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Comment by bokonist | Hacker News Reader

The problem is that Wall St. makes money by taking big risks and passing the losses on to the taxpayers. What would Goldman's profits be without the TARP bailout and the AIG bailout? I suspect Goldman would not have survived.

Of course, the solution is not to regulate pay, but to allow the big banks to fail ( I think the whole too big to fail argument is a lot of hooey, there a lot of ways to allow a bank to fail without causing contagious destruction).

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At that point, you should be complaining about the bailout money (which you've identified as the actual problem), not the bonuses (which you now seem to be claiming are a result of the problem). Arguing against bonuses due to TARP amounts to saying "The mortgage bubble -- propelled by massive government intervention -- has popped. The bailout, another massive government intervention, has had disastrous consequences. The obvious solution is more massive government intervention."

At some point, it has to stop. So I agree -- let the banks fail.

Most people seem to regard corporations as moral entities.

These companies screwed up. We bailed them out. We expect them to lower their heads in shame, tighten up their belts, ask forgiveness, and promise to not do it again.

When they don't act according to our "moral" expectations, we turn everything into a public spectacle, articles start pouring in, blogs are on fire with outrage etc etc..

The problem is that we screwed up at the first step -- companies are not moral entities. They like to present themselves as such (ex. Google's "Do no evil, except when you have to turn in a couple of Chinese dissents over to their government to be imprisoned for life...")

You may enjoy this article as it offers an interesting generalization of your thesis:

http://www.atimes.com/atimes/Global_Economy/JK25Dj06.html

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