OPINION

Sauce for the goose

The basic tenet of capitalism is that businesses should be rewarded and/or punished by the market; neither banks nor large industries are exempt from this rule. Yet recent facts show that they are. The governments of the West have decided that banks should be saved from bankruptcy and receive substantial funds. The argument is that if they were to fold it would have a catastrophic effect on the economy. Large industries are being bailed out for the same reason. Let’s just ignore for a moment the fact that the very people who held the fundamental rule of competition so sacred and inviolable are the very people trampling it today. It is totally unacceptable that in these times of crisis banks and large industries should be receiving such liberal funding from taxpayers when in times of flux they rake in the profits and share almost nothing with the state. If governments believe that in such difficult times they need to shore up banks with public money and the banks, in turn, accept the state’s protective umbrella, then maybe they should answer to a different set of rules. The assurance that the state will get the money back once the crisis blows over is not enough. If this were so, then small and medium-sized firms could also demand assistance. A nationalized banking system may be a counterproductive solution, but this does not mean that when the situation gets better we have to return to the same regime of impunity that was responsible for the crisis in the first place. Society, which always ends up footing the bill, has a vital interest in preventing a repetition of phenomena such as toxic bonds and provocative bonuses. Legal reform is not enough to ensure this. What is required is some permanent form of internal state control that will ensure both respect for the new rules and adequate financing of the economy.