Why Corporations Get Bailouts but Not Consumers: A Legacy of American Capitalism

The unfolding economic crisis has raised critical questions about the distribution of resources and the fairness of economic policies. While businesses and corporations receive substantial bailouts, consumers are struggling to maintain their livelihoods. This article discusses the implications of such a system and its adherence to the principles of American capitalism.

The Role of Economic Stimulus

Stimulating the economy is an essential goal, especially during times of crisis. However, Jorgen Harmses argues that it should not be the sole objective of government policies. Instead, the focus should be on ensuring that people have access to healthcare, food, and other essentials.

Businesses and their landlords, creditors should figure out how to sustain operations without relying on ongoing bailouts beyond the government's initial aid to everyone. This aid aims to cover essential goods and services that the government wants to distribute, enabling people to maintain their standard of living.

American Economic Policy as Capitalism and Socialism

There is a stark contrast between the treatment of businesses and consumers under the current economic system. Americans are often reminded that the system is capitalism for citizens, but socialism for corporations—a narrative that has become embedded in the national psyche.

Corporations and businesses receive bailouts to keep their operations running and to ensure employment. This includes salary payments to workers, which in turn helps consumers maintain their purchasing power. Additionally, there are substantial unemployment benefits and an extra $600 per week for the unemployed, providing a significant financial cushion for many.

However, the benefit distribution does not stop there. Tax breaks for companies, extensions for tax filing, and other financial relief measures further underscore the leniency granted to corporations. Despite these benefits, the systemic focus seems to be more on keeping businesses profitable rather than on ensuring that regular citizens can access the basic necessities of life.

The Concerns: Money at the Top vs. Economic Stability

The argument that money at the top is crucial for preventing inflation is valid. If all that money entered the real economy, it would likely cause significant inflation and lead to greater hardships for the average consumer. Currently, the financial sector's continued profitability ensures that money remains in the system, indirectly supporting large corporations.

However, the concern is that this system may not be sustainable in the long run. As the financial sector continues to receive heavy support, the inherent instability of this model increases. Eventually, the system may collapse, causing severe economic repercussions. Moreover, the long-term support of businesses without ensuring consumer welfare undermines the social contract that should exist between employers and employees.

Workers as Producers, Not Consumers

Labeling workers as consumers is a misnomer and an insult to the essential role they play as producers. Workers are not just passive recipients of goods and services; they are the driving force behind production and economic activity. Their role in creating value is fundamental to the functioning of any economy.

Proper economic policies should focus on providing the support necessary for businesses to thrive while ensuring that workers have the means to consume the goods and services that the economy produces. Simply handing out handouts without a path back to sustainable employment could lead to greater instability and hardship in the long run.

Conclusion

While the current economic system provides substantial support to businesses, it falls short in addressing the needs of the average consumer. This imbalance raises critical questions about the priorities of American capitalism. To achieve a more resilient and equitable economic model, policymakers must find a balance between supporting businesses and ensuring that workers have the means to sustain their standard of living.