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Corporate Welfare

Entry 859, on 2008-09-26 at 21:24:53 (Rating 5, Politics)

It seems that the US congress has almost reached an agreement on the plan to spend about US$700 billion (that's about 1 trillion NZ dollars) on bailing out the financial sector. I guess they are trapped between a rock and a hard place with the situation they find themselves in, but is this really a good idea?

The reaction amongst the public I have seen is almost universally negative. I have said in the past that I don't necessarily trust the opinion of the majority, but it is their money which is being spent so I guess they are entitled to have a say. Here's a sample of some of the better comments from the BBC web site...

Abdul from Leeds said: "Privatise the profits, socialise the losses. The tax payer did not get a cut of the profits - so why should they share the losses?" Yes, good question, isn't it?

Maziar Taleshi from Tehran observed: "Isn't it interesting the contradictions inherent in the market economy philosophy supported by the neo-conservatives? Normally we are told that government must not interfere or regulate big business and how limiting and adverse the effect of government control is... but when the going gets tough we are expected to accept a $700 billion bail out by the public sector." I think he's just observed the ultimate in hypocrisy.

And Denise from Kent said: "So, you make a complete horlicks of your company's financial portfolio, the Government bails you out AND you get a huge bonus at the end of the year. Nice work if you can get it. I'm in the wrong job..." I think people are beginning to see that these financial sector "high flyers" are really just silly corrupt little men.

Well, they are usually men, but there are exceptions like: "A US woman banker has been paid $40+ million bonuses while 20,000 have lost jobs in the business". This was a comment by Iain Connochie who also said: "$700 billion unprotected, the sharks/hyenas etc are just waiting to grab a piece of it". These useless parasites deserve no respect yet it sounds like it will be business as usual after they are rescued.

What I would like to know is what does this tell us about the priorities of the American administration? Americans are dying because there's no money for health care, American technology and science are languishing because funding has been cut, and their education system is disastrously underfunded. But when a bunch of highly paid financiers mess up they get all of this to help them out of a mistake which was caused by pure greed and stupidity.

This is one of the reasons I have no confidence in pure capitalism and free markets. The people who have the most political influence in those systems use it for their own benefit. They denounce the use of tax money to help the poor but they are the first to stand in line for handouts like this.

One of the comments on this debacle I read said they thought the people responsible were worse than the Nazis. That is probably a bit strong but I would have to say that these financial "geniuses" are hardly better than criminals in my opinion. Not only do they demand these massive payouts but they continue to get paid huge salaries to make grossly incompetent and corrupt use of other people's money. Its the ultimate in hypocrisy.

So I can rant and rave as much as I like but is there a reasonable alternative? I mean, if the financial sector isn't rescued won't the world slip into a depression which will adversely affect everyone? Unfortunately that is entirely possible. I think we need to change the way the world's finances are managed but we can't just throw the whole system out and hope for the best.

So maybe they should help out the financial institutions but there should be strings attached. The current management of those organisations should be fired or they should be forced to pay some sort of fine for their corruption. And we should put strong regulations in place to stop this sort of thing happening again, and those regulations should be sufficiently general that they can't easily be bypassed using the dirty little tricks that were used this time.

Ultimately the whole global financial system needs to change. Its geared towards rewarding corruption, greed, and purposeless schemes designed to do nothing useful. The US is losing its place as the global financial, political and technological leader but now China seems to be moving in to take its place and their form of capitalism is even more disgusting than the American one.

So I'm afraid things are unlikely to really change and I don't think the future really looks very positive. Maybe the world is heading towards another "dark age" fueled by stupid extreme capitalism, idiotic fundamentalist religion, and lack of accountability by the people who insist on it from everyone else. All I'm wondering right now is where did we go wrong?

Comment 10 (1718) by OJB on 2008-10-08 at 09:47:39: (view earlier comments)

Well first we need an admission from as broad a majority as possible that unrestricted capitalism is not the answer, and that overly restrictive government regulation isn't the answer either. Ideally all current regulations would be scrapped and we could start again with a new set which work properly instead of just being added to and changed around like the current ones, but that would be risky.

Comment 11 (1722) by SBFL on 2008-10-09 at 18:29:57:

'Progress always involves risks. You can't steal second base and keep your foot on first.' ~Frederick B. Wilcox

Comment 12 (1724) by OJB on 2008-10-09 at 20:03:55:

As we know, these quotes can be chosen to support either side of a debate. On the other hand, I would like to see a major change in out economic system to make it work better. But that's not going to happen. Which government would take that sort of risk? Also, which government could overcome the pressure from interested groups with plenty of money?

Comment 13 (1726) by SBFL on 2008-10-10 at 07:58:17:

I didn't think I was debating in that previous comment of mine. Sometimes I think you are so quick to assume an argument that you can't see when I'm in agreement!

Comment 14 (1730) by OJB on 2008-10-10 at 11:36:46:

No I recognised you were more or less in agreement. The debate I was talking about is the more general one between sticking with current policies and regulations or trying to start again, not necessarily a debate between you and me!

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