Free Market Bailouts: Why do They Happen?

Bailouts have been a staple of free market policy from the beginning of the implementation of neoliberal policies, like the Savings and Loans scandal. Typical free-market fundamentalists will blame the bailouts of 2008 on government intervention. However, this begs the question as to whether or not a government can be more powerful than free flows of capital. Are multi-national corporations, which inherently represent high concentrations of power and capital, really weaker than government? Free flows of capital allowed these corporations to become "too big to fail" in the first place. To read about where you can find more information on how private enterprise knows it cannot survive WITHOUT government subsidy, please click on the 8th footnote on this website: http://www.understandingpower.com/chap3.htm For warnings about the necessity for government intervention in the economy after the war, see for example, Paul A. Samuelson, "Unemployment Ahead: (I.) A Warning to the Washington Expert," New Republic, September 11, 1944, pp. 297-299; Paul A. Samuelson, "Unemployment Ahead: (II.) The Coming Economic Crisis," New Republic, September 18, 1944, pp. 333-335. "Shall we have Airplanes?," Fortune, January 1948, pp. 77f. An excerpt (emphasis in original): [The U.S. aircraft industry] is today producing at a rate that is less than 3 per cent of its wartime peak. . . . [Its spokesmen] speak frequently of "free enterprise," but they speak just as frequently of "long-range planning." It is crystal clear to them that they cannot live without one kind or another of governmental support -- yet "subsidy" is a shocking word to them. . . . Its respected heads . . . freely play the game of nagging and chiding the government, but it then transpires that their reproaches are made because the government has not gone far enough toward stating "clearly and frankly" its "obligation to help develop new and improved air transports and efficient networks of air transportation," as well as fostering new programs for military planes. . . . Every one of these proposals acknowledges the inability of unaided "private" capital to venture any deeper into the technological terra incognita of the aircraft industry. Every one acknowledges that only the credit resources of the U.S.A. are sufficient to keep the aircraft industry going: to enable it to hire its engineers, buy its materials, pay wages to its labor force, compensate its executives -- and pay dividends to its stockholders. The fact seems to remain, then, that the aircraft industry today cannot satisfactorily exist in a pure, competitive, unsubsidized, "free-enterprise" economy. It never has been able to. Its huge customer has always been the United States Government, whether in war or in peace.