Bail-outs are inevitable—and toxic

IN THE PASTMAXThe EconomistThe Economist Today month the biggest business handout in history has begun. The goal of helping firms survive temporary lockdowns is sensible, but it is hard not to feel uneasy (see ). At least $8trn of state loans and goodies have been promised to private firms in America and Europe, roughly equivalent to all their profits over the past two years. Over half a million European firms have applied for payroll subsidies. Some of these handouts will involve grubby choices: Boeing, embroiled in the 737 crashes, might get billions of taxpayer dollars. Broad rescue schemes could also leave a legacy of indebted, ossified firms that impede the eventual recovery. Speed is essential, but governments also need a clearer framework to organise the jumble of schemes, protect taxpayers and preserve the economy’s dynamism.