suffering.
Raising the spectre of “major economic collapse” at the notion that big corporations might have to operate under the same market conditions and risks as everyone else seems like an argument straight from a corporate lobbyist.
Don’t government rescues reward poor management and incentivise excessive risk, thus leading to economic troubles which necessitate them in the first place? It is not at all clear to me that the hypothetical world in which bailouts don’t happen and corporations know it and act accordingly contains more suffering.
Especially after you consider the costs imposed on the competent to rescue the failures, and the cost to the economy from uneven competition (between those who can afford to take bigger risks, or simply manage themselves sloppier, knowing that they are “too big to fail”, and those who cannot).
Calling it a spectre makes it sound mythical, but it has been known to happen. The fallacy lies in not having sufficient evidence it will happen in any particular case.
You can reduce risky behaviour by regulation. Baillouts without regulation is the worst possible word.
Bailouts involve disutility. My argument is that by spreading the costs over more people and more time, they entail less suffering.