Does the fact that Goldman—along with everyone else—needed an AIG bail-out to survive mean that it has some obligation to the government? Well, yes, I think so; if you're going to get systemic risk insurance from the government, you ought to pay for it. But does this mean that Goldman didn't really "deserve" the profit figures it recently reported, because without that bail-out they'd have tanked? That seems off; a similar argument could be made about any firm or household dependent on a functioning financial system.
First, the comparison with every other firm and household who benefits from a financial system is specious -- Goldman was out there actively gaming the system, they knew what they were doing and how the end game would play out, and they are the biggest beneficiaries of this broken system going forward. The typical widget making company does not stand in this relationship to the financial system. Which bring up the second point, namely, what the hell is the word "deserve" doing in this paragraph? Goldman "deserves" whatever profit it can get by whatever means the government sanctions. The lion "deserves" and gazelle it catches, and it's pretty silly for the prey to sit around after the fact complaining that it's not fair that, you know, the predator has big scary claws and runs real fast. Just deserts have nothing to do with it. The question is not a moral one but a practical and mechanistic one. If we continue to have a system where certain people can profit from making it implode, then we can be sure that it will continue to implode. Griping about how immoral and undeserving these profits are is the wrong tactic. We need instead to design a new mechanism where all the diffuse agents who suffer from this implosion are able to push back against the very concentrated power of those who benefit. What we absolutely positively cannot do is expect agents like Goldman to magically change their spots because we are morally outraged.
No comments:
Post a Comment