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<< But shortly after, when all inefficient companies bankrupt, Eh. It sounds great in theory, but in practice ( including in US, where all the more recent cris
by A4ET8a8uTh0 4y ago
<< But shortly after, when all inefficient companies bankrupt,
Eh. It sounds great in theory, but in practice ( including in US, where all the more recent crises shown ) inefficient companies get saved if they are sufficiently connected or 'important' enough to the system writ large.
I am not defending the practice, but I want to point to obvious flaw in the analysis since it diverges from reality somewhat ( I just noticed the inclusion of government involvement ).
- CSMastermind 4y agoThe government bails out comparatively few businesses. While many, myself included, dislike the practice, I don't think it happens on a large enough scale to make a significant impact on the economy at large.
- endtime 4y agoI don't really feel like I know much about this, so someone may point out an obvious way in which I'm wrong, but: How do you measure the effects of the moral hazard created by the post-housing crisis bailouts circa 2008? Are major financial institutions incentivized to take outsized risks if they're too big to fail? How can we be sure that doesn't "make a significant impact on the economy at large"?
- mistrial9 4y agothe War economies are related to this phenomenon of massive, inefficient companies getting new contracts and new cash; similar to Old World central contract awards connected to long-term govt cash flows, I believe..