politics, bailouts, competition 

"Some government contractors took out loans from the Paycheck Protection Program even as they were paid for government work during the pandemic"
wsj.com/articles/some-companie

The same thing happened during the housing crisis bailouts of 2009: perfectly healthy businesses, who had plenty of cash on-hand and were operating profitably, took bailout loans.

The same public anger erupted then. But then, as now, they missed something important.

politics, bailouts, competition 

It's a bit romantic, but in a healthy market (and not all are), competition is thriving and businesses fight to survive. Make a wrong move and your competition eats your lunch.

If you're smart, invest (in talented people, ideas) wisely, work hard -- and get lucky -- you're rewarded at the expense of your rivals. You eat their lunch.

This is how it's supposed to work!

But, bailouts change that.

politics, bailouts, competition 

Now, those uncompetitive rivals who were over-leveraged or financially unprepared for even a minor loss of revenue were being given loans under very favorable terms.

From the perspective of a healthy, successful business, this is an unfair subsidy that not only hurts their competitiveness, it distorts the entire market in favor of the uncompetitive rivals. In other words, it's also hurting consumers.

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politics, bailouts, competition 

The only logical recourse for these businesses in this scenario, as distasteful as it is, is to seek the same advantages given to their rivals.

This is obviously not ideal, but this is what these businesses will effectively be forced to do every time. We shouldn't be surprised by it.

And from a pure free market perspective, it's hard to argue they don't have just as much of a right to it as their rivals do. Especially at the current scale of stimulus measures.

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