Comment by sgu999
2 years ago
> the founder loses their investment
So does the bank, and the state that (more often than not) subsidised said investment through diverse vehicles. If the bank goes belly up, we've seen what happens, we collectively contribute to save them... because we're collectively sharing all the risk of investment in our financialized economies.
I agree that some people don't want risk and others do, but as soon as you start sharing ownership that dichotomy simply disappears.
We don't collectively contribute to save shareholders. When a bank goes under the depositors are made whole through government insurance programs. Shareholders get nothing.
In 2008 I believe bailouts did go to companies to keep them afloat (and thus helped shareholders). However, TARP returned a small profit for the government, so it didn't end up being a gift of free money overall imo. (reasonable people can say that the bailouts were excessive and introduced moral hazard for sure).
Sure, but using tax-payer money to save malfunctioning banks is pretty much the opposite of capitalism.
Crony-capitalism is capitalism, if you don't fall for the no-true-Scotsman fallacy.