Over at PolicyMic, Cato scholar Daniel J. Mitchell debates Demos co-founder David Callahan on whether massive government bailouts saved us from a second Great Depression, or plunged the economy into a prolonged recession that hurt taxpayers and undermined the self-corrective mechanisms of the market. Mitchell argues:
The Bush-Obama policies of bailouts and regulation have been bad for taxpayers, but they’ve also been bad for the economy.
A vibrant and dynamic economy requires the possibility of big profits, but also the discipline of failure. Indeed, capitalism without bankruptcy is like religion without hell.
Yet that’s what politicians from both parties have created. Profits are private and losses are socialized, so is anyone surprised that Wall Street responds to these incentives with imprudent risk?