If sectoral aid is wasteful, why then save the banking system? Not for the sake of the bankers, certainly; nor because state aid will create an efficient financial industry. Even flawed bank rescues and stimulus plans, like the one Barack Obama signed into law this week, are aimed at the roots of the economy's problems: saving the banks, no matter how undeserving they are, is supposed to keep finance flowing to all firms; fiscal stimulus is supposed to lift demand across the board. As manufacturing collapses, governments should not fiddle with sectoral plans. Their proper task is broader but no less urgent: to get on with spending and with freeing up finance.
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Reader CommentsDisplaying 2 of 2
Douglas Shearer
Feb 20, 2009 3:22 PM ET
Big government is not the answer.
Most of what's in the "stimulus" bill will not stimulate the economy. Over half of it is paying off cronies. That's why … more
Richard Bassett
Feb 20, 2009 12:51 PM ET
Kill the Old Start New Banks
Propping up and recapitalising failed banks is as wasteful as propping up failed manufacturers. As Schumpeter pointed … more
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