Bolstering Bad Business

There should be a separation of business and government. When, like now, that separation doesn’t exist, bad things can and will happen. It is no secret that government run programs often fall victim to the worst in economic practices. We do not have to look far to see many recent examples of government bolstering bad businesses. With that in mind, two interesting articles came across my newsfeed this week and both are related in effect and cause. The two also show a failure in economic practices, and both deserve to be answered with some sort of rational economic thinking.

The first article I read showed that Amtrak, the mass transit rail program created by Congress in 1970, has been running huge deficits every year, supported by taxpayer subsidies. These subsidies have allowed a failing business to continue to operate on bad principles and creates a form of corporate welfare; all paid for out of taxpayers’ pockets. Altogether, taxpayers foot an average $1 Billion dollars annually into this program and it is only getting worse. One thing is for certain, if the business was made to live on its own revenue, like private business, it would either find a way to rid itself of detrimental wasteful lines or it would have gone out of business long ago.

The other was about the United States Postal Service and their quarterly loss of $2 BILLION. I am sure most of us can remember the price of stamps and services when we were younger, and I am sure we all remember almost every single time they were raised. But what makes this different than just rising with the rate of inflation, set and attempted to be managed by the Federal Reserve, is the annual rise in prices and services is met with an increasing deficit and an increasing annual subsidy from the taxpayer’s pocket.

Simple economics suggests that whenever a business receives bailouts or subsidies from government it is at the expense of not only the taxpayers but also at the expense of the market economy. As anyone should be able to see, the use of government subsidies coming from the pockets and paychecks of the American Taxpayer bolsters bad businesses and deepens a negative effect on sound economic principles.