Bail out Americans
Re “U.S. airlines brace for a brutal spring,” Business, March 17
The airline industry’s trade group is calling on the federal government to provide about $58 billion in loans, grants and tax breaks. Other industries are sure to follow; they will say they need the money to preserve jobs, maintain vital infrastructure and stimulate the economy.
These are all myths intended to obscure the fact that bailouts benefit some of the richest people in America.
The first myth is that bailouts preserve jobs. Airlines will continue to cancel flights, idle planes and furlough employees as long as demand for their services continues to fall. Bailout money will go to the bottom line.
The second myth is that bailouts protect infrastructure. Our air transportation infrastructure is endangered neither by the coronavirus nor airline bankruptcy, which wipes out current shareholders and allows a company to be reorganized. As travel demand recovers, the infrastructure will be put back to work. Only the shareholders benefit from a bailout.
The third myth is that bailouts stimulate the economy. Corporate bailouts will be used primarily to preserve the assets of shareholders, not to stimulate consumption spending. To stimulate the economy, bail out people, not corporations. Michael M. Murphy
La Cañada Flintridge The writer is a visiting professor of business and economics at Forman Christian College in Lahore, Pakistan.