Jerue-Module 3

Too Big To Fail

The video above is discussing how certain businesses in the United States are “too big to fail” and how the government can justify a bail out or leaving a business in trouble alone.

According the the Utilitarian theory, it is ok for the government to bail out these big companies because it ends up helping the greater good. “the maximization of happiness ultimately determines what is just and unjust”(Shaw,87). Therefore, if the larger companies are bailed out, and the economy is still above water, then the greater good is happy.

The Libertarian theory is quite opposite; “justice consists in permitting each person to live as he or she pleases, free from the interference of others.”(Shaw,90). The video explains that these bail outs could be considered an unnecessary risks. According to this theory the interference would cause more harm than good and should be avoided.

Lastly is Rawls theory, which is described in two principles. First, that everyone has the right to basic liberties and freedom. Second, that if there happen to be some inequalities, that they be ones that bring the most benefit to the greater good. In the video, they describe how the government may weigh the cost of a bail out versus the cost of the company failing. In some instances, if a larger company fails, then there are smaller businesses affected, which then affects the employees of said companies.

2 Comments for “Jerue-Module 3”

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Your summary of how each justice theory would view bailing out banks is spot on, though i wonder if the long term effects of a government bailout would still be considered in line with the utilitarian and Rawlsian theory. The link you provided went to a fairly short video (1 minute 17 seconds), not sure if it was a preview for a longer video, but it summarized nicely how a government decides if it is necessary to bail out a business.

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I like the video you found. It is short and sweet and provides good insight why banks were bailed out. As you mentioned, Libertarians would not support a bailout of banks by the government. Libertarian justice theory focuses on freedom without infringement and government “limited to the narrow functions of protecting its citizens against force, theft, and fraud (p. 90).” It could be argued that many libertarians believe that the banking crisis was a direct result of government interference and a clear indication of a fundamentally flawed system. On top of that, it is most likely only prolonging the issue when banks are faced with the same issue.