Opinion: No More Bailouts

America was built on capitalism. The free market is the driving force behind our prosperity.

In the past couple months, government officials and corporate executives have been working together to use taxpayer money to bail out companies that are "too large to fail." What this amounts to is corporate welfare.

The argument in favor of these bailouts is that we need to keep these corporations afloat to prevent even more economic woes. Well, we gave $700 billion to the banks, and did they create more loans? No, they either sat on it, bought up smaller banks, or rewarded executive management. Now GM and Ford have their hands out.

My thoughts on this are in line with Ron Paul's. If a corporation is going bankrupt due to poor management or poor sales, it needs to fail. It is no longer relevant to our economy.
Instead of keeping people employed to create obsolete products (e.g. GM & Ford manufacturing gas-guzzling SUVs and pickups), put them to work in new companies that will produce hybrids and electrics. Keeping out of date companies afloat only postpones the inevitable.

Propping up bad business models does not make any sense. What is a company's incentive to perform if they can bank on the government helping them out if they screw up?

Furthermore, the Federal Reserve is chief cause of this mess in the first place. Business cycles are not some sort of natural occurrence. They are directed by the Fed which through artificially low interest rates and easy credit encourages businesses to make bad decisions. Then, every few years, the Fed raises interest rates back up, credit dries up, businesses fail, and we get recessions.

What this amounts to is central planning, which is not that different that communism. Communists believe a central authority knows best of how much of each item to produce, be it cars, corn, or coal. Nobody, no matter how intelligent, can know the desires and demands of 300 million American citizens. That is why we have the free market.

Feel free to comment.