What's the economic justification for capitalism to "bail out" companies but not people?
Call it "bailout" or temporary socialism, excuse me I mean nationalization, all that boohaha about the government staying clear out of the works of the market is after all only boohaha when push comes to shove. I can't stop wondering how the US government is OK with scrambling to bail out AIG, and not the over 48 million of its uninsured citizens! Forget humanity, basic human rights and all that soft stuff. With an estimated 18,000 uninsured people dying in the US, shouldn't this be considered an economic crisis?
Wikipedia defines a bailout as...
Bailout in economics and finance is a term used to describe a situation where a bankrupt or nearly bankrupt entity, such as a corporation or a bank, is given a fresh injection of liquidity, in order to meet its short term obligations. Often bailouts are by governments, or by consortia of investors who demand control over the entity as the price for injecting funds.
Understandably, the Bush people are concerned about the ripple effect that AIG's failure will have on national and global economies. It may not be the same magnitude, but surely 49 million people have poor health and 18,000 of them dying every year must have a huge impact on US economy. A study shows that...
... the lost economic value to the U.S. each year is between $65 billion and $130 billion, not because of the cost of health services, but because of the poorer health outcome of those who are uninsured. Also, the impact on business can be directly correlated to an increase in price of products and threatens the competitiveness in the global marketplace.
My fear is that if policy makers do something about this crisis, it may blow up in their (well, our really) faces just like the financial institutions crisis in the US. How different is this really from Africa losing her work force from preventable diseases?
By the way, how ironic that an insurance company, which is supposed to protect companies from crisis, is the source of the crisis. Where were the regulators when AIG greedily cast its net into areas it has no business with? Well that was capitalism at its ugliest. Hopefully, all who bent out of shape to convince us that leaving the market alone (as if "the market" is this highly intelligent being that knows how to regulate itself to keep the best interest of us) have learnt a thing or two from this crisis. Now all of a sudden they are talking about regulating the market?
Still, I wonder why should my tax money go to bailout AIG? Do I even have a say in this - because I'd rather my tax money go towards the uninsured than AIG - or at the end of the day Bush has the power to veto it and never mind what I want. Some democracy! How about asking Castro of Cuba to give the Bush administration a crush course on central planning 101? Ouch!