Thursday 4 December 2008

Full Employment at any cost?

The Yanks over the pond are getting ready to spend Billions more Dollars they don't have on bailing out the auto companies. When will this stop? If companies know they will always be bailed out by the government then there is no incentive to ensure that the books are balanced and more incentive to take more stupid risks. Ask people to do the patriotic thing and buy more cars if they want to save 2 million people's jobs but don't give the industry billions to continue losing money. Businesses (even big ones) come and go. That is the nature of the free market. Noone thinks Britain, for example, would be better off producing the same amount of coal (at a loss i might add) it did in the 1970s.

Ah you might say, what about the bank bailout? Banks are different. They are the foundation of the free market, without credit and investment the free market cannot function. It doesn't function  when all companies know that at the end of the day, no matter how badly they do, the Government will always give them a cash handout to stay afloat. There are times when saving jobs is less important than allowing more jobs to be created long term.

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