Do they even work
The government bailouts of this that and everything in between. Last week we learned that President Obama is open to newspaper bailouts, and now some are talking about a $4billion bailout of the US Postal Service. My question is simple, do bailouts work as a way to put the bailed out organization in a competitive and profitable position for the long term?
Seems like a silly question I know. We have been providing money to Amtrak, the USPS, and many others since their inception. However, if they don’t work why do we keep throwing good money after bad? I personally don’t agree with the argument that we even need an Amtrak or USPS, but I can see why others do.
But taking this to the next level, bailouts of GM, Chrysler, newspapers, and banks? Really, how is that working out for us? GM and Chrysler continue to slide away into the dustbin of history. The banks are “stabilized” but for how long? Newspapers? They haven’t reported actual news in quite some time and as a result have seen subscriber and ad dollars plummet.
Yes, I know Craigslist has eaten their lunch in the lucrative classifieds market, but so what. That happens all the time.
But, back to the USPS. Are they even needed anymore? Shouldn’t we be asking THAT question? If they aren’t, then why do we continue to throw good money after bad?
I once saw an illustrative post comparing S. Korea and Japan on precisely this point.
In the short term, well done bailouts are quite good for the economy. There can be quite a bit of pain associated with large segments of the population becoming unemployed all at once (think > 20%).
If bailout money keeps flowing in the longterm, it is very dangerous. The wealth which would normally go to growth instead ends up propping up ailing, dis-functional industries.
The problem, in a democratic society, is that companies who are politically strong enough to get bailouts in the first place are generally strong enough to get a continuous stream of them.
Johnny Abacus
24 Sep 09 at 10:31 am
The USPS is a failing, awfully-managed, and slow company. UPS and FedEx are widely recognized as the best shipping companies for businesses; you’ll rarely see a corporation go with USPS. And they’re not run by the government. Coincidence? I think not. The government doesn’t want to admit that most of it’s programs are horrendous failures, even if dismantling them would save billions of dollars annually.
On a minor note, I worked in a auto parts warehouse as a shipping clerk for several years, and most broken-part replacement orders we got were for GM vehicles
FORD FOR THE WIN!
http://sayanythingblog.com/mobile/entry/shocker_ford_which_didnt_take_a_bailout_is_eating_into_gm_and_chryslers_mar/
Scott J.
24 Sep 09 at 2:54 pm