In reality, 2 + 2 ≠ 5, even for really large values of 2.
When we bail out a person, or a business, or an industry, we are teaching them (and everyone else) that:
- the activities in which they engaged were not bad for failing to produce enough value to society for the members of society to voluntarily pay to support them.
- the activities were actually valuable for society because society was willing to collect involuntary payments from its members to support that activity.
So it should be obvious, given what we've been teaching our citizens and their businesses lately, that they are having trouble competing in the global market.
Any market regulated by a government which engages in bailouts of either persons or businesses is not a free market, and such an economy can not accurately be called free market capitalism. It may be more properly called crony capitalism and is identical in mechanism (though perhaps different in degree) to socialism, fascism, and communism.
This is not to say that, as a society we need to help our fellow man, but that help must be voluntarily given or the recipient is stained by the receipt of stolen goods. There must also be a cost for the assistance paid by the recipient, or the moral hazard will encourage both:
- a forever increasing drain of wealth from those who produce and make prudent life decisions.
- a continuous evolution of society from one that produces wealth to one that only consumes it.