In a market economy, business deaths are like death itself - an unfortunate but inevitable fact of life. However, recent government bailouts have tried to stop the inevitable by intervening in the market, at least temporarily saving failed firms from the economic grim reaper. Before putting the next failed business on life support, it's worth remembering why it makes sense to let struggling producers expire.
In summary he says that;
- When failing businesses are allowed to fail, resources are released from employments where they don't add value and made available for employments where they do.
- When failing businesses are allowed to fail, producers learn how to combine resources in ways that create wealth.
- When failing businesses are allowed to fail, producers have incentives to combine resources in ways that create wealth.
