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Bailout is defined as an activity in which a firm, corporation or any industry is provided with financial support. This support is meant for saving the corporation from getting bankrupt and prevents it from shutting down. Although it is argued by the classical conservatives that the state should be minimally or least involved in the free market, still is asserted that the government should bail out fiscally stressed corporations. Companies should be prevented by the government because some proportion of the money of the corporation is directly added to the governmental finances in the form of taxes (Yang & L, 2019). Also, it is asserted that state has the responsibility to protect the rights of the public, where corporations are the source of income for employees and failure of company will automatically affect or mitigate the economic resources of the employees (Eichengreen, 2019). Bailing-out companies represent the protective role of government that makes a state capable of addressing future financial disasters. Government is more like a mother to the citizens and the affairs of the citizens. Some bad phases never justify nullifying identity. An example of this action is the role of parents who remain supportive of children despite several errors and traumatic phases (Yang & L, 2019). Although there are some modifications that can be made under the impact of failure still, it is never justified to avoid bailing out. Government should bail out companies because if a company will fail, it means that a social balance would be disrupted in terms of economic paradigms and role shifting which will ultimately lead to destruction (Eichengreen, 2019). Moreover, it is the rule of law that corporations should be supported by the present government in the time of thick and thins (Yang & L, 2019). In a nutshell, government should bail out corporations that are fiscally stressed because it would lead to a careful role of the government, restoring employment rate, economy and maintaining a positive role of industries
Eichengreen, B., & Von Hagen, J. (2019). Fiscal policy and monetary union: federalism, fiscal restrictions and the no-bailout rule (No. 1554-2016-132531).
Yang, L. (2019). The impact of state intervention and bankruptcy authorization laws on local government deficits. Economics of Governance, 1-24.
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