Article from For Liberty by Norm Leahy.
Major U.S. airlines got $50 billion in federal aid to sustain operations – and employment – through the end of September. But without additional billions of taxpayer money, airlines are threatening to layoff tens of thousands of employees and dramatically reducing service.
Congress and the White House seem open to the idea of giving airlines an additional $25 billion to avoid the cutbacks and job losses.
They should resist the temptation to keep airlines on the dole. As the Mercatus Center’s Veronique de Rugy writes:
Let’s remind everyone why we shouldn’t bail out airlines. Yes, the coronavirus crisis is both a public-health and an economic tragedy. But this doesn’t justify the government granting special privileges to private firms, at least not without those firms first taking other available steps to potentially avoid the need for a bailout.
Among those steps are securing private capital to support business operations, and if that fails, declaring bankruptcy.
The U.S. government has a checkered history of bailing out companies facing rough economic times. Taxpayers have already put billions of (borrowed) dollars into the major air carriers. Before we do it again, we should demand the carriers seek market solutions for their needs.
And then we should demand government stop trying to pick winners and losers in the business world.
Image Credit: By xlibber (Another Airplane!) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons
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Of course, she is correct, the government should never be put in the position of picking winners and losers. The Bush-era banking scandal is proof of that. But where, as here, the airlines were put into their bad situation by government actions, which basically prohibited them from earning their income in the normal way (in this case, by prohibiting air travel) then an exception should be made.
The airlines were busy buying back stock and raising executive salaries and paying dividends instead of saving fora rainy day. They have all gone bankrupt before and then revived. Why is it different this time. Greedy and improvident management should be jettisoned in bankruptcy. Maybe sued to recover some off the loot they took personally. Find some new crooks to take over and restart.