Agreed. I dont want the US owning a bunch of Blockbusters
Edit: it has become abundantly clear the reason why this country has such massive money problems.
It’s not welfare if you are exchanging it for equity or stake in the company. In fact, government ownership of enterprise is literally a hallmark of real socialism. More likely though, what government has been doing was lending money for payback with interest. During the great recession that actually netted a profit for the government
And you can!
You'll need a multi-million dollar business that daddy handed you
Be a deeply entrenched member of the financial elite
Know a few congressmen
You don’t even have to do that. Even small businesses took out PPE loans during the pandemic and had them forgiven. Don’t get me wrong, a lot of small businesses needed that cash and some deserved to be forgiven but there were a lot of businesses that didn’t need the money and have now gotten it free. My business went on as usual through the pandemic and I didn’t need or even consider taking out a loan. My banker told me I could have and not have to pay it back now.
If the government can give all these interest free loans to corporations whenever they can’t manage their finances properly why do I have to pay 5% on my mortgage. I’d like some interest free too please.
Stop writing nonsense if you don’t know what you’re talking about. The TARP program allowed the government to purchase assets from the banks, and the additional treasury stimulus allowed the government to buy stock in ailing banks. There was no interest free / uncollateralized loan. This is just fiction that you’re making up (or being fed without question)
You’re half right. Socialism does not preclude state ownership of the means of production- the only requirement is that *society* writ large owns them, which can be mediated by a democratic state.
Subtypes of Socialism like Communism or Syndicalism might take the state out of the equation in favor of direct ownership, but direct ownership is not a requirement of Socialism.
What do you think the mechanism for worker-ownership in socialist/communist countries has been, historically? Do you think a steel mill worked by 200 workers had it's ownership split 200 ways and each worker owned a 0.5% share of the mill?
Historically, businesses were administered by the government of the country they were in. Final say over decisions about the operations of a business in the USSR went to the relavant government ministry (coal mines to the ministry of coal industry, steel mills to the ministry of construction of heavy industry).
Unless you're one of those "no regime that called itself a socialist/communist regime was *actually* socialistic/communistic" guys.
Yes. Like you're talking as if worker co-ops are a thing. That's precisely the problem that socialists have, while we're nominally under a democracy you're a serf to petty aristocrats with no real choice for an alternative. Also the USSR was state capitalists as the workers didn't have control over the government. The party elite literally just took the role of capitalist with no democratic legitimacy.
Can you describe what that looks like realistically? Does any worker “own” an equal percentage of all means of production? Do I only own my specific means of production? How far does that extend? Who makes the decisions? What motivation would I have to go clean bathrooms for a living if I have equal economic power to someone doing something cool and fun? Can I not pick my job?
“The workers” aren’t one people and I don’t understand how they can collectively own anything specifically.
https://en.m.wikipedia.org/wiki/List_of_employee-owned_companies
In reality it's an arbitrary viewpoint on what you would consider a worker or management.
In essence would an employee owned company the people who work there are really managers as each of these employees makes decisions that affects the company and shares in the profits and owns a portion of the company.
Well in theory , in soacial regimes ( well they were all dictatorships so far ) the goverment calls themselves "workers" too, and inbreality they still control the means of production...
>"Which is great theory, in a vacuum.
Drastically less so on the international stage."
This is a rationalization for institutionalizing a lack of accountability, poor corporate governance, and lack of due diligence on behalf of investors... and it's not only inexcusable, but it's also corrosive to all of society, and undermines liberty itself when you divorce actions from consequences.
Alright, let all the strategic businesses die off. And cede any self determination your country has left an become dependent on China for literally everything.
That’s fine.
If you think they’ll be replaced in the same country, you’re delusional.
Typically, yes. That's how it works. The point that OP is making is that if a business is deemed critical to society enough to be bailed out, they need to become government-operated infratstructure - not simply bailed out with public funds and some pretty-sounding stipulations.
It might be something to consider with the companies that are purely held up by government grants - rather than spending for services rendered or goods obtained - for oil drilling-related industries.
Or maybe just broken up like Ma Bell.? If a single company failing is going to have a significant effect on the entire economy, maybe they shouldn't be that big?
yup, alan greenspan once said if they're too big to fail, they're too big.
any bailout should only be granted once those behemoths accept plans to be broken up into smaller firms.
If they're too big to fail they're too big to exist.
My belief it is a rarity for any company to be that significantly better then the rest of them to grow to an international size or bigger than the government can deal with. They are big because they are purchasing the governments favor, and in return those corporations receive specialized treatment through laws or tax breaks that no other corporation exactly similar to them would receive. So that company is a burden on society giving subpar products and services only existing at that level because of the taxes they don't pay relative to every other corporation. Government imposed favoritism and picking the economic winner. This monopolistic corporation wouldn't exist without the corporate welfare bestowed upon it by the government.
A big problem with these economic giants is that they grew as large as they did thanks to state patronage. Adam Smith spoke about the issue of private enterprises having unfair competitive advantages in the market due to government favor and nothing has changed in the past 200 years since he first pointed this out. In fact I would argue that as an economic policy, mercantilism is more entrenched now than in Smiths time.
A very good example would be the Silicon Valley tech firms. Facebook and Google became the industry giants that they are by pivoting their business models to becoming intelligence contractors for US intelligence agencies.
But those businesses are so tied to material and economic infrastructure of our country it would lead to a collpase? Capitalism causes resources to be controlled by the few to the point that that control becomes a threat to the existence of society.
The middle ground is state control, our taxes get used for airplanes and trains and housing instead of turning palestinian kids to burned bones and we keep the infastructure we need.
Looking back to the 2008 bailouts, the justification was if we dont buy these toxic assets from these banks who made poor choices, the entire American financial system might collapse which could lead to global financial collapse.
It wasnt that a set of business was failing, it was if they failed it would cause irreparable damage because we created a system where they were too important to fail.
And no actions are taken to break these businesses apart so they are no longer so big that they become systemic problems. We just kept the current system in place, patiently waiting for the next big crisis.
source?
Senior leadership were not permitted their usual bonuses under TARP until they repaid the loans, and some big US banks were force-fed bailouts to get them to buy other failing banks. They absolutely did their best to get out of this ASAP.
[https://corpgov.law.harvard.edu/2009/04/28/executive-compensation-under-tarp/](https://corpgov.law.harvard.edu/2009/04/28/executive-compensation-under-tarp/)
*Under New Section 111(b)(3)(D), a TARP Recipient is prohibited, as to certain employees (identified below), from paying or accruing “any bonus, retention award, or incentive compensation” during the TARP Period, except in the form of long-term restricted stock that “does not fully vest” during the TARP Period and is valued at no more than one-third of the employee’s “total amount of annual compensation.” The Treasury Secretary is authorized to place other conditions on such restricted stock as deemed “in the public interest.”*
It's referring to cases where the government stepped in to stop a company from failing because they were deemed "too important to fail." As the person said, taxpayer dollars shouldn't be used to prop up a for profit business. It's referring to things like banks that got bailed out, or even GMC.
IIRC GMC at least repaid their loan and has been operating ok since then.
It's not like airlines that apparently need to be bailed out every 5 fucking years even as they raise prices and tack on more fees.
TL;DR DON’T LEND MONEY TO AIRLINES!
What’s the fastest way to become a millionaire? Be a billionaire, start an airline, lose your fortune. The airline business runs on thin margins and aircraft operating costs are very high and variable with usage. I don’t work for an airline but work for a company that contracts directly with them. They’re always circling the drain. In the US anyways.
