Where is the invisible hand now?

We see a dramatic decrease in consumption and production, but at the same time, we can observe that the big businesses cry for the government to rescue them? Where is the invisible hand that magically coordinates the market in such an efficient way that we will always reach the most efficient, wealth maximizing outcome? Although all those hardworking CEOs beg the government to help them in bad times (once again), in good times they argue that a free market is the best solution while taxes, regulations and government intervention just undermines the optimal outcome.

Everyone arguing for a market-based solution should now celebrate that the invisible hand will destroy all those inefficient companies because they did not save enough capital in good times or were imprudent to adjust themselves to the prospective economic situation. After this creative destruction, we will see new and innovative companies rising. Airlines were mismanaged by spending money on share buybacks instead of having enough cash to withstand an epidemic. Shale oil companies knew that an oil price below 50 USD would make them unprofitable. Huge profits were harvested for the entrepreneurial risk in the good years, but no one wants to take the entrepreneurial risk in bad times. According to neoclassical (financial) economics, those huge profits exist precisely because of the possibility of a significant downturn, and they are a risk premium that is paid for taking this risk.

CEOs and businessmen publicly tell you in good times that low skill workers have to adjust to the new economy, that they will temporarily lose their job, but by acquiring new skills they can get better jobs and contribute to the economy. However, as soon as it is  faced such a situation as a company, they cry for the government to rescue them with taxpayers' money which is the money of those workers that are laid off without a second thought. Capital gains and business tax rates are lower than the tax rate on labour, but companies are rescued first with the taxpayers' money. At the same time, workers are dying because of a privatized and broken healthcare system. Instead of funding a nationalized healthcare system with taxes on labour, mismanaged companies are rescued.

All those free-market enthusiasts are now experiencing the destructive and cruel power of the invisible hand and do not want to bear it, but in good times the invisible hand is their friend. Privatize the profits and socialize the loss. That is not a free market nor capitalism - that is a crooked economic system based on the exploitation of the lower and middle class.

How can you justify that within a neoclassical framework arguing for capitalism and a free market?