Allow me to explain a concept I hope quickly.
If you let people learn from their mistakes and let people fail/suffer from their mistakes, they will:
1. Not repeat those mistakes
2. Be pulled out of the system they destroyed with their mistakes.
Case in point, banking.
If we had a capitalist economy, most banks and the idiotic bankers that populated them would not only be wiped out, most of those bankers would be on the unemployment line or flipping burgers at McDonald's. The banking system would have been "cleansed" and what banks remained would have in a darwinistic sense been the "best" and would have continued to better serve society.
Instead, we bailed them out which means the idiotic bankers are not flipping burgers, but still employed in the banking system.
This puts government regulators at a quandry. Do we hope those naughty bankers learned their lesson?
Probably not, and so NOW we get to codify behavior.
This is an impossible task because you cannot codify behavior of amoral people. But don't let that stop the Feds from trying.
I can't help but think the banking system would be a whole lot more stable if we canned the FDIC and let banks try to engineer runs on each other. Stability would be a selling point, instead of taken for granted (wrongly, it turns out).
ReplyDeleteBut, but...TOO BIG TO FAIL! THE SKY IS FALLING!! Etc...
ReplyDeleteI think it was Rahm that said, "Never let a good crisis go to waste."
All part of the Prince's plan:
"Therefore a wise prince will seek means by which his subjects will always and in every possible condition of things have need of his government, and then they will always be faithful."
Keeping in mind also that it was the regulators, trying to equalize results that encouraged/mandated some of that behavior (sub prime mortgages) and then removing the risk to the banks by allowing mortgage backed securities, who caused much of the problem to begin with. Not only should some banks be failing but government should be repealing swathes of regulations in order to free up people to succeed or fail on their own merits.
ReplyDeleteIf you fail to punish fraud and deceit, you will get more fraud and deceit. necongi 8A 165
ReplyDeleteWhat's wrong with flipping hamburgers ?
ReplyDeleteMr. Wendy's started as a hamburger flipper before he opened his own restaurant chain and still continued to flip hamburgers at his restaurant despite being rich.