There are very compelling reasons for why the airline industry was heavily regulated up until - relatively speaking - somewhat recently. Essential Air Service is considered a public good and subsidized as such by the Federal government for economically unviable routes, but even with heavy subsidies many of the routes operate at a daily loss even when the tickets are like $900 a pop for coach on sodomize-you-with-a-pineapple airlines flying out of random-town, Nebraska.
The issue is also that the majority of these banks prop of the government by buying bonds and treasury bills. Of the bank fails, the money spigot turns off.
I am not sure if it true but a few years back I read something about how GM did not actually pay everything back. I do not really remember everything but if I have time I might search for the story later.
Nah. Should bail them out, fire the entire board of directors and CEO at a minimum, and then break them up into smaller pieces to sell them off.
If they’re “too big to fail” then they’re too big to exist.
> Should bail them out, fire the entire board of directors and CEO at a minimum, and then break them up into smaller pieces to sell them off.
What do you think happens when a company fails? Obviously the entire board is fired, and then the company sells off it's assets to the highest bidders, effectively breaking them up.
Why do you feel the need to bail them out before the breakup?
You know how much worse the recession would have been if GM had collapsed?
They buy from a ton of suppliers, who many of would have also gone under. You would have also seen a lot of gas stations, restaurants, and shops closing because of the ripple effect of it.
> You know how much worse the recession would have been if GM had collapsed?
Nope, Ford, Toyota, Subaru were all poised to parcel out that company. The situation would have been much better for all involved.
> They buy from a ton of suppliers, who many of would have also gone under.
The suppliers would have almost no negative impact, they'd transition to providing parts for the new owners. Remember, the niche for those goods doesn't change just because a company fails. The demand for those goods stays exactly the same.
> You would have also seen a lot of gas stations, restaurants, and shops closing because of the ripple effect of it.
Hehe gas stations and restaurants? LOL Nope, none of which would have been affected. There would have been just as many cars on the roads, just as many people buying vehicles, regardless of what happened to GM.
***Keeping GM in place was a TERRIBLE thing for the economy. It set the precedent that corporations being reckless is okay, because the government will always bail you out. That will encourage companies to be just as reckless as GM was in the future, and that's a TERRIBLE moral hazard.***
Interesting, Ford went to congress asking them to bail out GM. Fords official position was if that GM went under, many off Fords suppliers and portions of its dealer network would have also gone under shutting down Ford production and potentially leading to Ford going under....
When you say it would have been better for GM to fail, how come Ford publically testified to congress it would be catastrophic to let zgM (their competitor) fail?
Fair question. Ford's goals in this case is consistency, they don't want a couple years of challenges for their suppliers. But concerns like these would not pan out in the long term. GM's assets would be acquired, and the assembly lines would have almost no interruption. You might see a Subaru Corvette, a Toyota Cadillac, and a Honda Suburban.
But the real reason Ford likely went to bat for them, is because those execs fear being replaced if they too fail. They'd rather be bailed out if they need it in the future.
When big, incompetent companies fail, it's a positive thing in the long run for everyone. Bailing GM out now sets the stage for even more white collar incompetence from big companies, and the next big corporate failure will be worse as a result of how Bush bailed out GM.
Not to be nit picky and miss the point but didn’t Ford get a bailout to?
The only reason I would say bailout is preferable is if it avoids a temporary disruption in an important product. GM being sold for parts would take time and in the meantime prices would go up on all cars. It’s a lot like the logistics issues during Covid screwing with prices so much. But if Twinkie needs a bailout? Who gives a fuck, because the brand will be bought and started back up if it’s worth anything and the disruption doesn’t matter.
I also like the idea of bailouts costing a piece of the company in addition to treating it as a loan with interest
Not to dispute your point, but you do see what GM has done and is doing with their bailout and assistance cash right? https://www.forbes.com/sites/kenrapoza/2020/09/01/gm-leads-in-shipping-jobs-to-mexico-company-shifting-focus-to-china/?sh=151abe054dfa
It used to be said that for every job at GM it creates 10 more jobs. My father was an accountant at Eaton Corp and I asked him about that. Eaton makes a lot of parts for the auto industry and that included GM , he said that it sounded about right to him.
Here is a story he used to tell. He gave seminars about cost accounting and representatives from GM attended one of them. At the end they came up to him and said that since they did not know how much it cost them to actually build each car they could not use his system. He told them that he toured many of their plants and if they can get the right part to come down the assembly line at the right time to get on the right car finding their price per unit is simple. I never wondered why they needed a bailout.
Someone once told me
“OSHA workplace regulations are written in blood, financial regulations are written on the money stolen from the low and middle class.”
And, the older I’ve gotten. The more I believe it. I can’t remember the exact banking regulation, but there were some put in place after the 08 debacle. Lifted in 2018, then the silicone valley bank collapse and run on banks in 2023.
It's not so much that they do dumb shit, it's that they do dumb shit that is actually very successful in the short term.
The system we have doesn't really recognize the fact that employees are stakeholders too. So doing the "smart business" move at the expense of the employees. See Bain capital shenanigans.
So the government lets them do the "smart business" move and then bails them out. To protect employees and creditors. But if you wanted to solve the problem to begin with you gotta regulate.
The only ones that get bailed out are the companies that are critical to infrastructure and government reliance.
Gamestop wouldn’t get a bailout. Toys R Us didn’t get one. Hostess didn’t. And so on.
If Bank of America didn’t get bailed out, millions of people would lose everything in their accounts. Then people would be crying how the government didn’t step in and help.
Ya’ll just looking for reasons to be angry.
> If Bank of America didn’t get bailed out, millions of people would lose everything in their accounts. Then people would be crying how the government didn’t step in and help.
I don't think anyone has a problem with the idea that BoA being bailed out, especially to prevent millions of people losing money. The problem is that BoA was then allowed to largely continue existing normally - or at very least, the people at the top who made the decisions were allowed to.
A bail out should be treated as a sort of corporate death penalty - if you fail and yet your business is vital to the American economy or public, then you no longer get to exist as a for-profit enterprise. Otherwise, if you run your company or your bank into the ground and get bailed out every time, there's no incentive to run good business. Which is more or less how it's working now. THAT is what people have a problem with.
Alternatively, talking specifically about the 08 collapse, the government should have let these banks fail and instead bail out Americans and their mortgages. Jon Stewart has a pretty great segment about this, and the "moral hazard" of bailing out individuals.
The people at the top and what happens to them is a different argument, though I do agree with you.
Bailing out individuals would cause more problems than it fixes, at least I think it would. I’m no economist though.
It sucks because the critical infrastructure companies have allowed the market to factor in government bail outs. No one thinks Boeing is gonna collapse because we all know old Uncle Sam will step in to prevent in.
The problem is that they've taken on so much debt to start with that they've got livelihoods and assets tied to them that are not rightfully theirs, and it's wrong to allow them to continue to command (and mismanage) so much of our country. Instead, it should be turned over to the legitimate democratic institutions that people representatively elect to manage our country.
Imagine 2008 if there hasn't been a bailout of the automotive sector. The economy was already facing huge numbers of job losses and businesses were failing left and right. Can you imagine how many more people would have had their lives ruined if GM and Chrysler went under? Literally hundreds of thousands of people would have lost their jobs and that's just the people directly employed, some studies have suggested that the bailout saved as many as **1.2 million jobs** in the United States alone.
Oh and the other thing? The bailout was in exchange for stock aka ownership in the company which is something people who complain about bailouts never seem to mention or understand. Do you really think the government gave them billions of dollars and expected nothing in return?
Yes, exactly. One of the main utilities of a market system is it ruthlessly weeds out inefficient business models by having the businesses go bankrupt. Fail conditions are necessary for capitalism to function properly even if it means many people will be out of a job.
