During my lifetime, I’ve seen the laws change to make personal bankruptcy get harder and harder. At the same time, corporate bankruptcy has gotten easier. It’s kind of like how the banks were bailed out in 2008, but not the homeowners. The banks just had to sign a two page document to get billions of dollars in low interest loans. There was a program to help homeowners, of course; but it was incredibly difficult to qualify for. Most people didn’t. And those who did spent years doing it.
That’s the thing. As far as the government is concerned, there are the right kind of people and the wrong kind of people. The right kind of people are the rich and they are lavished with money because they always land on their feet. Of course, it’s a bizarre kind of self-fulfilling prophecy where the government “knows” the rich are good for any help they get because the government makes sure that they get help whenever they get in trouble. Meanwhile, if you are poor, you’re screwed. I once thought about applying for food stamps in the relatively liberal state of California, and I was handed a packed of about 50 pages of forms to fill out. If I had done it, I would have received about $20 per week in food.
Robert Reich wrote a very interesting article the other day, Donald Trump Proves What’s Wrong with Bankruptcy Laws in America. And he provided a way of looking at corporate bankruptcy and the economy at large that I had never thought about:
Think about about. When an individual goes bankrupt, it doesn’t affect the rest of the economy that much. Yes, some creditors end up with less money. But no individual is going to make or break a credit card company. But when corporations are allowed to go bankrupt, they can destroy the lives of thousands of works — sometimes far more. Yet our government has decided that the far more destabilizing kind of bankruptcy is the one that should be encouraged. Obviously, such policies have little to do with what is best for the nation as a whole.
Most of Reich’s article is about how the finance industry has warped the law for its own gain and against the people of the nation. Long ago, there was this idea that what’s good for General Motors is good for America. That certainly wasn’t true — even when it provided really good union jobs for tens of thousands of workers. But now we operate as though what is good for Goldman Sachs is good for America. And that’s simply a bizarre notion.