I have absolutely no clue how this stuff works, so forgive me if the question stands on a false premise.
Seems convoluted. Why not just let the business venture fail?
And if the basic function of the business is so integral to the function of society then it should not be a business, but should be a regulated administrered aspect of government.
If a business functioning is so important it needs to get bailed out, in this case it should be nationalized.
Seems convoluted. Why not just let the business venture fail?
Usually because the business failure could mean thousands of primary job losses, and possible tens of thousands of secondary job losses from other businesses that support the first. Depending on the region, that could have massive ripple effects across the local, regional, and possibly national economy.
We don’t have a strong social safety net in the USA so that would likely lead to large scale poverty, homelessness, and massive increase food insecurity. These things then ripple out to other businesses in the area completely disconnected from the primary failing business causing more job losses as so forth.
The amount of public money to try to support the population and economically revitalize the region is massive when set next to a comparatively small bailout that would maintain the workforce at the primary business and and avoid the other businesses affected secondarily.
In short; its cheaper to pay the bailout so the primary company can pay their bills again than to operate in a pure market economy of boom and bust.
And if the basic function of the business is so integral to the function of society then it should not be a business, but should be a regulated administrered aspect of government.
If a business functioning is so important it needs to get bailed out, in this case it should be nationalized.
This can get messy very quickly:
From a domestic point of view, if the business is one of many providing the product or service, then the government now has a vested interest in driving any public spending to that one nationalized company while the surviving non-nationalized companies attempt to compete.
From an international point of view, if that nationalized company produces products for export, then you get the same problem we have with many companies in trade regulations. For example, the WTO prohibits direct subsidies tied to exports. The USA accuses China of this all the time and is the basis for many import bans in countries around the world.
This sounds reasonable.
I don’t know what bailouts you’re talking about specifically. I’ve not looked into any covid bailouts that may have occurred. What I can answer is how bank bailouts in Sweden during the 2008 crisis worked.
The very short version: A bank can’t pay what it owes. The bank gets an offer from the Government: issue stock and we will buy it for enough money to cover your immediate expenses. Government now owns half the bank, previous shareholders are not happy but owning the other half of the bank is better than owning nothing which is what they would have had otherwise. The government later sells it’s stock to make some of the money back.
The main criticism is that the banks took a risk and made more money, paid higher bonuses than they would have without taking the risk. When the gamble failed the tax payers took the bill. Even after selling the stock for a profit years later the side effects of the financial crisis was overall a big negative for the government.
When the government manages companies that’s called communism and communism is bad, mkay?
Aren’t government employees sometimes placed as overseers in certain types of settlements against corporations?
how they are supposed to work is that the loan is provided to the company under certain conditions and some of those conditions include directions on how the money needs to be spent. Repayment terms provide enough runway to give companies time to recover and pay back the loans.
How they actually work is that these companies lobby Congress and often have very lax oversight. At best, loans received by the government are often risk free and allows a company to spend money they otherwise not have. For example, they might have to pay a CEO their bonus.
The only oversight is the American public and we just don’t have the balls anymore to do what we have done historically to enforce a broken social contract.
Could? Yes. Would? No. Most western governments are basically bought out by corporations to different extents, so convincing them to do stuff like this is difficult at best
The government gave the bailout money so the CEOs could give themselves bonuses. It’s all a corrupt circlejerk.
Spending it “the right way” would be letting the shitty fucked up companies fail and go out of business while saving the taxpayers the expenditure of keeping failed businesses afloat via golden parachutes and tax fraud.
I’d say spending it the right way would be to give the bailout, with the condition that the government now owns the business. All profits go to the government and all management will be done by the government. Let the business keep competing with privately owned businesses, but have the business be owned by the people instead.
I can also accept ownership being distributed equally to all employees.
Co-op?
There is not nearly enough oversight on what large corporations do. Enforcement is selective at best.
Why would the government buying the debt allow them to make sure money is being spent in the right way? Why can’t the government do that already?
I’m not exactly sure what you’re proposing but my guess is it’s not materially different in this regard.
Sure, the government could do all sorts of things to ensure bailouts are effectively applied, including giving them directly to the people who need them. They don’t do that because helping the people isn’t the goal. They just say that’s the goal as a marketing ploy.
Bailouts go to huge corporations because that’s who the government cares about. Stopping rich dudes from keeping as much of our money as possible is diametrically opposed to our nation’s fundamental economic and political philosophy. Of course they don’t make a serious effort to keep it from happening.
Short answer: No.
Long answer: Nnnnnnooooooooooooooo.
Sorry. I don’t understand the answer. My question wasn’t Yes or No. Could you elaborate, please?
Yes. It was:
couldn’t the government buy the debt and make sure the money is spent the right way?
And my answer is- no.
Oh, your right. Sorry.
You can’t just buy debt unless its the debtor side.
