Solar Power
Helping People off the Fence

Going Bankrupt and Capitalism

Many people are urgently watching the news, trying to find out if Congress will bail out the “big three” car makers. I’m interested, but my main question is How does Congress justify paying billions to businesses without worrying about getting anything back?! Why is it important to bailout large companies when chances are you will just have to bail them out again in another few years.

One commonly used phrase that I disagree with is that this is bailing out the “auto industry”. What this would do is bailout the big auto companies that everyone knows is going down the tubes. What this wouldn’t do is bailout the auto industry. The way of capitalism is that when a business loses, it disappears and smaller buisnesses fight to take their place. In the end, one or two win, the rest fade into obscurity, and we all move on for better or for worse.

Now three major businesses going bankrupt won’t be great for everyone. Unemployment will spike, car prices may rise, and people will panic and run away from the stock market. But on the other side, any businesses that attempt to take the place of the previous business will have to compete for every customer. The competition could very easily cause a surge in vehicle technology, lower prices, and help nurse the stockmarket back to good health.

One of the most important part of capitalism is letting old businesses fade away and new ones appear. Bankruptcy is a more explosive way for businesses to fade out.

But then what do I know.

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