Bailouts harm free markets

Manish Sabharwal is right on the ball in today’s Mint: “By demanding fiscal relief, do managers realize or care about the damage they do to the legitimacy of markets when voters and politicians see private profits and socialized losses?…

Big bailouts not only undermine the credibility of markets but few things corrode business efficiency more than the realization that it is more profitable to win the favour of politicians than the favour of customers.

Herbert Spencer the British philosopher said the ultimate result of shielding man from the effects of his folly is to people the world with fools. Bailouts such as GM are on the wrong side of history; the UK government spent $16 billion on British Leyland before they gave up.”