tag:blogger.com,1999:blog-10424035.post6452765286941754166..comments2023-09-11T08:58:24.710-06:00Comments on Reach Upward: HubrisScott Hinrichshttp://www.blogger.com/profile/11831447472339880148noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-10424035.post-20914986035441977412008-12-04T17:11:00.000-07:002008-12-04T17:11:00.000-07:00The whole idea of a bailout is that government mus...The whole idea of a bailout is that government must take action to pump taxpayer money into something that taxpayers left to their own devices are unwilling to spend their own money on.<BR/><BR/>The unwillingness of people to invest in something is a market signal that its behavior has been sufficiently poor to destroy confidence that it is a worthy investment. The only options are to work to develop good behavior (which may require new management, selling off pieces, etc.) or to cease functioning.<BR/><BR/>Or rather, these would be the only options if it were not possible to lobby government to use taxpayer funds to allow the continuance of bad behavior (or at least functioning without sufficiently good behavior).<BR/><BR/>Exactly why is it that it is OK for government to force taxpayers to invest in something that they judge to be an unworthy investment on its own?<BR/><BR/>Government should be strong enough to fulfill its necessary roles, but it should be restrained enough to refrain from (however well intended) subsidizing or developing ownership in private business.<BR/><BR/>While your classmate's thoughts sound good on the surface, we do not in fact have many real examples where government putting money into private business has created a better situation than otherwise would have been achieved without government intervention. And don't use the line that FDR did so with the WPA, CCC, etc. Economist Eric Rauchway successfully blew away that myth in his book <A HREF="http://www.amazon.ca/Great-Depression-New-Deal-Introduction/dp/0195326342/invisiblehear-20" REL="nofollow">The Great Depression and the New Deal</A>.Scott Hinrichshttps://www.blogger.com/profile/11831447472339880148noreply@blogger.comtag:blogger.com,1999:blog-10424035.post-54258285022092842832008-12-04T07:38:00.000-07:002008-12-04T07:38:00.000-07:00One of the great things about being in an MBA prog...One of the great things about being in an MBA program is that I have a chance to eavesdrop on a whole bunch of intelligent conversations.<BR/><BR/>Just yesterday some students were discussing some of the problems with the recent bailouts. One made a rather interesting point: a successful bailout is one that creates value in the economy by increasing productive output. In contrast, much of the recent bailouts have simply been substitutes for paper losses, a solution that does increase the supply of money (and, perhaps, reduces some risk) but fails to increase work effort or productive output. Thoughts?<BR/><BR/>I've enjoyed your mini-tutorials on economics. Keep it up.Tomhttps://www.blogger.com/profile/04486513311176687085noreply@blogger.com