Wednesday, February 26, 2014


Through the massive wealth that corporations are able to obtain they are able to take unreasonable risks for society. This is a problem that exists across multiple fields and industries in both the public and private sectors such as in the recent sub-prime mortgage crisis when the Lehman Brothers collapsed and were bailed out by the federal government as detailed in akadjian's article "25 images of markets regulating themselves". After the collapse they were able to successfully argue to the government that without a bailout they would be SOL and the economy would collapse. If this was the first time that big banks had asked for handouts then it might not have been as big of a travesty but it has been standard operating procedure for banks to take on extremely risky investments for the highest possible profit margins and when their investments fail they just ask the tax payers for a bailout. This happened first with the Continental Illinois National Bank and Trust Company in 1984, with US Savings and Loans in 1989, 2001 with the airline industry, and again in 2008 with A.I.G. Lehman Brothers and several others.
When you look at how much money these companies are getting for messing it is completely possible to see how they justify making such risky decisions as what they did with sub-prime mortgages. Its as if their vehicle of profit is stuck in overdrive speeding down the highway not caring if it breaks down or crashes they know it can be fixed for free. When it becomes expected that the taxpayer will pay corporations for making mistakes and the average citizen can at best declare bankruptcy should they not get some compensation for the risk they are taking the brunt of? If the people have to keep supporting these businesses every time that they fail then they should become the property of the people and their profits should be used to reduce taxes. This could incentivise business to make less risky decisions while still keeping the company profitable, because if they need to be saved by the government they would then become property of the government. This would be good for both businesses and the consumer as it would allow them to return to profitability and reduce expenditure by using services the government already uses meaning that all of their savings could be given directly to the consumer in the form of cheaper services.

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