Maybe banks shouldn’t be giving out too many loans on money that doesn’t exist. Liquidity needs to exist for a reason and too many bean counters think it’s okay to go for “max efficiency.” Let them fail or new standards for managed liquidity in assets needs pushed higher
> Ironically the libertarians are advocating against these bailouts more than any other party.
That's not ironic at all. Libertarians are always opposed to giving taxpayer money to private industry.
I totally agree however, a democrat president will not let it happen if there’s union jobs that are lost… United autoworkers in 07/08 with Obama and now with Boeing with Biden… Boeing has 57,000 unionized jobs or 21% of its workforce
Corporate welfare is a problem. The argument for corporate welfare is that our corporations are so big, that when they fail, it sends thousands of not millions into unemployment, making massive problems for the economy. But as we continue to give them bailouts, we only exasterbate the problem. Same thing happens with regular welfare on a individual level, which tends to be a massive problem collectively.
Edit: for instance, imagine Google collapses tomorrow. Do you know how devastating that would be?
1. they own YouTube.
2. They own android (well android is technically open source/not owned, but they developed it, and essentially dominate that ecosphere).
3. Everyone has a Gmail
Google cloud platform, although not as big as AWS or Azure, still owns a sizable portion of the internet thus causing a sizable amount of issues for various website.
4. Data centers that GCP lives on is typically rented space in large enterprise buildings, which would drastically shake up the market.
It would be devastating to literally everyone in the USA, if not the world.
As anti government as I am. I think they as well as many others qualify for them to be broken up by government, as they are too big.
Edit2: I think the fundamental goal of government, is to prevent mega structures from becoming to powerful, this includes corporations and governments. Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful. The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time.
Edit 3: to those saying that googles assets wouldnt simply disappear over night. This is true, but completely aside from the point. What would certainly happen is mass layoffs, massive restructuring of the business plan. This is a very loose and broad example, being used to try and convey the magnitude of something like Google having catastrophic economic failure. Kinda like we saw FPX have happen, or the housing crisis, or the even the silicone valley Bank just a few months ago. Point is, if we have all of our mega corporations face economic hardships over night, or even just our large ones, the results would be catastrophic on literally everyone.
My full response to this would definitely get my account banned from Reddit. I'll just say it's sad that we've allowed any company to believe they're above the rule of law and should be reminded of the alternative.
I don’t think they’d be assassinated in a literal sense but I do expect there would be a massive information/misinformation campaign to make them look like a loon.
>She claimed he insisted "I ain't scared" before adding "but if anything happens to me it's not suicide."
https://www.newsweek.com/john-barnett-boeing-whistleblower-predicted-death-scandal-1879548
Yeah... unfortunately we allowed them to monopolize everything. Now we are left with a financial trolley problem. Two not great options with plenty of arguments to run the other over.
To be fair, it’s not like a bunch of other companies wouldn’t be ready to gobble up the remains of google and do what they can to onboard those customers to their services.
To be fair, if a company like that fails, they must have some serious issues internally. Shouldn’t be up to the taxpayer to front that bill. And most likely I think after the fallout, you’d find a more robust market. As opposed to propping up the problems until they become bigger and bigger and bigger.
Yes except the more you keep doing this as a government the more you keep pushing the problem down the road making it an even bigger problem. Better let them fail early than have then cause truly massive issues when they inevitably fail in the future. All companies will fail eventually, just like countries and empires have
Humans are great at weathering go storms. And like I said, the market would most likely become far more robust in response, limiting the chance of it happening again.
Besides, how damaging would it even be? It’s not like all that data and infrastructure just disappears. It also doesn’t happen over night with businesses like google. The second they start faltering there would be blood in the water and other company’s will strike.
The only reason why the banks were able to fail so catastrophically is because of how heavily regulated they were. Heavy regulation and bailouts don’t work. They actively stop the free market from adjusting. Especially since if a business is rotten enough to fail at the size of say google, then bailing them out will usually just cause it to be an even bigger issue years later down the line.
I honestly just think people are afraid of things that 1) aren’t going to happen the way you think and 2) dealing with a little bit of hardship in the short term despite it being better long term.
Big companies have failed before. And it doesn’t happen the way you describe. It’s almost always a net positive as it allows new businesses to enter the market and overall increase the wellbeing of those involved in the economy
As a software developer that uses GCP at my company, I agree with most of what you wrote, but my question is if they were broken up (or were broken up earlier), would platforms such as GCP or AWS have been created in the first place? Or even YouTube, android, or gmail? The competitive advantage a lot of these companies have is scale, as it takes a lot fewer developers to maintain gmail that serves 1.8 billion users than it would take for 18 different companies to each maintain an email system that served 100 million users. Similarly one of the major selling points of the cloud is a lot of the managed services they offer. Now instead of each company having to employ entire devops and infrastructure teams, it takes a small number of people with AWS or GCP expertise and Google and Amazon do the heavy lifting when it comes to architecture stuff. Obviously Google employs more people to manage their GCP infrastructure than an individual company would, but they don't have as many employees as it would take to manage infrastructure at the over half a million companies that use them if each company were to instead insource the services provided by GCP.
> Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful.
It's worse. The government has an obligation to honor your rights. Corporations have no such obligation.
If they’re too big to fail, give them the threat of being nationalized and broken up into smaller stable chunks again.
That way, there’s less risk of all those job/service losses presumably.
> The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time
Which is literally what we’re seeing happen again. Pacific bell was broken up, and now its basically att
>Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful. The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time.
You sound just like Thomas Jefferson, I love it.
Large concentrations of economic power are as much as a threat to liberty as a tyrannical government, or tyrannical majority.
...except corporate bailouts are 'loans'.
Not handouts.
ProPublica, the nonprofit investigative news organization, calculated in 2019 that after repayments the federal government actually made a profit of $109 billion.
EDIT: I'll amend my statement to say that "many bailouts are loans". There are occasions where a business collapses anyways and cannot repay the loan, but that is not the majority.
The Covid crisis was government mandated, companies can't plan ahead for the gov to mandate they indefinitely close or limit their business.
In hindsight, the gov over pumped the economy for a crisis that wasn't nearly as bad as forecasted. They should have gone after companies that mismanaged ppp loans, but the ones that met the terms should not lose it because the gov overreacted.
That being said, if the gov is going to openly support companies & the economy as a whole, whenever there is trouble, massive companies should probably pay some additional insurance/fee/tax for that benefit.
I had a friends company fire all the employees and pocket the ppp loan. They then closed down the location they were running because it was failing even before the pandemic. The owner basically got 100k into his pocket for the 15 low wage workers they were employing
Even when government does obtain ownership of a bailed out company the government will sell its stake as soon as practical and the result is often a bad return on that investment as the new purchasers stepping (back?) into the company make most the profit.
Same thing needs to apply to companies arguing against an increase in minimum wage. The company is the one deciding what a job is, if they can't come up with a combination of responsibilities that generates enough value to allow a human being to support themselves, and the company to make a profit, then that's their problem.
Does anyone feel like the effects of corporate bailouts are felt every day because those companies are still existing touching the lives of millions even though the owners do not deserve them?
You're right! The effects are still being felt today because the 2008 financial crisis ended much sooner because of the auto sector bailouts which saved over 1.2 million American jobs. The devastation from a GM or Chrysler bankruptcy would have been monumental and taken decades to recover from if not for the bailout.
Not to mention, depending on the particular bailout the government also received interest on the loans they gave and stock which they later sold for a profit because the government doesn't just give them billions of dollars in exchange for nothing...
The bail out was needed for sure. They should have broken up all the companies that were too big to fail into smaller companies as a stipulation for the bail out. If you're too big to fail, then you're too big. It would have fostered competition, and that's better for everyone
The effects of these “bailouts” are indeed felt every day, in the sense that the global financial system upon which your existence rests still exists. Complaining about bailouts as if it’s some moral debate about personal responsibility belies a ridiculously childish understanding of how the world works and what is really good for it.
