Stop Socializing the Downside and Privatizing the Upside (2011)

I think often people frame this issue incorrectly. As much as I have my own opinions of what 'isms' or parties are superior, we should be discussing the incentives we've built into our political systems that encourage politicians of all stripes to make decisions like this. Politicians avoid a very visible event with high damage to a single entity (major bank or airline going bankrupt), compared to difficult to trace moderate damage spread across everyone over a long period of time. It's very low cost to the politicians to impose a bail-out, they don't face the long-term slow moving economic and social damage.

I feel confident large businesses would behave far more sensibly with a long-term vision if they knew there wasn't a taxpayer below them ready to catch them when they fail performing financial stunts.

The thing is, that's not an argument at all. At best, it's demagoguery hiding behind weasel words. The role of the state is to compensate the lack of economic incentives to provide the public with some goods and services in order to ensure that the people has adequate access to them.

The key factor is, obviously, that the role of the state is to bridge the economic gap. Not to profit from a service, but to ensure that a service is provided in spite of not being profitable.

And it is this way by design, isn't it? After all, who in their right mind would argue that the state should turn a profit on selling goods and services back to its own tax payers?