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Thursday, October 30, 2014

 

Bush/Obama Bailouts

       Given the historical economic crisis of our generation, I find it difficult to talk about any other issue. Libertarians consider government intervention as a bad thing for progression in the economy. Government intervention in the form of bailouts just delays the inevitable. By that, I mean if there was no government to bail whatever business needs bailing out, the free market system would chew them up and spit them out. Not that the free market economy is full of savages, but no business will last in a free market economy if it is not fit to do so.
        The Great Recession led to the dismal fall of many gigantic corporations, even industry leading corporations. One example of this is General Motors. The car manufacturing giant needed a government bailout of 50 billion dollars. Why is this a bad thing? It is bad because GM is in essence being rewarded for poor management of a company and the bailout does not encourage reform in an economic downturn. What it encourages is stagnation in technology.
       The car industry was so heavily impacted by the recession because fossil fuel prices skyrocketed and there was a huge demand for fuel efficient cars. GM obviously lacked the technology at the time to produce that type of technology so they went bankrupt. In a free market economy with no governmental intervention, GM would have gone under and others would have risen with the new technology demanded. Instead, government used force to give GM the money to mass produce half-ass fuel efficient cars while keeping their massive market share of the automotive industry. They did not keep their market share because they produced a superior product in demand, but were given the market share by force.
       Although GM was once a revolutionary and innovative company, they failed to keep the innovation going. Their bankruptcy proved that and that should have been the end of GM. Ideally, another company with the technology to increase the progression of the economy would come along and take the market share that GM left behind. This chance for innovation and progression was brought to a screeching halt when the government used force to bail out GM. Government intervention is always bad.
     

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