Who’s to blame?

Here’s a great letter to the editor by Don Boudreaux


17 November 2009

Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281

To the Editor:

John Micetich argues that “if we add up the bailouts to all financial firms, we’re well over $1 trillion, at least 10 times more than the Fred/Fan bailout. Therefore, let’s put most of the blame where it belongs: Wall Street investment houses and commercial banks voluntarily taking inordinate risk with shareholder money” (Letters, Nov. 17).

Let’s say that your brother Bob is pastor of a church.  You – a successful gangster – make it known to Bob that you stand ready to repay any of the church’s debts if ever Bob finds the church’s cash flow to be inadequate.

Whom would Mr. Micetich blame if Bob then launches ambitious construction projects to expand the size of the church, only later to find that his parishoners’ contributions are too small to allow payment of the church’s debts?  Surely he won’t blame brother Bob, for Bob quite rationally relied upon your promise to backstop these debts.

The blame clearly is yours, which would be forgivable if your generosity were made manifest with money you earned honestly.  But because you forcibly confiscate money from others, the ultimate losers in this little tragedy are the persons whose wealth you seize – the persons whose seized wealth supports your gaudy lifestyle and your faux-generous promises to brother Bob.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030


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