The Corner

‘Too Many Bailouts, Not Too Few’

The wonderful Russ Roberts, of George Mason Univeristy and Mercatus Center, had a very good short essay (as part of a debate between three economists) in the New York Times discussing “When to Let a Bank Fail.” He writes:

The bigger mistake has been the bailing out of too many firms rather than too few. Capitalism is a profit and loss system. The profits encourage risk-taking. The losses encourage prudence. For decades, government policy and action have discouraged prudence by bailing out or taking over virtually every significant financial institution that has acted recklessly.

Hello Congress, is anyone listening?

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