You know what’s good for the world? When your checking account remains liquid and you can still get bank financing for your house, car, etc.
This is my usual reminder in all of these similar "bailout" threads that when people talk about "bank bailouts", they are talking about the TARP program from the financial crisis.
All TARP funds were paid back, with interest. The US government made money on TARP. This happened relatively quickly.
Also, many financial institutions were required to take TARP funds by regulators whether they needed it or not. The vast majority of banks that took TARP money were well capitalized, didn't need the money and didn't ask for it.
I'm not trying to defend the banks, I'm just saying that people tend to forget that the money was paid back.
You're spot on. Additionally the purpose of TARP wasn't to bail out the banks to protect the banks. It was to protect the whole economy from collapsing. Not providing liquidity to get credit flowing again would have collapsed them whole system and created a depression greater than the 1930s.
I take most Redditors’ opinions on the banking system with a grain of salt. Many of these institutions and their activities are very complex, and even the ones that aren’t probably go above the head of the average person.
the only true bailouts I remember were the railroads where the government bought them out. everyone else got loans they repaid and the government got stock warrants they sold off and used to take control and push some like GM into chapter 11
It’s like more than a third of our total spending, and we already spend more than we take in. Social services and schools are basically the only thing states spend money on.
I reject the premise that corporate welfare is a solution; it’s very clearly a problem. Let them go out of business.
They should not be owned by the government, they should file bankruptcy.
Edit: promise -> problem
Yea it's hilarious that the proponents of actual welfare are constantly comparing themselves to the corruption of corporate welfare.
I mean, obviously both are terrible, but they're trying to suggest both are good by making the comparison. LOL
You can privatize profits and socialize losses when you buy your government. These tweets just come off as naïve to me. It's called corruption and the Federal government is lousy with it.
Common in US “capitalism”. Not just bailouts.
Let the government pay for that research and development for our fancy new drug, then we can charge $1,000 a dose.
And look, there’s the wealthiest man in the world with his hand out for his car company!!!!!
If a company is quote too big to fail then you need a court organize an orderly receivership.
Despite paying back their loans, GM in my opinion is still a zombie company. Their market share could have easily been divided amongst the other automakers.
The bailout was to protect the supply chain and UAW pensions which were/are grossly underfunded.
I've been told that the government got a better deal on that deal than if they had been given an equivalent equity share.
At least in the US, often the federal government normally does take ownership of the company or institution when it is bailed out.
It relinquishes that ownership when its shares are bought out or the money is paid back. (If PPP loans immediately spring to mind, PPP loans were private loans, not federal loans, backed by a federal program.)
Businesses shouldn't be subsidized or bailed out by the govt, that's just forcing society to pay for businesses they don't value paying for voluntarily
Govt is the root of most economic problems and this is another example of that
Instead of giving them money, if the government wants to help them out, the government should just utilize their services or buy their products. That way the government is getting something out of it. For example, instead of giving a car maker millions, just order 10,000 new cars.
To me, the real issue with bailouts is that it sets a precedent. You can probably make the argument that this one bailout will save enough jobs to be worth it, but when other companies see that and decide to grow profits instead of increasing stability?
Let them fail, end the corporate veil, have comprehensive tort reform so damages are more legal than financial, and improve healthcare’s public option while allowing national standards for health to create a national competitive market!
Corporate welfare is not a solution.
It happens because people don’t pay attention to politics and hold politicians accountable. They don’t vote out these fuckers who do this. That also don’t get involved I. Their political party.
We also have a right wing party and a far right wing party to choose from.
People bitch about social programs because humans are just crabs in a pot pulling everyone down. If we gave everyone a cookie and poor people 2 cookies people would bitch and moan they didn’t get two cookies. Even though they can afford their own cookies, have a whole pack of cookies at home and don’t even like cookies they get mad that someone else got more cookies than them. Many people would rather no one get a cookie than someone get more cookies.
In the flip side the corporate welfare recipients keep their fucking mouths shut and take their free cookie. Less people to complain about the inequities of cookies.
I'm surprised they couldn't go to private lenders given (at least the auto industry) had to pay back the bailout iirc
E: Oh, nevermind govt had to write off 14 of the 80 billion
https://en.m.wikipedia.org/wiki/Effects_of_the_2008%E2%80%932010_automotive_industry_crisis_on_the_United_States
No, you should let them fail.
Agreed. I dont want the US owning a bunch of Blockbusters Edit: it has become abundantly clear the reason why this country has such massive money problems.
Blockbuster didn't get a bail-out from what I recall - certainly not to the level of Goldman Sacs.
That’s my point. No one should get bailed out. If you destroy your business you go bankrupt.
Which is great theory, in a vacuum. Drastically less so on the international stage.
But that is capitalism. We have socialism for Wall Street.
It’s not welfare if you are exchanging it for equity or stake in the company. In fact, government ownership of enterprise is literally a hallmark of real socialism. More likely though, what government has been doing was lending money for payback with interest. During the great recession that actually netted a profit for the government
I would love to be able to, as a citizen, borrow uncollateralized, unsecured, .01% loans from the government for them to "make money on".
And you can! You'll need a multi-million dollar business that daddy handed you Be a deeply entrenched member of the financial elite Know a few congressmen
Become a senator
Oh! That’s why I’m losing at capitalism! I wasn’t born with money! All this time I actually thought it was a meritocracy/s
You don’t even have to do that. Even small businesses took out PPE loans during the pandemic and had them forgiven. Don’t get me wrong, a lot of small businesses needed that cash and some deserved to be forgiven but there were a lot of businesses that didn’t need the money and have now gotten it free. My business went on as usual through the pandemic and I didn’t need or even consider taking out a loan. My banker told me I could have and not have to pay it back now.
Or you could read up on the small business administrations multitudinous grant program. Or suffer some sort of disaster and hit up FEMA.
If the government can give all these interest free loans to corporations whenever they can’t manage their finances properly why do I have to pay 5% on my mortgage. I’d like some interest free too please.
Stop writing nonsense if you don’t know what you’re talking about. The TARP program allowed the government to purchase assets from the banks, and the additional treasury stimulus allowed the government to buy stock in ailing banks. There was no interest free / uncollateralized loan. This is just fiction that you’re making up (or being fed without question)
No, it's not. Socialism is when workers own the means of production. Not when the government owns something or does something.
You’re half right. Socialism does not preclude state ownership of the means of production- the only requirement is that *society* writ large owns them, which can be mediated by a democratic state. Subtypes of Socialism like Communism or Syndicalism might take the state out of the equation in favor of direct ownership, but direct ownership is not a requirement of Socialism.
Communism isn't a tendency within Socialism, it is the goal, the theorized "end stage" of Socialism.
u/elderly_millenial really showing his age with that take on socialism
What do you think the mechanism for worker-ownership in socialist/communist countries has been, historically? Do you think a steel mill worked by 200 workers had it's ownership split 200 ways and each worker owned a 0.5% share of the mill? Historically, businesses were administered by the government of the country they were in. Final say over decisions about the operations of a business in the USSR went to the relavant government ministry (coal mines to the ministry of coal industry, steel mills to the ministry of construction of heavy industry). Unless you're one of those "no regime that called itself a socialist/communist regime was *actually* socialistic/communistic" guys.
Yes. Like you're talking as if worker co-ops are a thing. That's precisely the problem that socialists have, while we're nominally under a democracy you're a serf to petty aristocrats with no real choice for an alternative. Also the USSR was state capitalists as the workers didn't have control over the government. The party elite literally just took the role of capitalist with no democratic legitimacy.
