Commentary: Government bailouts can help better our post COVID-19 lives

LONDON: The COVID-19 crisis and recession provides a unique opportunity to rethink the role of the state, particularly its relationship with business. The long-held assumption that government is a burden on the market economy has been debunked.

Similarly, in the US, Senator Elizabeth Warren has called for strict bailout conditions, including higher minimum wages, worker representation on corporate boards and enduring restrictions on dividends, stock buybacks and executive bonuses. The US airline industry, for example, has been granted up to US$46 billion in loans and guarantees, provided that recipient firms retain 90 per cent of their workforce, cut executive pay, and eschew outsourcing or offshoring.

In some cases, governments have gone beyond conditionality to alter ownership models. Germany and France are acquiring or increasing, respectively, the state’s equity stake in airline companies, citing the need to safeguard national strategic infrastructure.The auto-industry bailout has played out very differently in Italy than it has in France. The FCA Group has convinced the Italian government – which has historically provided large subsidies to Fiat – to grant its subsidiary FCA Italy a €6.

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