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Economics

How to End Economic Bailouts

Americans have seen the angusih of giving trillions of dollars to the private sector to keep the industry running. Many were outraged by the tax money that was given to companies like AIG, and was later enlightened the company spent the tax dollars on frivolous things such as CEO bounuses. Nevertheless, the bailouts were necessary for America’s economic fundamentals; without government intervention America would be facing a fiscal disaster that would soon transcend the global economy. Most economist agreed that the private sector bailouts were essential, but is there a way to end economic bailouts and secure a healthy private sector? Yes, there is a better way.

There is no debate that the bailouts that the American federal government fashioned kept the country afloat. So when American citizens cry in outrage, “Where is my bailout?” they are ignorant to the fact that this was a bailout to secure not only private business but the citizens as well. There is a strong connection between the people and the private sector in capitalism – they secure each realms fate economically. The bailout is a perfect example of when the fates of businesses and the consumers are cohesive; the people (or the government) aided the fatal private sector and in result were rewarded some more economic security. The economic fate of everyone is determined by the relationship of people and businesses.

That is how bailouts can end; by changing the business and people relationship to ensure economic security. The reason why the businesses needed a bailout was because they were too big to fail. When a company becomes massive in size and revenue, they become an asset to the economy and the people. The large businesses are care givers to the people – they supply employment, salaries, and benefits. Then when the large businesses begin to fail, the people become the care givers with government bailouts that exceed trillions of dollars. This type of a relationship makes the two realms bitter and unable to regain trust.

The bailouts given to large industries would not be necessary if the companies were not massive to begin with. Keeping businesses smaller would ensure that bailouts that take away the tax payer’s money would cease to exist. Why? Because now that businesses aren’t so large anymore they are not such an asset to the economy anymore. Large businesses have a vast amount of employees; when the large businesses begin to fall the people risk having more unemployment which would result in less money being ejected into the economy, so it’s only logical to keep those businesses floating with bailouts to secure their future. If the economy was only filled with small businesses there would be less detriment on the people because there is only an acute amount of employees. If one small business collapses, the amount of unemployment would not be as high like the large businesses that would go under.

The reason the economy went under was because so much capital was in the hands of a few industries and those industries began to collapse, but if there are more businesses that are smaller the capital is more divided up and would result in less of a chance of economic havoc. Keeping businesses small would be the responsibility of the people (or the government) to do. The relationship of the businesses and the people would change by having a more equal economic say. The government would have to get tough and keep businesses smaller. The government would call forth the breaking up of today’s large businesses such as NBC or Wal-Mart to secure our economic future. The government would have to end tax loopholes that large businesses take advantage of. Lastly, the government would have to get tough on taxing the businesses more to ensure less revenue that would keep the industry from growing. These government sanctions would end the large businesses, and therefore end the economic bailouts.

Conservatives would call this socialism, because it endangers the rights of the free market. They will claim that this is just more government intervention into the businesses that is unnecessary. Well let me ask you this: would you rather spend trillions keeping an economy stable and secure or would rather have growing businesses have to pay a little more taxes to keep the economy secure? I’m not stating that businesses should only be one store on one main street, but it is reasonable to secure the people’s fate by keeping massive businesses more diminutive then they are today. The free market has their rights, but to ensure a secure economy without bailouts some sacrifices would have to be made. The people have rights too, and they should have the right to cease the existence of trillions of dollars in bailouts.

There is a better way to construct our capitalist economy. They basic principle is to keep businesses small; make sure the industries in the private sector do no become an economic asset. Employment will stay the same, because the economy is the same size – the money is just divided up more between the industries. America has already seen the mayhem of the trusts in the gilded age, so now it’s time to continue the legacy of keeping an honest and secure relationship between the people and business to secure our economic future and our tax money as well.

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