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Failing Business Failing 1 Should the Government bail out Failing Businesses? November 23, 2002 Failing Business Failing 2 In the United States evolving technology, businesses and markets have complicated the debate on the extent of government’s involvement in business. The questions range from how much government should be involved in the oversight of current businesses to what should the government do if a business is failing. The debate volleys back and forth: Should government’s bailout failing businesses? The choice of whether government should bailout failing business raises several questions. Who should they bailout, when should they bail them out, what are the benefits from the bailout, what are the effects on the economy? Government has in the past bailed out businesses in time of need. Cities such as New York and nations including Mexico have been brought back from financial brink by government aid. In the 1970’s Lockheed Martin Corporation (Aeronautics Company) was rebuilt with federal assistance. In the 1980’s the government guaranteed repayment of $1.5 billion in commercial loans to bailout Chrysler Corporation and bailed out the savings and loan during their crisis (2002, Houston Chronicle). By aiding these companies our aeronautics systems are still in place, people have the choice of buying a Chrysler, and depositors did not lose money. Although, there are those who normally feel government should not bailout failing businesses, some of them changed their minds after the tragedy on September 11, 2001. After the previously mentioned tragedy, commercial airlines needed a rescue of some fashion in order to continue their business. Washington prefers the term “recovery”, instead of bailout or handout, but the fact remains they are giving money to a failing business. Just like the defenders of the savings and loan bailout, which ensured Failing Business Failing 3 depositors did not lose money; supporters of the commercial airline rescue argue that allowing the huge carriers to fail would harm the economy.
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