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Bailouts as Privilege


Note another thing that the bailouts represent: special privilege to particular market players to protect them from failure. This isolates these firms from the market forces, such that they remain afloat whether they do good or bad at satisfying consumer wants. Resources cannot be reallocated from what have been revealed as useless projects to more urgent ones, again, as determined by the consumers. The government is channeling the money into uneconomic uses.

This privilege, since protection cannot be extended to every single firm without resulting in a particularly absurd form of socialism and in complete calculational chaos, is the definition of injustice. It’s destructive of the impersonal order that is the free market. On the market it is never about “who you know”; it is almost always about how much money you have in buying and the quality and price of your product in selling. Thus, the market does not respect persons or firms. Good will is hard to obtain and easy to lose. Under hampered market, on the other hand, there arises a class of mafia-like “connected” companies with privileges bestowed on them by the coercive power of the state. They are personal friends of the political elite. They are exempt from the discipline of the market which beats and decimates its every member who fails to please the consumers. This favoritism, I want argue, is unjust. Government cannot pick winners in the marketplace — only consumers can; but losers surely pick the government as their refuge from the rigors of free enterprise.

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