Archive for February 4th, 2009

lemon socialism

Posted on 2009 02, 04 by Matt

Paul Krugman, Columnist for the New York Times refers to the times ahead as a crash course in “lemon socialism.” He defines it as, “taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right.” Good news if you are the majority shareholder in giant corporations, but bad news if youre an honest worker.

In a capitalist economy a business must have the ability to fail. If there is no chance in it failing then it has no incentive to offer a higher quality of product or service of their competitor. Look at state governments. What if private firms were allowed to offer valid drivers licenses, do you think these private companies would make you wait inordinate amounts of time to get a license or handle trivial issues? Of course not, for they know if you did you would merely go to one of their competitors. The state does not need to provide a proficient, high quality products and services because they have no competition. These bailouts are leading big business to have similar thoughts.