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Luigi Zingales on Why Paulson Is Wrong

Luigi Zingales, Robert C. Mc Cormack Professor of Entrepreneurship and Finance at the Graduate School of Business in the University of Chicago, explains why Paulson is wrong even on the assumption that some sort of Federal government action is desirable.

"The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists."

Posted on Sunday, September 21, 2008 at 3:18 PM | Comments (3) | Return

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