by Mike Masnick
Mon, Mar 2nd 2009 1:08am
As it appears that the US government will be putting even more money into AIG beyond the $150 billion we've (us, taxpayers) have already spent, Fred Wilson has a good point about why government funded businesses will almost always act inefficiently. The very fact that every move they make is extra-scrutinized for how they're "spending our dollars" makes it almost impossible to act in ways that can help a company actually make the investments and decisions it needs to make. Instead, everything is second-guessed and scrutinized for "how will this look." This results in business decisions that are forced to respond to populist sentiment rather than good business judgment. This again raises questions of why we're propping up businesses that failed, rather than helping new entities open up.
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