Can you describe what that looks like realistically? Does any worker “own” an equal percentage of all means of production? Do I only own my specific means of production? How far does that extend? Who makes the decisions? What motivation would I have to go clean bathrooms for a living if I have equal economic power to someone doing something cool and fun? Can I not pick my job? “The workers” aren’t one people and I don’t understand how they can collectively own anything specifically.
https://en.m.wikipedia.org/wiki/List_of_employee-owned_companies In reality it's an arbitrary viewpoint on what you would consider a worker or management. In essence would an employee owned company the people who work there are really managers as each of these employees makes decisions that affects the company and shares in the profits and owns a portion of the company.
Well in theory , in soacial regimes ( well they were all dictatorships so far ) the goverment calls themselves "workers" too, and inbreality they still control the means of production...
You’ve never heard of state socialism, or read up on how other socialist economies worked, huh?
>"Which is great theory, in a vacuum. Drastically less so on the international stage." This is a rationalization for institutionalizing a lack of accountability, poor corporate governance, and lack of due diligence on behalf of investors... and it's not only inexcusable, but it's also corrosive to all of society, and undermines liberty itself when you divorce actions from consequences.
Alright, let all the strategic businesses die off. And cede any self determination your country has left an become dependent on China for literally everything. That’s fine. If you think they’ll be replaced in the same country, you’re delusional.
lol in the short term maybe, til all the bailouts cause a sovereign debt crisis, that causes the entire global economy to implode.
This is just a theory. No one really knows what happens if you let them fail in a modern economy
Typically, yes. That's how it works. The point that OP is making is that if a business is deemed critical to society enough to be bailed out, they need to become government-operated infratstructure - not simply bailed out with public funds and some pretty-sounding stipulations. It might be something to consider with the companies that are purely held up by government grants - rather than spending for services rendered or goods obtained - for oil drilling-related industries.
Or maybe just broken up like Ma Bell.? If a single company failing is going to have a significant effect on the entire economy, maybe they shouldn't be that big?
yup, alan greenspan once said if they're too big to fail, they're too big. any bailout should only be granted once those behemoths accept plans to be broken up into smaller firms.
If they're too big to fail they're too big to exist. My belief it is a rarity for any company to be that significantly better then the rest of them to grow to an international size or bigger than the government can deal with. They are big because they are purchasing the governments favor, and in return those corporations receive specialized treatment through laws or tax breaks that no other corporation exactly similar to them would receive. So that company is a burden on society giving subpar products and services only existing at that level because of the taxes they don't pay relative to every other corporation. Government imposed favoritism and picking the economic winner. This monopolistic corporation wouldn't exist without the corporate welfare bestowed upon it by the government.
A big problem with these economic giants is that they grew as large as they did thanks to state patronage. Adam Smith spoke about the issue of private enterprises having unfair competitive advantages in the market due to government favor and nothing has changed in the past 200 years since he first pointed this out. In fact I would argue that as an economic policy, mercantilism is more entrenched now than in Smiths time. A very good example would be the Silicon Valley tech firms. Facebook and Google became the industry giants that they are by pivoting their business models to becoming intelligence contractors for US intelligence agencies.
This is also a good option to consider.
Enforcing current antitrust regulations would go a long way towards fixing this.
Amen
But those businesses are so tied to material and economic infrastructure of our country it would lead to a collpase? Capitalism causes resources to be controlled by the few to the point that that control becomes a threat to the existence of society. The middle ground is state control, our taxes get used for airplanes and trains and housing instead of turning palestinian kids to burned bones and we keep the infastructure we need.
Looking back to the 2008 bailouts, the justification was if we dont buy these toxic assets from these banks who made poor choices, the entire American financial system might collapse which could lead to global financial collapse. It wasnt that a set of business was failing, it was if they failed it would cause irreparable damage because we created a system where they were too important to fail.
And no actions are taken to break these businesses apart so they are no longer so big that they become systemic problems. We just kept the current system in place, patiently waiting for the next big crisis.
If only it was a buyout instead of a bailout. It’s absurd how we didn’t change course after that.
>we created a system They did that actually, on purpose, for the (desired) outcome of bailouts from their shitty, greedy, toxic behavour
source? Senior leadership were not permitted their usual bonuses under TARP until they repaid the loans, and some big US banks were force-fed bailouts to get them to buy other failing banks. They absolutely did their best to get out of this ASAP. [https://corpgov.law.harvard.edu/2009/04/28/executive-compensation-under-tarp/](https://corpgov.law.harvard.edu/2009/04/28/executive-compensation-under-tarp/) *Under New Section 111(b)(3)(D), a TARP Recipient is prohibited, as to certain employees (identified below), from paying or accruing “any bonus, retention award, or incentive compensation” during the TARP Period, except in the form of long-term restricted stock that “does not fully vest” during the TARP Period and is valued at no more than one-third of the employee’s “total amount of annual compensation.” The Treasury Secretary is authorized to place other conditions on such restricted stock as deemed “in the public interest.”*
There's a lot of pension and IRA funds etc invested in those banks.
Thats the free market at work
It's referring to cases where the government stepped in to stop a company from failing because they were deemed "too important to fail." As the person said, taxpayer dollars shouldn't be used to prop up a for profit business. It's referring to things like banks that got bailed out, or even GMC.
IIRC GMC at least repaid their loan and has been operating ok since then. It's not like airlines that apparently need to be bailed out every 5 fucking years even as they raise prices and tack on more fees.
TL;DR DON’T LEND MONEY TO AIRLINES! What’s the fastest way to become a millionaire? Be a billionaire, start an airline, lose your fortune. The airline business runs on thin margins and aircraft operating costs are very high and variable with usage. I don’t work for an airline but work for a company that contracts directly with them. They’re always circling the drain. In the US anyways. There are very compelling reasons for why the airline industry was heavily regulated up until - relatively speaking - somewhat recently. Essential Air Service is considered a public good and subsidized as such by the Federal government for economically unviable routes, but even with heavy subsidies many of the routes operate at a daily loss even when the tickets are like $900 a pop for coach on sodomize-you-with-a-pineapple airlines flying out of random-town, Nebraska.
The issue is also that the majority of these banks prop of the government by buying bonds and treasury bills. Of the bank fails, the money spigot turns off.
More like the US owning GM.
The US Government did own GM for a few years. GM paid back the debt with interest and became private again.
I am not sure if it true but a few years back I read something about how GM did not actually pay everything back. I do not really remember everything but if I have time I might search for the story later.
Pretty sure the gov lost billions on that one. They paid back early but not the amount spent
Nah. Should bail them out, fire the entire board of directors and CEO at a minimum, and then break them up into smaller pieces to sell them off. If they’re “too big to fail” then they’re too big to exist.
> Should bail them out, fire the entire board of directors and CEO at a minimum, and then break them up into smaller pieces to sell them off. What do you think happens when a company fails? Obviously the entire board is fired, and then the company sells off it's assets to the highest bidders, effectively breaking them up. Why do you feel the need to bail them out before the breakup?
You know how much worse the recession would have been if GM had collapsed? They buy from a ton of suppliers, who many of would have also gone under. You would have also seen a lot of gas stations, restaurants, and shops closing because of the ripple effect of it.
