The folks at reason do us a service, albeit a sobering and disturbing one, by tallying up all of the bailout promises as of Friday. The total to date:
Rough total: $2,063,800,000,000
That’s a little over $6,800 for every man, woman, and child, or just under $15,000 for each of America’s 140 million taxpayers.
Yes, you read that correctly: over two.trillion.dollars.
This total does not include possible bailouts of the U.S. auto industry, which is the precise opposite of what should happen. This is one industry saddled with uneconomic and uncompetitive cost constraints, and bankruptcy has become the legal mechanism by which firms and unions renegotiate the terms of those contracts. Furthermore, these bailouts reinforce the myth that bankruptcy destroys the productive capacity of the assets owned by the bankrupt firm. This is patently false; bankruptcy is a mechanism for the redeployment of assets in a more productive form that the previous one.
Bailouts perpetuate the inefficiency by preventing these adaptations from occurring.