I gotta admit, the stuff I've been reading on economists blogs, such as The Big Picture and Greg Mankiw's Blog, is a bit one-sided. but I don't see much praise of these moves from anyone that understands the economy. And from my evaluation of it, this is a bad move. As Luigi Zingales put it, the government is creating a system "where profits are private, but losses are socialized." That doesn't sound like a good system to me. I love to benefit from my work. And in all honesty, the idea of not paying for the things that go wrong around me or because of me is very attractive. But I don't want others to pay for it. If it's a case of them or me, I will say me. Hence, if I'm willing to pay for my mistakes, I ask that others pay for their own.
And more important than who pays for what is what happens when we pay for it. If I trip down the stairs and break my collar bone, rest assured, next time I'll walk down those stairs with extreme care. If I ride my bike without a helmet, crash, and get a concussion, next time I'll wear a helmet. And what encourages me? The pain. What if the pain were taken away? Well, I'd run recklessly down stairs and knock my brain around falling off the bike, and probably end up killing myself from all the injuries. The pain is a motivation to change. If we take the pain of this crash from those who are in a position to make sure it doesn't happen again, then they will not learn and we are in danger to face this again.
Of course, there is a degree to which I'll take on others losses and pains. I believe in service, in helping and loving my fellow man. I will work in soup kitchens, I will pay fast offerings, I will give time and money to help others. But that is on a personal, individual basis. I reject the government's right to force me to help others.
And this differs from my personal willingness to serve in another way. I reject the government's right to take my money and help not the outcast and downtrodden, but the wealthy. This money is not going to help the poor. It is going to help the rich.
We are in trouble. The capitalist system which has produced an incredibly wealthy and stable economy is being threatened by those who should protect it. But you can't trust politicians to think of the long-term. They are forced by short-term economic incentives (the need to get their constituent's vote in a month and a half) to think in the short-term.
The market's up, but at what price?
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