Friday, October 3, 2008

Creative Destruction!

http://www.breakingviews.com/2008/10/02/tarp's%20economic%20implications.aspx
Bailing out these companies seems to be a mistake on some levels. This article pointed me to a new theory I hadn't heard of called "creative destruction". Giving money to the corporations that have failed themselves, the United States of America and to some extent, the world. Rewarding these companies with the proverbial "get out of jail free card" seems to send the message that it's OK. People make mistakes, that is true, but shouldn't they learn from these mistakes? If the governments' dog pees in the kitchen; do we get some average person to buy the paper towels, clean it up, then get the dog some very expensive bottled water? No, you punish and train the dog, in the hopes it does not happen again.

With this bailout the government has shutdown many openings in the market to allow new people, with new ideas a chance to start new business's and to not allow this giant mess to keep continuing. Creative destruction states that "again out of destruction a new spirit of creativity arises". All I think we should ask is that we allow a new spirit of creativity to arise. Inject money into the market, but look to the lessons to Hoover and the 'Veterans Bonus'. Don't inject the big corporations, inject the people who will boost the market by spending with some of this money.
This plan is dangerous because it diverts the funds from its' most productive uses. The investments failed. Let other people have a chance to see investments that will not.

No comments: