State sponsored financial support-a double edged sword

In deciding which companies to provide financial assistance to, retaining a belief in free market economics might need to be put on hold, temporarily, if only for the sake of society and society alone.

If you had asked me last year what my opinion was on state bailouts and government financing, I would have said it is a curse on free market economics and stifling to innovation. Publicly funded companies are ultimately prone to inefficiencies, bloated management, and a form of militant unionisation that benefits no one. If a company is poorly managed and consistently loss making, then it should be allowed to die – let natural selection take its course. So, when Monarch, Thomas Cook and FlyBe all folded I didn't rejoice, not at all, but I felt comfortable in the knowledge that the market which decided their fate would nonetheless take care of their staff in the long term. With change comes opportunity.

Now however, with an entire industry at its knees, I am finding it difficult to still be a firm proponent of free market economics during extraordinary times - and this is certainly one of those times. My reasoning is not one of saving a company or of letting natural selection take its course but the long-term societal impact of large corporations going bankrupt at the same time. Let me be clear, bad businesses should not be rescued by politics. But if the result of simultaneous failures leads to a profound effect on the lives of hundreds of thousands of people, then the wider benefit to society should be considered.

The difficulty then is how to sort the wheat from the chaff. Who should be funded and how should it be distributed? What is a good business and what isn't? What is in the national interest and what decisions are merely being driven by a misplaced sense of patriotism to privately owned companies? As always, politics will be the deciding factor. And while I am still by and large in the camp of free market economics, if assistance is required then it needs to be both within reason and industry wide. At least then we might know who will make best use of a helping hand in times of need and be wiser for it.