Sunday, October 18, 2009

All That Glitters is Goldman Sachs

News of huge profits and bonuses at investment bank Goldman Sachs have caused some to cry foul. While this would be expected from certain quarters, I think this latest round of criticism really ought to have folks like Goldman worried.

First, here's economist Russ Roberts with a commentary that appeared on NPR:

Normally, I'd say it's nobody's business. What people get paid is best left to the marketplace.

But Goldman Sachs is different because those of us on the outside are really on the inside. Goldman Sachs was propped up with our money. Not the money it took directly from the government and paid back. The money that AIG gave it that really came from the taxpayer....

We have to stop rescuing the reckless. We have to let people who make bad decisions bear the consequences.

Profit and loss. The rest of us live that way. Wall Street can too.

Roberts is a professor at George Mason University and has a free-market perspective. When he criticizes Goldman, it definitely has a different flavor than the type of criticism that comes from an economist like Paul Krugman.

Then there's libertarian blogger Megan McArdle:

Whatever they really think, deep in their hearts, they're certainly doing their best to give the impression that they believe they are entitled to collect huge paychecks no matter what happens, and have the taxpayer pick up the tab for their mistakes.

Admittedly, these two voices on the right are probably in the minority at lease in terms of speaking out publicly. At times it seems the national Republicans oppose all government interventions, except those that help big business get even bigger.

It's refreshing to hear some thoughtful criticism of the situation from the right. More importantly, such criticism is crucial to forming a useful and effective response to the financial crisis.

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