Russ Roberts

Stop Subverting Market Forces

There are many sources of inequality. Consider the good kind — Sergey Brin and Larry Page create Google, make our lives a lot more interesting and along the way become incredibly wealthy. Or Lebron James’s or Lady Gaga’s worldwide fame. Because of technology, top performers can earn more than they once did. But that’s a good thing — more people get to enjoy their skills.

Then there’s what I think of as the bad kind. For the last 25 years, Washington politicians and policy makers have consistently cushioned the market forces that would have punished executives at large financial institutions. The policy of bailing out creditors at these institutions — 100 cents on the dollar — has made it easier for these institutions to borrow and lend to each other.

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