Essay Example on Gov't Bailout of Troubled Companies: Pros, Cons, & Big Q's

Introduction

The topic is about the government bailing out troubled companies amid the coronavirus pandemic. It is a challenging period for businesses, especially the airlines which have been most hit as most nations' has restricted international travel to control the epidemic. The government faces the big question of whether to nail out companies or not, and many people hold different opinions. Some feel that it is the role of the government to bail out companies when such cases occur as nobody has control over it. Some think that the government should not be held responsible and be forced to bail out these companies which are privately owned.

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The government should not bail out troubled companies. The bailout will not help in preventing any economic collapse and hence not necessary at this point. The government should explore other measures.

Topic Summary

Catherine, in her article titled: "No, airlines do not need a bailout" gives a comparison of the 2008 bailout and the 2020 rescue. The economic circumstances and dynamics then allowed a bailout to provide a solution to the economy and prevent a potential economic collapse (Catherine, 2020). Catherine argues that in 2020, airlines that cannot support themselves financially should be left to collapse rather than using public money to help them. In 2020 according to Catherine, the economy cannot collapse completely just because an airline has collapsed since the economy is not intertwined as it was in 2008 (Catherine, 2020).

Barua in the 2020 article titled Understanding coronanomics has a contrary opinion. The impact of the pandemic on the economy is profound and uncertain, according to Barua. The position that the government has a role to play in helping the companies recover, including the public bailout of troubled companies is analyzed and supported (Barua, 2020). The government needs to support failing industries which include the airline companies discussed, arguing that a bailout is among the effective way of helping troubled companies (Barua, 2020).

Both writers in their articles want the audience to know the impact of the pandemic to companies during this period of coronavirus pandemic. They have given solutions to the troubled business where Catherine does not support a government bailout of distressed companies while Barua supports a rescue among other interventions. Both writers want the audience to understand to understanding the impact of the pandemic on the economy and the problem it poses to companies.

Rhetorical Appeals

Catherine, as the author of the article, uses appeal to credibility by first getting her article published in Washington post that has a nationwide circulation. It gives her a wider audience who can trust her analysis and opinion by the fact that she has published her article Washington post which is known to release researched and well thought out articles (Catherine, 2020). By comparing the year 2020 with 2008, Catherine appeals to logic with an analysis that compares and gives factual information based on different times. She uses emotional appeal by the argument that private companies not be funded using public money. It would emotionally appeal to the American citizens who would feel like it is wasting their money by supporting private entities like airlines. She effectively communicates with her audience on why the government should not bail out troubled private companies (Catherine, 2020).

Counter Argument

Barua, in his article understanding coronanomics, uses the same appeals to communicate the message of why the government should bail out troubled companies. He uses the issue of unemployment if companies close down to appeal to people s emotions since they all want jobs for survival. People are emotionally convinced why the government should bail out troubled companies. He terms the economic impact on the economy as coronanomics to try and make it logical why the government need to help companies survive. He uses financial terms in the paper and in-depth analyses to present himself as a credible economist. He is also is an assistant professor and thus reliable to discuss the economic impact of covid-19.

Barua argues that Coronavirus has affected the whole economy and not only airlines. Hence bailing out the airlines and helping the poor in the society will go a long way in rebuilding the economy. The government stands to lose if it does not bail out troubled companies. The collapse of the companies will result in job losses is not the interest of the government, and the pandemic existence in the globe is unknown (Barua, 2020). According to Barua, the government should thus bailout these companies, including airlines which have heavily been hit (Barua, 2020). However, this argument is not logical. It will not be possible for the government to choose which companies to bailout and which to let collapse.No company in the current economic era that has not been negatively affected by Coronavirus.

The reason why the original argument by Catherine is stronger is that the bailout is not necessary and will not prevent any economic collapse. The airlines just like any other companies, should file for bankruptcy and let the process take charge instead of going for shortcuts using government bailouts. If the company is liquidated, it is possible for new investors to buy out the company and creates a new business model that will make the company profitable without government involvement (Catherine, 2020). Bailing the airlines and other private companies in trouble is not suitable for the economy in the long-term. In 2008 banks were so linked that any fall for one of them would affect the whole economy leading to a recession. It is not the case in 2020, and thus the government should let the economic forces and models take control without financial intervention for troubled companies.

Issue evaluation

The counter-argument by Barua makes the argument that companies should not be bailed out even more reliable. He argues that the economy has been affected by the pandemic, and all companies are likely to suffer. It is also not known for how long the epidemic will continue affecting the economy. It is not possible to choose one airline company for the bailout and leave out other companies; hence all companies should be allowed to work on new business models to overcome the negative economic impact of coronavirus.

Conclusion

The pandemic has negatively impacted the economy, and most companies are in trouble. They are facing hard economic times with reduced revenue streams. Every company has been affected, and the universal impact does not allow a few companies to be bailed out while others are left to find ways of survival. All companies, including airlines, should be bailed out by the government. Companies should be allowed to find economical solutions to their troubles without a government bailout.

References

Catherine, R . (2020, March 19). No, the airlines do not need a bailout. Retrieved April 1st, 2020, from https://www.washingtonpost.com/opinions/no-the-airlines-do-not-need-a-bailout/2020/03/19/18c8c7b0-6a1e-11ea-abef-020f086a3fab_story.html (Links to an external site.)

Barua, S. (2020). Understanding Coronanomics: The economic implications of the coronavirus (COVID-19) pandemic. Retrieved from: https://www.google.com/search?client=firefox-bd&q=Barua%2C+S.+%282020%29.+Understanding+Coronanomics%3A+The+economic+implications+of+the+coronavirus+%28COVID-19%29+pandemic.