Policies designed to avoid economic downturns at all costs can lead to significant long-term risks. Capital and labor become trapped in inefficient companies that would otherwise fail, hindering productivity growth and creating a less dynamic economy.

The government inevitably acts as an "insurer of last resort" during systemic crises to prevent economic collapse. The danger, highlighted by the OpenAI controversy, is when companies expect it to be an "insurer of first resort," which encourages reckless risk-taking by socializing losses while privatizing gains.

When government policy protects wealthy individuals and their investments from the consequences of bad decisions, it eliminates the market's self-correcting mechanism. This prevents downward mobility, stagnates the class structure, and creates a sick, caste-like economy that never truly corrects.

The government's purchase of mortgage-backed securities and stakes in banks and auto companies was a de facto nationalization. This prevented creative destruction and propped up failing institutions, creating a "zombie" economy kept alive by money printing that has fueled today's inflated asset bubbles.

Acknowledging a de facto government backstop before a crisis encourages risky behavior. Lenders, knowing their downside is protected on AI infrastructure loans, are incentivized to lend as much as possible without proper diligence. This creates a larger systemic risk and privatizes profits while socializing eventual losses.

The potential bailout of Spirit Airlines fundamentally misunderstands capitalism. Bankruptcy is not a bug to be fixed but a crucial feature that allows failing companies to restructure and adapt to market changes. Using public funds to prevent this process creates cronyism and props up unsustainable businesses.

The consistent history of government bailouts in the airline industry incentivizes risky financial behavior. CEOs know they can operate without a financial safety net because taxpayer money will likely rescue them in a crisis.

The potential bailout of Spirit Airlines highlights a debate over a key U.S. economic advantage: the ability to let businesses fail. Propping up 'zombie companies' misallocates scarce resources and harms healthier competitors, undermining the dynamic reallocation of capital that drives long-term productivity and growth.

The system often blamed as capitalism is distorted. True capitalism requires the risk of failure as a clearing mechanism. Today's system is closer to cronyism, where government interventions like bailouts and regulatory capture protect established players from failure.