Sunday, July 31, 2011

Doing good can pay

Allan Sloan, a columnist for Fortune has concluded, “The U.S. Government’s often maligned $14 trillion intervention not only staved off global collapse – but is making money.” (“Surprise! The Big Bad Bailout is Paying Off,” Fortune, July 25, 2011, pp. 65-70)

The chart (below) summarizes his analysis. For full details, follow the link to his column or do the old-fashioned thing and read it in the magazine.

(“Surprise! The Big Bad Bailout is Paying Off,” Fortune, July 25, 2011, p. 67)

Properly regulated private enterprise generally produces better economic performance than do government owned businesses. However, the U.S. Treasury intervening to keep large financial firms from failing prevented another Depression of the magnitude, or perhaps even greater, of the 1930s Depression. The government seemed to decide arbitrarily which homeowners drowning in mortgage debt to help. The longevity of the automakers’ profitability remains in doubt. Yet taxpayers have made money and kept the economy afloat by doing the right thing.

It’s too bad that Congress and the Executive branch so often find it difficult if not impossible to repeat that performance!
For previous Ethical Musings posts on the bailout, cf. Musings about U.S. economic problems, Individual responsibility - part 3, and Stock market plunge.

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