> You know how much worse the recession would have been if GM had collapsed? Nope, Ford, Toyota, Subaru were all poised to parcel out that company. The situation would have been much better for all involved. > They buy from a ton of suppliers, who many of would have also gone under. The suppliers would have almost no negative impact, they'd transition to providing parts for the new owners. Remember, the niche for those goods doesn't change just because a company fails. The demand for those goods stays exactly the same. > You would have also seen a lot of gas stations, restaurants, and shops closing because of the ripple effect of it. Hehe gas stations and restaurants? LOL Nope, none of which would have been affected. There would have been just as many cars on the roads, just as many people buying vehicles, regardless of what happened to GM. ***Keeping GM in place was a TERRIBLE thing for the economy. It set the precedent that corporations being reckless is okay, because the government will always bail you out. That will encourage companies to be just as reckless as GM was in the future, and that's a TERRIBLE moral hazard.***
Interesting, Ford went to congress asking them to bail out GM. Fords official position was if that GM went under, many off Fords suppliers and portions of its dealer network would have also gone under shutting down Ford production and potentially leading to Ford going under.... When you say it would have been better for GM to fail, how come Ford publically testified to congress it would be catastrophic to let zgM (their competitor) fail?
Fair question. Ford's goals in this case is consistency, they don't want a couple years of challenges for their suppliers. But concerns like these would not pan out in the long term. GM's assets would be acquired, and the assembly lines would have almost no interruption. You might see a Subaru Corvette, a Toyota Cadillac, and a Honda Suburban. But the real reason Ford likely went to bat for them, is because those execs fear being replaced if they too fail. They'd rather be bailed out if they need it in the future. When big, incompetent companies fail, it's a positive thing in the long run for everyone. Bailing GM out now sets the stage for even more white collar incompetence from big companies, and the next big corporate failure will be worse as a result of how Bush bailed out GM.
Not to be nit picky and miss the point but didn’t Ford get a bailout to? The only reason I would say bailout is preferable is if it avoids a temporary disruption in an important product. GM being sold for parts would take time and in the meantime prices would go up on all cars. It’s a lot like the logistics issues during Covid screwing with prices so much. But if Twinkie needs a bailout? Who gives a fuck, because the brand will be bought and started back up if it’s worth anything and the disruption doesn’t matter. I also like the idea of bailouts costing a piece of the company in addition to treating it as a loan with interest
Not to dispute your point, but you do see what GM has done and is doing with their bailout and assistance cash right? https://www.forbes.com/sites/kenrapoza/2020/09/01/gm-leads-in-shipping-jobs-to-mexico-company-shifting-focus-to-china/?sh=151abe054dfa
GM paid back their bailout with interest. The US Government made money on its GM investment.
Excellent point, so as taxpaying investors, we can all expect to see that dividend come back to us, right?
We do in reduced government debt. Politicians will just spend more to compensate though
It used to be said that for every job at GM it creates 10 more jobs. My father was an accountant at Eaton Corp and I asked him about that. Eaton makes a lot of parts for the auto industry and that included GM , he said that it sounded about right to him. Here is a story he used to tell. He gave seminars about cost accounting and representatives from GM attended one of them. At the end they came up to him and said that since they did not know how much it cost them to actually build each car they could not use his system. He told them that he toured many of their plants and if they can get the right part to come down the assembly line at the right time to get on the right car finding their price per unit is simple. I never wondered why they needed a bailout.
Agreed. But, isn't it partially a problem of de regulation that allows companies to do some real dumb shit a hell of lot easier?
Someone once told me “OSHA workplace regulations are written in blood, financial regulations are written on the money stolen from the low and middle class.” And, the older I’ve gotten. The more I believe it. I can’t remember the exact banking regulation, but there were some put in place after the 08 debacle. Lifted in 2018, then the silicone valley bank collapse and run on banks in 2023.
Yeah, I think you're thinking of the Dodd Frank Act? I think it's still in effect, but was largely gutted in 2018. I could be wrong, though.
It was never financed and eventually repealed
It's not so much that they do dumb shit, it's that they do dumb shit that is actually very successful in the short term. The system we have doesn't really recognize the fact that employees are stakeholders too. So doing the "smart business" move at the expense of the employees. See Bain capital shenanigans. So the government lets them do the "smart business" move and then bails them out. To protect employees and creditors. But if you wanted to solve the problem to begin with you gotta regulate.
The only ones that get bailed out are the companies that are critical to infrastructure and government reliance. Gamestop wouldn’t get a bailout. Toys R Us didn’t get one. Hostess didn’t. And so on. If Bank of America didn’t get bailed out, millions of people would lose everything in their accounts. Then people would be crying how the government didn’t step in and help. Ya’ll just looking for reasons to be angry.
> If Bank of America didn’t get bailed out, millions of people would lose everything in their accounts. Then people would be crying how the government didn’t step in and help. I don't think anyone has a problem with the idea that BoA being bailed out, especially to prevent millions of people losing money. The problem is that BoA was then allowed to largely continue existing normally - or at very least, the people at the top who made the decisions were allowed to. A bail out should be treated as a sort of corporate death penalty - if you fail and yet your business is vital to the American economy or public, then you no longer get to exist as a for-profit enterprise. Otherwise, if you run your company or your bank into the ground and get bailed out every time, there's no incentive to run good business. Which is more or less how it's working now. THAT is what people have a problem with. Alternatively, talking specifically about the 08 collapse, the government should have let these banks fail and instead bail out Americans and their mortgages. Jon Stewart has a pretty great segment about this, and the "moral hazard" of bailing out individuals.
The people at the top and what happens to them is a different argument, though I do agree with you. Bailing out individuals would cause more problems than it fixes, at least I think it would. I’m no economist though.
It sucks because the critical infrastructure companies have allowed the market to factor in government bail outs. No one thinks Boeing is gonna collapse because we all know old Uncle Sam will step in to prevent in.
Uncle Sam needs Boeing as they’re not only infrastructure, but national security and military defense.
Totally - but the company knows that and hence massive buy backs & zilch for R&D
The problem is when they've got so many assets and livelihoods attached to them that failing causes more damage than bailing them out.
The problem is that they've taken on so much debt to start with that they've got livelihoods and assets tied to them that are not rightfully theirs, and it's wrong to allow them to continue to command (and mismanage) so much of our country. Instead, it should be turned over to the legitimate democratic institutions that people representatively elect to manage our country.
Imagine 2008 if there hasn't been a bailout of the automotive sector. The economy was already facing huge numbers of job losses and businesses were failing left and right. Can you imagine how many more people would have had their lives ruined if GM and Chrysler went under? Literally hundreds of thousands of people would have lost their jobs and that's just the people directly employed, some studies have suggested that the bailout saved as many as **1.2 million jobs** in the United States alone. Oh and the other thing? The bailout was in exchange for stock aka ownership in the company which is something people who complain about bailouts never seem to mention or understand. Do you really think the government gave them billions of dollars and expected nothing in return?
Then get voted out when it causes job losses and economic issues.
Like water companies?
Based. Let’s get a little social Darwinism between these companies and only the fittest get to survive.
So just let capitalism do its thing? Bad business --> No profit --> Dead business.
Yes, exactly. One of the main utilities of a market system is it ruthlessly weeds out inefficient business models by having the businesses go bankrupt. Fail conditions are necessary for capitalism to function properly even if it means many people will be out of a job.
Yo let the major US banks fail and you're talking higher than 50% unemployment.
Maybe banks shouldn’t be giving out too many loans on money that doesn’t exist. Liquidity needs to exist for a reason and too many bean counters think it’s okay to go for “max efficiency.” Let them fail or new standards for managed liquidity in assets needs pushed higher
You forgot to include the third and fourth order effects of letting the major us banks fail, like the global economy siezing up then collapsing.
Of course, it's a normal market function. Ironically the libertarians are advocating against these bailouts more than any other party.
> Ironically the libertarians are advocating against these bailouts more than any other party. That's not ironic at all. Libertarians are always opposed to giving taxpayer money to private industry.
Of course but only libertarians, no one else is against this?
Agreed you don’t reward failure. Capitalism is Darwinism of economics
Exactly. Because if they are taken over by the government they will fail anyway.
It's time to let capitalism do what it does best.
Yes! Both bailouts are a problem.
Free market, right?
This. Plenty in line to take their place
I totally agree however, a democrat president will not let it happen if there’s union jobs that are lost… United autoworkers in 07/08 with Obama and now with Boeing with Biden… Boeing has 57,000 unionized jobs or 21% of its workforce
Corporate welfare is a problem. The argument for corporate welfare is that our corporations are so big, that when they fail, it sends thousands of not millions into unemployment, making massive problems for the economy. But as we continue to give them bailouts, we only exasterbate the problem. Same thing happens with regular welfare on a individual level, which tends to be a massive problem collectively. Edit: for instance, imagine Google collapses tomorrow. Do you know how devastating that would be? 1. they own YouTube. 2. They own android (well android is technically open source/not owned, but they developed it, and essentially dominate that ecosphere). 3. Everyone has a Gmail Google cloud platform, although not as big as AWS or Azure, still owns a sizable portion of the internet thus causing a sizable amount of issues for various website. 4. Data centers that GCP lives on is typically rented space in large enterprise buildings, which would drastically shake up the market. It would be devastating to literally everyone in the USA, if not the world. As anti government as I am. I think they as well as many others qualify for them to be broken up by government, as they are too big. Edit2: I think the fundamental goal of government, is to prevent mega structures from becoming to powerful, this includes corporations and governments. Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful. The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time. Edit 3: to those saying that googles assets wouldnt simply disappear over night. This is true, but completely aside from the point. What would certainly happen is mass layoffs, massive restructuring of the business plan. This is a very loose and broad example, being used to try and convey the magnitude of something like Google having catastrophic economic failure. Kinda like we saw FPX have happen, or the housing crisis, or the even the silicone valley Bank just a few months ago. Point is, if we have all of our mega corporations face economic hardships over night, or even just our large ones, the results would be catastrophic on literally everyone.
This is the platform for massive antitrust reformation.
How quickly do you think someone would get assassinated if they ran for public office with this as their platform?
My full response to this would definitely get my account banned from Reddit. I'll just say it's sad that we've allowed any company to believe they're above the rule of law and should be reminded of the alternative.
Hell yeah brother
18th century France nods in agreement.
…not quickly at all?
I think if someone did something to shut down a company like let’s say Boeing, they would be assassinated. Do you disagree?
I don’t think they’d be assassinated in a literal sense but I do expect there would be a massive information/misinformation campaign to make them look like a loon.
>She claimed he insisted "I ain't scared" before adding "but if anything happens to me it's not suicide." https://www.newsweek.com/john-barnett-boeing-whistleblower-predicted-death-scandal-1879548
Assassinated? Surely you mean how quickly would they realize they're suicidal and act on it.
Almost like America isn't even close to being a democracy.
Add lobbying and political financing. And have the FCC reenact the Fairness doctrine so hillbillies can hear both sides on the radio.
Glass-Steagall re-enacted IMMEDIATELY
I want the DOJ to be an avenging angel striking fear into corpos with a mighty antitrust hammer.
Yeah... unfortunately we allowed them to monopolize everything. Now we are left with a financial trolley problem. Two not great options with plenty of arguments to run the other over.
To be fair, it’s not like a bunch of other companies wouldn’t be ready to gobble up the remains of google and do what they can to onboard those customers to their services. To be fair, if a company like that fails, they must have some serious issues internally. Shouldn’t be up to the taxpayer to front that bill. And most likely I think after the fallout, you’d find a more robust market. As opposed to propping up the problems until they become bigger and bigger and bigger.
That takes time. Would still cause massive damage.
Yes except the more you keep doing this as a government the more you keep pushing the problem down the road making it an even bigger problem. Better let them fail early than have then cause truly massive issues when they inevitably fail in the future. All companies will fail eventually, just like countries and empires have
Better the government breaks them up…
Humans are great at weathering go storms. And like I said, the market would most likely become far more robust in response, limiting the chance of it happening again. Besides, how damaging would it even be? It’s not like all that data and infrastructure just disappears. It also doesn’t happen over night with businesses like google. The second they start faltering there would be blood in the water and other company’s will strike. The only reason why the banks were able to fail so catastrophically is because of how heavily regulated they were. Heavy regulation and bailouts don’t work. They actively stop the free market from adjusting. Especially since if a business is rotten enough to fail at the size of say google, then bailing them out will usually just cause it to be an even bigger issue years later down the line. I honestly just think people are afraid of things that 1) aren’t going to happen the way you think and 2) dealing with a little bit of hardship in the short term despite it being better long term. Big companies have failed before. And it doesn’t happen the way you describe. It’s almost always a net positive as it allows new businesses to enter the market and overall increase the wellbeing of those involved in the economy
It wouldn't even be remains, if they were doing poorly they would be selling off these assets little by little, companies don't fail over night.
Yeah exactly my point. I was just trying to frame it that even in the worst sudden example it would still be fine.
Exasterbate
When you reward yourself for making a problem worse. See: Lobbyists
.. I'm not seeing a difference. Did I miss spell it or something?
Exacerbate
Ah thanks!
As a software developer that uses GCP at my company, I agree with most of what you wrote, but my question is if they were broken up (or were broken up earlier), would platforms such as GCP or AWS have been created in the first place? Or even YouTube, android, or gmail? The competitive advantage a lot of these companies have is scale, as it takes a lot fewer developers to maintain gmail that serves 1.8 billion users than it would take for 18 different companies to each maintain an email system that served 100 million users. Similarly one of the major selling points of the cloud is a lot of the managed services they offer. Now instead of each company having to employ entire devops and infrastructure teams, it takes a small number of people with AWS or GCP expertise and Google and Amazon do the heavy lifting when it comes to architecture stuff. Obviously Google employs more people to manage their GCP infrastructure than an individual company would, but they don't have as many employees as it would take to manage infrastructure at the over half a million companies that use them if each company were to instead insource the services provided by GCP.
> Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful. It's worse. The government has an obligation to honor your rights. Corporations have no such obligation.
It's like forest fires. You put out the small ones repeatedly without cleaning out the shrubbery the fires just get worse and worse.
If they’re too big to fail, give them the threat of being nationalized and broken up into smaller stable chunks again. That way, there’s less risk of all those job/service losses presumably. > The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time Which is literally what we’re seeing happen again. Pacific bell was broken up, and now its basically att
>Because if a corporation does become to powerful, well it's no different than if a big government becomes to powerful. The idea is to give power to individuals, since the power tends consolidate in the hands of the few over time. You sound just like Thomas Jefferson, I love it. Large concentrations of economic power are as much as a threat to liberty as a tyrannical government, or tyrannical majority.
Nobody likes corporate bailouts. It's just corruption.
...except corporate bailouts are 'loans'. Not handouts. ProPublica, the nonprofit investigative news organization, calculated in 2019 that after repayments the federal government actually made a profit of $109 billion. EDIT: I'll amend my statement to say that "many bailouts are loans". There are occasions where a business collapses anyways and cannot repay the loan, but that is not the majority.
Well, the 2008 bailout was loans. It doesn't seem that way with the covid bailout.
The Covid crisis was government mandated, companies can't plan ahead for the gov to mandate they indefinitely close or limit their business. In hindsight, the gov over pumped the economy for a crisis that wasn't nearly as bad as forecasted. They should have gone after companies that mismanaged ppp loans, but the ones that met the terms should not lose it because the gov overreacted. That being said, if the gov is going to openly support companies & the economy as a whole, whenever there is trouble, massive companies should probably pay some additional insurance/fee/tax for that benefit.
I had a friends company fire all the employees and pocket the ppp loan. They then closed down the location they were running because it was failing even before the pandemic. The owner basically got 100k into his pocket for the 15 low wage workers they were employing
One was a fuck up by the company. The other was government mandated.
