No business or other organization is entitled to any special treatment by the government. Our tax dollars don’t need to go to corporate subsidies, nor should businesses be given special tax loopholes.
Some politicians — often those who talk a lot about limited government — have no problem with giving big handouts to big businesses. The cynical view is that these politicians are paying businesses back for big campaign donations. The more charitable view is that these politicians are trying to help these businesses succeed because they think it’s good for both employees and the national economy.
Whatever the intention, it is not the responsibility of any government — and certainly not the federal government — to be playing that kind of an active role in the free market. The best way for the government to support businesses is to give them all stable, predictable rules: the minimum necessary regulations, low taxes, and sound monetary policy. Otherwise, it should stay out of their way.
If a business needs a handout from the government to survive — as General Motors (GM) and Chrysler did during the infamous auto bailouts — then that business is a failure and should be allowed to fail. If it still has value, somebody will buy it at the bankruptcy sale and life will go on. If it doesn’t have value, then the assets will be liquidated (also benefiting other, stronger businesses) and life will still go on. The economy is not — and cannot be — static. Businesses will be born. Businesses will die. Businesses will change. So be it.
This is sometimes unpleasant in the short term, especially for the innocent employees of the businesses that fail. But propping up those businesses with corporate welfare doesn’t help those employees in the long run either. The supposed reason for saving GM and Chrysler was to save jobs…but most of those jobs went away anyway, it just took longer. Meanwhile, billions of tax dollars were burned (and the American people, without their consent, became part owners of two failed car companies).
A market is not free if the government interjects itself unnecessarily into the economy. This is true whether the government interjects itself to help or to hurt a given business. In either case, it is meddling in things it cannot fully understand and that causes countless unintended consequences. Additionally, when it targets these handouts to specific businesses, it violates the principle of equal treatment under the law. The government can’t give General Motors billions of dollars unless it is willing to give every other business billions of dollars too.
Government shouldn’t be in the business of giving handouts…not to individuals, not to groups, and not to businesses.