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Tuesday, November 08, 2011

The Financial System Is Rigged in Favor of the Rich

I have a new column (my title was "Help Households and the Banks Will Be Just Fine"):

The Financial System Is Rigged in Favor of the Rich

This passage from Luigi Zingales is a good intro:

...nothing upsets people like the perception that the rules don’t apply equally to everybody..., what many people felt after the 2008 bailouts of the financial system. The system was certainly at risk, and some government intervention was just as certainly necessary. Yet it ... didn’t escape most Americans that TARP was the largest welfare program for corporations and their investors ever created in human history. ... TARP wasn’t just the triumph of Wall Street over Main Street; it was the triumph of K Street over the rest of America.
The way the bailout was conducted damaged Americans’ faith in their financial system, in their government, and in the market economy. ... Their altered feelings weren’t the consequence of any ideological bias against government involvement; on the contrary, a majority of respondents believed that the government should regulate financial markets. They objected, rather, to the specifics of what the government was doing. One reason they objected was their perception that lobbying interests had influenced the intervention: 50 percent of respondents, for instance, thought that Paulson had acted in the interest of Goldman Sachs, not the United States.
But a stronger reason, presumably, was that the bailout made the system suddenly look fundamentally unfair. Why should outsourced workers, whose only fault was to have entered the wrong sector, bear the burden of market discipline, while rich bankers were offered a government safety net? ...

    Posted by on Tuesday, November 8, 2011 at 11:07 AM in Economics, Financial System, Fiscal Times | Permalink  Comments (32)


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