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Conversation

One thing me and socialists have in common, I presume, is that government bailouts for corporations seems like a really terrible idea.

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I started reading Principles for Managing Big Debt Crises, and it makes a strong case that despite the moral hazard of supporting failing institutions that made bad calls, it's super important for mitigating financial collapse across the board

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and

I like this analogy

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I'm unconvinced about the tradeoff though, taking away the ability to fail seems like it would change the incentives inside the company in a bad way

7:01 PM · Mar 23, 2020

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Yeah, if an institution couldn't fail in any circumstance it does seem like they'd do riskier things If bailouts are conditional on some sort of greater crisis, does that still seem not worth it?

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I think so? I guess it depends on how much corporations would operate differently if they knew for a fact they would just disintegrate if something really bad happened. I don't know a ton but I assume they'd build more robust backup plans.

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