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IPFS News Link • Free Market

Why Not Let Banks Fail?

• by Jacob Hornberger

The policy would consist of shoveling large amounts of subsidies into the business in order to help it remain in business. If, however, the business failed anyway, the federal government would pay a large sum of money to the owners of the business as well as to the business's employees to enable them to transition to other lines of work.

Now, for a true-blue socialist, this would sound like a tremendously fine idea.

It would conjure up images of Medicare for All, the socialist healthcare system by which the federal government would provide or guarantee healthcare services for everyone — for "free."

In actuality, however, it would be an enormously bad idea, which I think everyone, except true-blue socialists, would instinctively realize. 

After all, where would the federal government get all that money to cover all the businesses that fail on a regular basis. Yep. Taxation! The feds would have to be taxing the American people — big time — to keep up with providing subsidies to all those failing businesses. It would't be long before Americans found themselves paying income taxes totaling maybe 90 percent or more of their incomes to provide all the money to fund this giant socialist scheme.

Moreover, all that free money would encourage all sorts of inefficient businesses. Everybody would be opening up businesses knowing that if they failed, the government would be there to bail them out. Obviously, that would only exacerbate the taxation problem.