Context of Question
People usually point to the financial crisis of 2007-2008 and how the CEOs got huge bonuses despite the recession. I agree that is not the smartest thing to do from a PR standpoint, but the banks fulfill a very important part of our economic system. If they were to fail, it would cause numerous loans to default and trigger options, which would result in an economic collapse.
Answer

Generally, I disagree with bail outs because it works against benefits of having a free market and free competition. We got to where we are because people who were in  positions of power and influence allowed or made the conditions which caused these calamities,  to remain in power and influence. They might have done so intentionally with honest motives or for private gain,  or unintentionally through incompetence or stupidity. 

There is no opportunity for society to change those who made bad decisions because bailing them out,  usually means sustaining them. As a result,  bad practices and bad ideas continue to propagate because the culprits who keep making them are given little motive to change.

Bailouts,  therefore, hinder free competition because a new lot of individuals who might have better ideas and are more capable of creating or running important businesses and institutions are not given the chance to do so.

I agree with bailing out institutions and businesses that are too big for us to allow to fail IF and only IF, those people responsible are held accountable and responsible for their actions. This I believe was carried out more successfully in Iceland but not in the UK or US.

Do you have a different answer that might help the questioner? How would you answer this question?


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