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  #51  
Old 03-26-2020, 02:46 PM
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The free market works. You just have to make big corporations actually play by its rules.
Not meaning to sound glib, but they are playing by the rules. The rules say that you can get legislatures to support you if you make large contributions to candidates campaigns. The rules say that if you get big enough, the government will bail you out because you are effectively a public utility. Those Econ 101 rules you are thinking of are great for passing a freshman level class, but they are not meaningful beyond that.
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  #52  
Old 03-26-2020, 07:54 PM
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Not meaning to sound glib, but they are playing by the rules. The rules say that you can get legislatures to support you if you make large contributions to candidates campaigns.
Those are, indeed, the rules of crony capitalism and fascism. Not what I was talking about, though.
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  #53  
Old 03-27-2020, 05:02 PM
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When I lived in Switzerland, just about everyone had a postal savings account (okay, not everyone; I didn't). Every bill I got was accompanied by a green card that you took to the nearest post office and paid and got a stamped tear-off receipt. If I had had an account I believe I could have filled in my account number, signed it and dropped it into a mailbox.

But of course if that were proposed in the US, the banks would scream and lobby like mad to defeat it. Switzerland does not have government by lobby. Actually, neither does Canada.
  #54  
Old 03-27-2020, 06:49 PM
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A less bloody and more effective method is to let their companies die.

The problem with beiling out the likes of American Airlines - well there are a lot of problems but this is the biggest one - is moral hazard. It is effectively paying them to keep doing the same thing. If given the $10-15 billion they want, they will simply do the same shit until the next disaster. It's perfectly rational behaviour.

If the US government allows American to go belly up, and refuses to help other airlines weather a storm they should have been prepared for, then when someone buys their airplanes and hires most of the same people and starts up a new airline, they will save money for a rainy day because they'll expect the government to lie them die if they don't.

The free market works. You just have to make big corporations actually play by its rules.
What happens when a really big corporation goes bankrupt? Tens of thousands of people are out of work. There's a ripple effect through the whole economy and other companies that didn't do anything wrong are also ruined. The entire economy takes a major wound.

And the executives who made the bad decisions retire to their country estate. Sure, they might not be as rich as they were before the fall but they're still doing fine. Heck, with all the unemployment going round the cost of servants probably got cheaper.

Your system punishes everyone except the handful of people who actually made the mistakes.

The smarter decision would be for the government to step in and save the corporation. That avoids the economic hardships that letting it go bankrupt would have caused. And then, if they want, they can punish the individuals who caused the bankruptcy.
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Old 03-27-2020, 07:09 PM
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What happens when a really big corporation goes bankrupt? Tens of thousands of people are out of work.
The money that would have spent at that company doesn't vanish; it simply gets spent at other companies. The effect is to incentivize failure.

Large companies are NOT efficient creators of jobs relative to the bailout money they keep getting. You'd be much better of throwing the money out of airplanes over major cities.

Quote:
The smarter decision would be for the government to step in and save the corporation. That avoids the economic hardships that letting it go bankrupt would have caused. And then, if they want, they can punish the individuals who caused the bankruptcy.
How can well run businesses ever succeed if the shitty ones are constantly propped up with taxpayer money? Business would be totally dominated by failed enterprises, bloated and kept propped up by ordinary people, like a giant corporate Weekend at Bernie's.
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  #56  
Old 03-27-2020, 07:29 PM
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I think the current event the entire world is experiencing, and whatever financial fallout ensues, IS going to produce an entire generation of savers, no further ‘encouragement’ will be required, in my opinion.
  #57  
Old 03-27-2020, 10:14 PM
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What happens when a really big corporation goes bankrupt? Tens of thousands of people are out of work.
Not typically. Bankrupt doesn't mean vaporized. And even if it does, tens of thousands is nothing. Three and a half million people were quitting their jobs each month over the past year. Nearly another two million getting fired or laid off. Yet we were still creating hundreds of thousands of (net) new jobs each month.

Preserving failed companies for the sale of preserving employment at failed companies is bad policy.
  #58  
Old 03-27-2020, 10:28 PM
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We use to have that kind of economic policy. Let businesses fail and let the invisible hand take care of the results. Keep the government out of economics.

We also used to have a thing called Panics. They were economic crises. We had one in 1785, 1789, 1792, 1796, 1819, 1825, 1837, 1847, 1857, 1866, 1873, 1884, 1890, 1893, 1896, 1901, 1907, 1910, and 1930.

And then they stopped. We haven't had a Panic since 1932. Which, not coincidentally, was when the government decided that maybe it was a good idea to intervene in economic crises.

I feel we should stick with what's working.
  #59  
Old 03-28-2020, 07:09 AM
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You can intervene in the economy without bailing out individual businesses.
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