Thursday, January 24, 2008

Windfall Millions : The Dark Side of Capitalism Raises its Head : What Does the Subprime Mortgage Debacle Tell Us?

Money, money, money. Just how much is enough?
And how much should a man be allowed to earn if he has in fact harmed the community?
Is there something fundamentally wrong with our financial rewards system?

In a world based on money and capitalism, there are going to be abuses of the capitalist system, and Robert J. Samuelson at his Washington Post op-ed points to Capitalism's Enemies Within as the nation struggles with unresolved financial problems arising from abuses of capitalism. As Samuelson observes:

"Amid the mayhem on world financial markets, it is becoming clear that capitalism's most dangerous enemies are capitalists. No one can have watched the "subprime mortgage" debacle without noticing the absurd contrast between the magnitude of the failure and the lavish rewards heaped on those who presided over it."

Read more from Samuelson here.

A nice statement about Samuelson's article is one from PlatyGuy at DiscussAnything.com:

"This is why I always make a distinction between free markets and capitalism. Being near the money (capital) doesn't mean you're more involved in value creation but it does mean you can divert more of that money into your own pockets. Sure, capital is important, but - as Samuelson notes - it's not more important than other inputs. Economic growth requires more than just moving money (which represents pre-existing value) around, and those who just facilitate that motion don't deserve any special rewards. Their job is the financial equivalent of plumbing, not architecture, and should be compensated accordingly."

Hat tip to CaryGEE.

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