Government Bailouts of Private Businesses

[Fu_Bag]

If any private business, large or small, regularly practiced a proven failing, or failed, business methodology, should taxpayers have to pay the price for the bad decisions of private business leaders?

Is this ever a healthy thing to do or does it stagnate a market by allowing a failed business to remain?

My personal take is that I'm not interested in funding a continued business relationship between said business and the politicians they support. I think that it's harmful to a dynamic, healthy market where the best business model wins.

Thoughts and opinions?

Fu Bag

 

[deadhand31]

Sounds alot like many airlines......
They tend to run their businesses at a loss because they know Uncle Sam will bail them out. The workers get screwed while CEOs get their huge salaries. What should be done is to let these businesses fail. They will have capital for sale. For example, the airlines:They'll have planes. Someone else will buy them. These other airlines will need to get workers to maintain them. They'll also need pilots to fly them. They'll need administration to run this. I say, if a business doesn't make money, let it go under. Someone else will fill the gap. I do not think it's the responsibility of the government to fix people's mistakes.

 

[Fu_Bag]

Sounds alot like many airlines......
They tend to run their businesses at a loss because they know Uncle Sam will bail them out. The workers get screwed while CEOs get their huge salaries. What should be done is to let these businesses fail. They will have capital for sale. For example, the airlines:They'll have planes. Someone else will buy them. These other airlines will need to get workers to maintain them. They'll also need pilots to fly them. They'll need administration to run this. I say, if a business doesn't make money, let it go under. Someone else will fill the gap. I do not think it's the responsibility of the government to fix people's mistakes.

That's exactly what I'm talking about. I'd love to see an Airtran/Frontier alliance buyout Delta. I'd love to see what Southwest could do if it boughtout a major airline. I'm still waiting for my free first class tickets to anywhere I choose to arrive as thanks for my tax dollars funding their failing business practices. I probably shouldn't hold my breath, huh?

 

[michaeledward]

What is the solution when the airlines fail, and the economy follows?

Much of the commerce of the United States takes place on those airlines. Without those airlines, many of the goods and services you and I purchase would not be available. Would we then choose to purchase local goods and services, transferring our economic activity to local suppliers, or would we without that economic activity ... putting less energy into the economy.

What of the other activities the derive from shared values?

AmTrak is a common example. For decades, politicians have been attempting to kill this common rail program. Of course, rail uses less carbon per passenger than an automobile. With passengers travelling rail, they are not travelling on road, which reduces traffic congestion. Travelling via rail, allows a passenger to contribute to their economic endeavor in a way that piloting an automobile does not.

What of the strictly scientific endeavours, from which we derive uncertain benefit?

The National Aeronautic and Space Administration has contributed very little direct benefit to the United States economy. The prime and subcontractors of NASA however, rely on its annual budget to employ thousands of high tech laborers. The United States space program, and other strictly scientific programs, provide direct 'bailouts' to businesses that offer no other commercially viable products. Should they be on the chopping block too?

 

[Rich Parsons]

If any private business, large or small, regularly practiced a proven failing, or failed, business methodology, should taxpayers have to pay the price for the bad decisions of private business leaders?

Is this ever a healthy thing to do or does it stagnate a market by allowing a failed business to remain?

My personal take is that I'm not interested in funding a continued business relationship between said business and the politicians they support. I think that it's harmful to a dynamic, healthy market where the best business model wins.

Thoughts and opinions?

Fu Bag

When something like 1 in 7 to 1 in 9 jobs is directly or Tier One suppliers indirectly related to an industry, the Government has a vested interest to help out this area as they did with Chrysler in the early 80's.

Now that the economy is not so directly connected and related to one single industry, the amount of jobs is not the issue to the economy.

Yet, one should as the government has looked at the failure of certain companies and the relationship to transportation is another issue where the government might see an issue of if they allowed them to make money by setting a price as a monopoly this would not be good, so what would happen if only one or two survived and then they raised their rates later to what many need to do business but the average person cannot travel for personal vacations or emergencies or family issues. The effect to the local economies for tourism and such could also lead some to want to protect travel.

Is it right? From the aspect of helping our neighbors yes. In the aspect of Capitalism and market pricing and survival of the fittest, it does not fit. Yet, this is why most companies have been heading towards other countries to compete with overhead costs. And yes, wages and benefits are considered overhead as they are fixed structural costs.

So I guess it depends upon what your point of view on certain subjects are and what you personally want to see happen on if it is a good idea or not.

 

[deadhand31]

What is the solution when the airlines fail, and the economy follows?

The problem with that is that they all don't fail at the same time. Let's say Delta fails. Ok, now AirTran and Southwest can now swoop in to new hangars, new routes, and even purchase the planes that were used in those routes. They can now use their own successful business administration to turn those routes into financial successes instead of financial burdens.

Right now, Delta doesn't have to change. They continue running their businesses at a loss, knowing that they will get money from government bailouts. Look at them like a broke spendthrift: You give him money, but he wastes it. He then wants more money, so you give it to him, only to be wasted again. He's not going to have incentive to make changes until the day he is cut off.

 

[michaeledward]

Right now, Delta doesn't have to change. They continue running their businesses at a loss, knowing that they will get money from government bailouts.

That is the second time you have made that ascertion. Please present some evidence.

The company is not a private company, it is a publicly held company, that must answer to its shareholders. Show me where in the Year End report, stock filings, or Board of Director information that the business plan includes 'operating at a loss'.

http://investor.delta.com/edgar.cfm

And the current 'BailOut' plan is that US Airways is bidding to acquire the company, not the Federal Government.

 

[Fu_Bag]

Thanks for the responses, all.

OK. Different angle. If Delta receives taxpayer subsidies, and this allows them to show themselves as being profitable, are they truly profitable, or are they operating at a loss? My point is that if there is another airline, or group of airlines, that can run the routes better, manage the airline better, and continue to offer affordable fares to all travellers, is it better to subsidize the giant, or not subsidize the giant and allow other airlines shots to do a better job?

Would anyone support having such an issue included in the next ballot? I think it'd be interesting to see what voters think about the issue.

 

[Elayna]

If we are talking specificaly about the airlines then I say that if we are having to use our tax dollar to bail these airlines out while ALSO paying a very high price to fly on them why not just make it a publically run transit. Such as the subway, buses and so on.
I mean I dont think it is right that not only are we having to pay taxes to keep airlines up but we also have to pay AGAIN to fly on them. What is up with that? When do we stop paying twice over for a mediocore service? I mean come on!!!
We dont pay twice for a shirt do we? Yea we have sales tax but that doesnt just go back to the "Gap" because they dont make enough money. That goes to schools, hospitals, charity and so on.
Doesnt it seem a little outrageous?

I mean if i had a business that went under and got government help over and over and over, I dont think the community would be happy, especially if I charged them an arm and a leg for a bagel.
And if someone cant run a company, then move aside and let someone else fill the demand more effeciently. There is a demand for flight. But there isnt a demand for bad business practices. I think not.


Elayna.

 

[TonyMac]

Bad idea. Carter bailed out Crysler who then paid back the loan by selling the army pickup trucks and tanks. We paid for them twice. Now mercedes owns crysler.