Do Bailouts Really Help?
Since the outbreak of COVID-19, five of the leading global central banks combined injected trillions of dollars into the economy.
With little to no say over how additional liquidity is allocated, governments are left hoping that credit trickles down to SMEs and citizens.
And the studies show they do not.
Bailing out corporations is bailing out investors. And who pays to bail out investors? It’s taxpayers. basically, it’s the rich passengers asking their Uber drivers to ‘forget the change.”
Supporters of bailouts, including US President Trump, say that they are necessary to keep workers employed and to avoid a larger financial crisis.
Economists disagree, arguing that bailouts are misguided and pose a host of other problem, mostly because the overwhelming bulk of corporate stock is held by people in the top 10% of earnings, who do not see the adverse economic impact of events such as COVID-19 affect their bank balances or threaten their livelihoods.