Posted by
Andrews on Tuesday, February 17, 2009 6:46:00 PM
I have been listening to talk about the bailout plans and among the usual shrieks of panic about disappearing jobs and the loss of industry, one other argument strikes me as particularly bizarre, the idea that we "must not let businesses fail".
I wrote before about how the environmental movement was, in essence, declaring war on evolution by seeking to preserve every species, but I did not think they would start applying that principle to the economy as well. Though, in the end, it will be just as beneficial for the economy as for the environment. That is, not at all.
The economy in a vibrant, growing nation is filled with new ventures and, as a result with failed ventures as well. When the economy is thriving not only are there numerous false starts as businessmen try to get new ideas right, but also old businesses in decline eventually closing as newcomers take their place.
As I wrote before, our increases in bankruptcies may not be the negative sign many see, but a sign that the economy is correcting itself after inflationary distortions.
But the idea of preserving businesses from failure goes against this, trying to preserve the status quo, as if 2008 were the optimal year for the US economy. Imagine what would have happened had the government tried this with ice houses? Or buggy makers? Or barbers who healed me through bleeding? All of our advances, all of our growth rests upon the basis of successful businesses thriving and failed businesses closing and freeing resources for new uses. Admittedly, our current crisis is government created, but that doe snot change the principle. Businesses which are not viable need to close or else we are all made more poor.
But just as with environmentalism, so too the doctrine of preserving businesses is not a rational one. Instead it is an article of faith, the simple emotional response that during a crisis we
NEED jobs, and we cannot let any business close. No though is given to the jobs that could be created with the resources now tied up in failed ventures. The single thought is "we must preserve". And so economic thought degrades to the level of environmental rhetoric and emotional appeal.