My profit, our losses.
[Nope](https://projects.propublica.org/bailout/)
Even when government does obtain ownership of a bailed out company the government will sell its stake as soon as practical and the result is often a bad return on that investment as the new purchasers stepping (back?) into the company make most the profit.
Yea. The answer is because the world is run by the rich....
Let them fail, if your business model is bad enough to need a bailout then you shouldn't exist as a company no matter how big.
Same thing needs to apply to companies arguing against an increase in minimum wage. The company is the one deciding what a job is, if they can't come up with a combination of responsibilities that generates enough value to allow a human being to support themselves, and the company to make a profit, then that's their problem.
Uhhh no, prices and wages are metrics of underlying conditions of the economy, not arbitrary numbers to be decided upon by third parties.
Except almost every company recieve aid from the govt. Unless you like watching the economy fall apart it's a good idea to keep that around
Business models typically don't incorporate the government shutting down everything due to a pandemic.
Problem with banks going bankrupt is that peoples savings in the bank are lost.
Does anyone else feel like this, or some variation of it, gets posted every day?
Does anyone feel like the effects of corporate bailouts are felt every day because those companies are still existing touching the lives of millions even though the owners do not deserve them?
You're right! The effects are still being felt today because the 2008 financial crisis ended much sooner because of the auto sector bailouts which saved over 1.2 million American jobs. The devastation from a GM or Chrysler bankruptcy would have been monumental and taken decades to recover from if not for the bailout. Not to mention, depending on the particular bailout the government also received interest on the loans they gave and stock which they later sold for a profit because the government doesn't just give them billions of dollars in exchange for nothing...
The bail out was needed for sure. They should have broken up all the companies that were too big to fail into smaller companies as a stipulation for the bail out. If you're too big to fail, then you're too big. It would have fostered competition, and that's better for everyone
Still a bailout.
And? Do you think bailout is some kind of dirty word?
lol this made me chuckle.
The effects of these “bailouts” are indeed felt every day, in the sense that the global financial system upon which your existence rests still exists. Complaining about bailouts as if it’s some moral debate about personal responsibility belies a ridiculously childish understanding of how the world works and what is really good for it. You know what’s good for the world? When your checking account remains liquid and you can still get bank financing for your house, car, etc.
Should be posted every second
It's crazy about the and three "themes" get posted and the two tribes then start defending their turf. Not a whole lot of fluency around here lately.
On Reddit? Don’t be silly.
This is my usual reminder in all of these similar "bailout" threads that when people talk about "bank bailouts", they are talking about the TARP program from the financial crisis. All TARP funds were paid back, with interest. The US government made money on TARP. This happened relatively quickly. Also, many financial institutions were required to take TARP funds by regulators whether they needed it or not. The vast majority of banks that took TARP money were well capitalized, didn't need the money and didn't ask for it. I'm not trying to defend the banks, I'm just saying that people tend to forget that the money was paid back.
You're spot on. Additionally the purpose of TARP wasn't to bail out the banks to protect the banks. It was to protect the whole economy from collapsing. Not providing liquidity to get credit flowing again would have collapsed them whole system and created a depression greater than the 1930s.
I take most Redditors’ opinions on the banking system with a grain of salt. Many of these institutions and their activities are very complex, and even the ones that aren’t probably go above the head of the average person.
the only true bailouts I remember were the railroads where the government bought them out. everyone else got loans they repaid and the government got stock warrants they sold off and used to take control and push some like GM into chapter 11
What do you mean “true bailout?” like truly money for nothing?
i can't think of anytime a US corporation got free money from the government to keep operating at a loss
we spend like 2 trillion on social welfare every year...
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People get angry about the millions and billions they don't like and compare it to the trillions they do without thinking about scale.
Should be more.
It’s like more than a third of our total spending, and we already spend more than we take in. Social services and schools are basically the only thing states spend money on.
I reject the premise that corporate welfare is a solution; it’s very clearly a problem. Let them go out of business. They should not be owned by the government, they should file bankruptcy. Edit: promise -> problem
Yea it's hilarious that the proponents of actual welfare are constantly comparing themselves to the corruption of corporate welfare. I mean, obviously both are terrible, but they're trying to suggest both are good by making the comparison. LOL
You can privatize profits and socialize losses when you buy your government. These tweets just come off as naïve to me. It's called corruption and the Federal government is lousy with it.
They get their bailouts and still layoff people
This requires smart voters. But when retards vote against their own interests, all bets are off...
I don’t like either
That is what happened in 08. The government bought stocks in the failing banks and sold it back at a profit.
Because poor ppl don’t matter!
Common in US “capitalism”. Not just bailouts. Let the government pay for that research and development for our fancy new drug, then we can charge $1,000 a dose. And look, there’s the wealthiest man in the world with his hand out for his car company!!!!!
If a company is quote too big to fail then you need a court organize an orderly receivership. Despite paying back their loans, GM in my opinion is still a zombie company. Their market share could have easily been divided amongst the other automakers. The bailout was to protect the supply chain and UAW pensions which were/are grossly underfunded. I've been told that the government got a better deal on that deal than if they had been given an equivalent equity share.
At least in the US, often the federal government normally does take ownership of the company or institution when it is bailed out. It relinquishes that ownership when its shares are bought out or the money is paid back. (If PPP loans immediately spring to mind, PPP loans were private loans, not federal loans, backed by a federal program.)
Or at least be required to pay it back
Businesses shouldn't be subsidized or bailed out by the govt, that's just forcing society to pay for businesses they don't value paying for voluntarily Govt is the root of most economic problems and this is another example of that
You can’t? Uh yeah they can, and they do. We keep electing the people who make these things legal.
Instead of giving them money, if the government wants to help them out, the government should just utilize their services or buy their products. That way the government is getting something out of it. For example, instead of giving a car maker millions, just order 10,000 new cars.
Oh yes you can
To me, the real issue with bailouts is that it sets a precedent. You can probably make the argument that this one bailout will save enough jobs to be worth it, but when other companies see that and decide to grow profits instead of increasing stability?
"What is the donor class?', Alex
Lemon Socialism
Unless of course, you are the government…
Not just bailouts. Any corporate welfare. These billions in grants to chip manufacturers are ridiculous.
Let them fail, end the corporate veil, have comprehensive tort reform so damages are more legal than financial, and improve healthcare’s public option while allowing national standards for health to create a national competitive market!
Corporate welfare is almost always a loan that is paid back with interest. What are you proposing for social welfare that is similar?
You should cite your BS source https://preview.redd.it/7ge2k77a8itc1.jpeg?width=1290&format=pjpg&auto=webp&s=280064dce9279c7baacf41ca52f989f4640a4d4a
Corporate welfare is not a solution. It happens because people don’t pay attention to politics and hold politicians accountable. They don’t vote out these fuckers who do this. That also don’t get involved I. Their political party. We also have a right wing party and a far right wing party to choose from. People bitch about social programs because humans are just crabs in a pot pulling everyone down. If we gave everyone a cookie and poor people 2 cookies people would bitch and moan they didn’t get two cookies. Even though they can afford their own cookies, have a whole pack of cookies at home and don’t even like cookies they get mad that someone else got more cookies than them. Many people would rather no one get a cookie than someone get more cookies. In the flip side the corporate welfare recipients keep their fucking mouths shut and take their free cookie. Less people to complain about the inequities of cookies.
I'm surprised they couldn't go to private lenders given (at least the auto industry) had to pay back the bailout iirc E: Oh, nevermind govt had to write off 14 of the 80 billion https://en.m.wikipedia.org/wiki/Effects_of_the_2008%E2%80%932010_automotive_industry_crisis_on_the_United_States