Week 13 Reflection -- Having Skin in the Game

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I thought that the comparison of Vanderbilt and Collins during the beginning of industrial steam ships was a wonderful, coherent example that made this dilemma very clear to me. I have already recognized that I do not approve of government subsidies for businesses, and I actually already had fairly similar views as the speaker, but this highlighted and made more clear the arguments I agree with. We’ve had a lot of discussions in this class centering around how consumers need to have an investment in order to incentivize their success. For example, when discussing the housing bubble, a large argument was that because down payments were not required, home owners had nothing on the line for if they got foreclosed on. I see the reverse problem in the topic at hand this week. We do not want the United States government to have “something on the line” when it comes to American businesses. This causes poor investments on the United State’s part because they do not want to lose the investment they have already put into companies if they begin to fail. This then creates a cyclical effect where the U.S. props up businesses that maybe should fail in order to make room for entrepreneurs who have better and more efficient business practices. This is displayed perfectly in the case of Vanderbilt and Collins as Vanderbilt was denied subsidies, but eventually became more successful than Collins. In contrast to Vanderbilt, Collins would go to the U.S. government for more money and funding whenever he hit a snag in the road or his business was not as successful as it could be instead of taking initiative, being creative, and creating better marketing and solutions to his problems. Entrepreneurs who only rely on themselves instead of government subsidies have more to lose from failure and more to gain from success which then makes them better and more inventive entrepreneurs which in turn makes them more successful. So while we do not want the government to have “skin in the game” since they will continue to invest in companies that should fail, we do want entrepreneurs to have “skin in the game” as it increases their desire and ability for success.