Home Economics Organizations That Don’t Deserve The Bailouts They Receive

Organizations That Don’t Deserve The Bailouts They Receive

Trista May 13, 2020
Better financial management could have prevented the fallout for hotels.

8. Hotels Were Also Bailed Out

The travel industry was one of the most immediately affected, outside of healthcare, due to the current crisis. Stay-at-home orders meant very few people are traveling, work events are being canceled, and no one is booking hotels.

The result is hotel staff getting furloughed as the industry struggles to survive. Like airlines and cruise lines, hotels took home a massive share of the bailout money. Nevertheless, the question remains: Do they deserve it? Would better financial practices have helped them be prepared for the crisis?

Bailouts seem to be something that companies can rely on during a crisis.

7. Lacking Financial Responsibility

Responsible management of finances means that when there is a period of prosperity, individuals, families, and companies will save some of that money for a rainy day. The rainy day is here now, so if airlines, hotels, and other industries have been experiencing so much prosperity over the past decade, why are they not prepared?

Because they’ve been using their cash influxes to buy back company shares and increase payments to upper-level management. They haven’t been using it to repay loans or build up a reserve fund to carry them through a difficult period.

Did the bailouts help the economy?

6. Bailouts Could Have Been Better Spent?

With the economic stimulus package, small businesses could apply for loans that would also keep them afloat as they weather the current crisis. Individuals who have a social security number and an income below a specific limit also received cash payments. Some economists argue the only good use for the bailout money is for these small businesses and individuals.

Why? For one reason, individuals and small businesses have to practice financial responsibility regularly because they know they cannot rely on bailout money in a crisis. They can’t be using extra money to fund corporate bonuses, and are the ones hurting the most right now from the disaster.

Some argue that more money should have gone to healthcare.

5. Will Bailouts Hurt the Economy?

The question needs to be about the long-term health of the economy, but right now, no one knows what the future holds. The current crisis is so unprecedented that there is no telling what will happen. However, many can agree on the fact there are significant changes underway.

So what will be the long-term impact of the bailout money that Congress gave to billion-dollar companies that have not been financially responsible? The answer depends on the systemic changes that happen as we weather the current crisis.

Bailouts are increasingly common.

4. Poorly Managed Companies May Keep Looking For Bailouts

With a history of the government providing bailout money now well-established, there’s a fair chance that the large companies with poor financial practices may continue looking to the Federal Reserve as their corporate slush fund.

But will the government continue giving bailouts? Many indicators now show that the country’s current economic practices, which provide tax breaks to the wealthy and encourage financial irresponsibility among major companies, are on their way out.

Corporate bailouts undermine the workers that the packages are meant to help.

3. Workers Are The Foundation Of The Economy

Without going in the direction of communism, many people can agree that the foundation of the American economy is the workers who go to their jobs every day, often for low wages, and are now unemployed. Those that are not unemployed are on the front lines of the crisis, like grocery store workers who stock shelves so people can get food for their families.

They are doing so at the risk of their health because they stand a higher chance of contracting it. When a large share of these workers is no longer able to go to their jobs, the entire economy takes a big hit. Now that we recognize the significance of these workers, public policy will hopefully shift in their direction.

Bailouts may do more harm than good.

2. Enriching Large Companies/CEOs Is Bad For The Economy

These essential workers that support the entire economy so families can buy groceries have been working for low wages that haven’t been rising even to keep pace with inflation.

Meanwhile, CEO and upper-level management salaries have been going up. To come out of the crisis with a healthy economy, or one that is at least becoming healthy, we will need to appreciate the jobs that low-wage workers do and enact policies to benefit them and their families.

The entire economy needs a makeover.

1. People Not Having Sick Days Is A Bad Idea

While CEOs of major restaurant chains have been enriching themselves through a decade of low taxes and high profits, workers have been operating in an environment where they don’t even get paid sick leave. What does that mean when a deadly illness takes over the world?

It means that people who prepare your food cannot afford to stay home even if they feel ill, meaning that they stand a higher chance of spreading the disease, and can’t go to the doctor. So really, the current financial practices of the country have been contributing to the present crisis. Therefore, we can’t expect those same financial practices to bring us out of it.