[Black Wolf]

Why do you assume that all AIG employees would sit on their @$$es and do nothing for many months until another company takes AIG's place and rehires them?
It's not like they're incapable of working anywhere else. 
Hell, many would probably leave the insurance industry for good and be happy about it.

But what are they going to do? The jobs market is already weak - you dump tens of thousands more people onto that all trained in the same industry and the vast majority of them just aren't going to find another job

Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd ...

... go to someone else to buy insurance, and be back in business the next day. Hell, they'd start hiring AIG's former contracters/subcontractors the next week (month maybe) too.

It's the timeframe I have a problem with. AIG is an enormous company - the largest commercial and industrial insurer in america, according to wikipedia. It goes under, and you're looking at thousands of companies all trying to get new insurance elsewhere all at the same time. Companies don't move quickly enough to deal witht hat in any kind of reasonable timeframe. And even if AIG simply fractured up and was onsold to other companies, you're still looking at a timeline in months before people get rehired by those other companies to deal with the new accounts. Business moves slowly when big changes are involved, and that slow pace would hurt a lot of people.

----------------------------------

Here's the proper version:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. The bartender says one day that he's going bankrupt and needs the 10 men to give him money, $50 each, so he can keep his business afloat. That is a bailout.

Let's say the people say 'No!'. The bar bankrupts and goes out of business, and the 10 men, along with all other customers go to different bars the next day. Within a week other local bars hire more employees to keep up with the greater amount of customers. That is free market.

A bar? A bar that probably has, what, 200 regular customers, and twenty odd employees? Most of whom are probably part time or casual? A bar that doesn't deal with any transactions more complex than simple sales and a few contracts with breweries, liquor suppliers etc.? Yes, in that example, you're right, the free market will deal with the bar and life for most people will go on as before. That's why governments don't bail out bars, or any small businesses for that matter except farms. But that doesn't scale up, not with numbers and definitely not with the complexity of the businesses involved.

[karajorma]

You missed my point. You've complained in the past about how high taxes drive businesses away yet you don't seem to understand that big businesses going bust does much the same thing.

[BengalTiger]

I get the point about big companies failing in an economic crisis causing more problems, as shown days ago in my previous posts. I don't agree with ideas such as people losing one job and being incapable of working elsewhere (even if for less cash), and in case you've missed it, I posted this thingy here:

http://conservativecolloquium.wordpress.com/2008/03/21/a-beer-story-tax-cuts-for-the-wealthy/

which describes how tax breaks work in the US, using a bar and 10 people as an example. I simply used the same metaphore to write about insurance companies, bailouts and the free market. Since it's a metaphore, it gives the general idea (mechanism), but not the details.

You missed my point. You've complained in the past about how high taxes drive businesses away yet you don't seem to understand that big businesses going bust does much the same thing.

http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States#Largest_Bankruptcy

There were huge bankruptcies in US history, and while they did cause problems, none actually drove big businesses out of the US.

[karajorma]

If AIG goes out of business do you really expect that only American companies are going to pick up the business they currently have?

[BengalTiger]

If AIG goes out of business do you really expect that only American companies are going to pick up the business they currently have?

No, I expect more companies to take it's place, which will be good for the customers in the long run (just like when foreign car makers appeared on the US market). BTW- where'd you figure out I'd be thinking that?

[karajorma]

Because you still haven't correlated corporations leaving America due to tax being a bad thing with corporations going bust and being replaced by companies not from America.

Let me put it more simply then. If companies leaving America for tax reasons = bad. Then how does companies not from America taking large portions of your business != bad?

[Topgun]

um, because they are otherwise good companies? you know, they sell stuff.

[karajorma]

What's that got to do with anything?

If you don't know what I'm on about take a look at this thread. Bengal Tiger repeatedly claimed that large corporations moving out of America (And therefore not paying tax in America) was a bad thing. I fail to see how he can claim that large companies going bust and being partially replaced by companies not based in America isn't the same thing by a different route.

I want him to explain which of his two arguments was wrong or how he can reconcile the two.

[Topgun]

oh, okay.