Bailout fever has hit the U.S., and we're all well aware of how government funds have been propping up entities that are considered "too big to fail," like AIG (NYSE:AIG), Fannie and Freddie, and General Motors (NYSE:GM). However, the most recent industry to get some government love may be the newspaper industry.

I don't believe in bailouts at all and have been staunchly opposed to the government funds directed to the financial and automotive industries. A bailout of the newspaper industry would add insult to injury, though. And there are signs that it may be coming to pass.

Hints of bailouts to come?
Silicon Alley Insider posted last week that Washington state's governor has approved a 40% tax cut to the state's newspaper concerns, which certainly implies a governmental "leg up" versus other companies.

Furthermore, apparently some lawmakers may be thinking about loosening up antitrust laws when it comes to newspaper companies collaborating to work on pricing power in online ads -- something that brings to mind the very real potential for collusion and price fixing. Fair? I don't think so. (It also brings to mind the Friedrich von Hayek quote I referred to when I wrote the article Trust vs. Antitrust last week -- in many cases, monopolies form because of government aid, contrary to conventional wisdom.)

Meanwhile, there's been some buzz about President Obama's comment at the White House correspondents' dinner that "a government without newspapers, a government without a tough and vibrant media of all sorts is not an option for the United States of America."

Those words give me the creeps. Linking the concepts of government and newspapers too closely sounds like an unholy alliance to me. True, a truly unbiased media can keep government in check, but it doesn't stand to reason that government would help it to do that. (And the words allude to a Thomas Jefferson quote, where he said he would choose newspapers without government rather than government without newspapers; somehow I don't think he meant government should be tied up with them, though.)

Granted, I enjoy BBC News from time to time, and I know many people who are huge fans of our own NPR. Then again, what I've noticed over the years when I've run across China's Xinhua News Agency's "news" is the chilling potential for media that's too directly linked to the state -- in other words, propaganda. Direct government involvement in the media is a dangerous thing, a slippery slope. Many people already talk about the mainstream media having political bias. But can you imagine if government was funding it?

Evolve or die
Newspaper companies such as New York Times (NYSE:NYT) and Gannett (NYSE:GCI) are most certainly struggling; even News Corp.'s (NYSE:NWS) collection of newspapers including The Wall Street Journal aren't thriving. (The New York Times did roll out some interesting digital innovations recently, although one might wonder whether that's too little, too late.) The troubles the industry faces may be sad, but there's no reason for panic about the state of our democracy.

After all, look no further than Google (NASDAQ:GOOG) to find all kinds of resources for current events. And Amazon.com (NASDAQ:AMZN) is giving a new way for consumers to digest news and blogs through its Kindle e-reader. Most newspapers have put their papers on the Web, and should probably ditch the newsprint altogether; of course, on the Web, they need to keep on their toes, since consumers have many more choices than simply being locked into the newspaper that lands on their front step every day.

Many bloggers do just as good a job of displaying investigative journalism and critical thought as old-school journalists and commentators do, some do even better. There is no shortage of commentary and news on the Internet, even as many newspapers struggle and some even fold.

Basically, when it comes to news and information, the market's working just fine. The fact that newspaper companies are struggling simply means people have turned to other sources and other means of consuming information. Newspapers, like any other industry, always needed to evolve or die, regardless of whether they were willing to see the writing on the wall.

Nostalgia's no reason to save this industry
Many people feel very emotional about the idea of folding newspapers, but the truth is, there is plenty of journalistic activity going on all over the Internet. The business model for traditional newspapers may be trashed, but digitally, media's hopping, and that's clearly the place where droves of people get their news and information these days. True long-term investors should want to find the up-and-coming companies that are looking toward the future; true long-term investors should also be infuriated if the government gives some companies an unfair advantage in the competitive landscape.

We already risk having too many companies get an unfair advantage from government funding and protection from their own mistakes. Meanwhile, there's absolutely nothing "too big to fail" about the newspaper industry. Media is vibrant and growing, except information's on the Internet, not on inky newsprint with information that's often stale before it hits the front door.

Let's hope lawmakers come to their senses, too, if they're planning on intervening to save the newspapers. Nostalgia is no reason for the government to give preferential treatment to save a dying industry.

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Alyce Lomax owns no shares of any of the companies mentioned. The Fool has a disclosure policy.