Under what conditions would multi-billion-dollar bailouts of private businesses be acceptable? What are the criteria you’d use, if you were Paulson for deciding when it is prudent to use public money to save private business?It is a terrific question with no obvious answer. I am good to need to think about it for a good long time. Here is what my instincts say:
The difficulty is, though, that some companies get "too big to fail" and have to be bailed out. As such what my gut tells me should happen is that, each year the U.S. Federal Trade Commission should hold hearings to determine if, in their view, any companies have become "too big to fail". If so, that company should be broken up into several smaller companies, similar to the Bell system divesture.
It is not an ideal free market solution, but it seems to be a lot more "free market" oriented than using taxpayer money to bail out the biggest corporations in the country.
Again, that is just my gut instinct. I am going to need to think about the problem more seriously.