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And, yes, I DO take it personally: Incentivizing bad bankster behavior
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Wednesday, November 17, 2010

Incentivizing bad bankster behavior

it's hard for me to accept that we're actually having a debate about holding crooks accountable... otoh, why should we hold the bankers accountable when our elected leaders flout the constitution with impunity...?
Failing to prosecute Wall Street’s high-flying crooks doesn’t only represent a great miscarriage of justice. Powerful voices within the economic establishment are now making the case that holding the bankers criminally culpable is necessary if we ever hope to stop our national economy from moving from one speculation-driven bubble to the next.

Nobel-prize winner Joe Stiglitz recently told AOL’s Daily Finance that major damage resulting from the financial disaster “has not really been taken on board, and that is confidence in our legal system, in our rule of law, in our system of justice.” His prescription? “I think we ought to go do what we did” in the wake of similar financial crises in the past, and “actually put many of these guys in prison.”

His argument is based not on the visceral satisfaction of seeing the high and mighty brought down a peg, but on cold economic grounds. At heart, economics is the study of incentives, and by refusing to hold the corporate criminals at the heart of the housing crisis accountable in any meaningful way, we’re creating powerful incentives for more malfeasance in the future.

As Stiglitz explained, “People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.” With those penalties amounting to a small 5 percent or 10 percent tax on illegal profits, what’s to stop the crooks? “You're still sitting home pretty with your several hundred million dollars that you have left over after paying fines,” Stiglitz said.

why should the banksters be held accountable when our ex-president is going around bragging that he authorized torture...?

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