(Comment: 1/n) More than that, I will argue that the biggest disservice our govt does is not letting unproductive businesses go bust. There r guaranteed returns/prices, trade restrictions & plethora of (bad) regulations making sure that the economy remains more of the same.
(2/n) This then means that we keep using our resources to produce same goods/services rather than allowing them to get reallocated to more productive activities. See an earlier thread for more detailed discussion
(3/n) It is not hard to appreciate why govts are often reluctant to let businesses to go bust even if they are unproductive. Doing so makes people temporarily unemployed and give leeway to opposition to blame the govt for not doing anything about this.
(4/n) But the solution to this should be better social security and investment in skill development programs to help everyone adapt to changing realities around us. The solution should not be keeping unproductive businesses alive.
(n/n) Now wat I hav said above is more relevant to normal times. It is probably not desirable to let businesses go bust in the middle of a recession (e.g. currency crisis). But dont wait for 'normal times' for too long. Or else, there will always be an excuse to delay reforms.
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