Read This article by Simon Jenkins.
He points out that banks and bankers have done very well indeed out of the bailouts that have characterised the response to the 2007 credit crunch.
I agree with everything that Simon Jenkins says, but I think we have to examine how we got into this mess. We have given quantities of money to the banks that are enough to bankrupt the country. This is because banks have huge influence, which is linked to the fact that they get such favourable treatment from the government. From the banks' point of view this is a virtuous circle. From the point of view of the rest of us, it is a disaster. The massive regulatory burden makes it very difficult for new startups to challenge the banks, which lead to their supranormal profits. These excess profits do not need to be paid to shareholders, because they have nowhere else to go: they are captured by the employees, who individually become enormously powerful. It was not entirely a coincidence that Gordon Brown just happened to be at a cocktail party with Victor Blank, chairman of Lloyds TSB, when he was told that HBOS needed rescuing.
This would not matter so much except in that the state has developed taxation to an extraordinary degree, so that now it is quite feasible for the government to hand over about a tenth of the UK GDP just to prop up a few banks that should have failed. One hundred and thirty-one billion pounds is a lot of money in anyone's language: more even than it costs to run the NHS for a year!
Most governments live in a kind of parallel universe where there are no tradeoffs. They seem to believe that taxes can be increased without limit without compromising the ability of the productive sector to pay. Just listen to Peter Mandelson talking about all the jobs he is creating by increasing government spending on this and that, and try to catch the point where he admits that by increasing taxes and reducing the post-tax income of individuals, he will inevitably destroy jobs, now or in the future.
The problem with democracies is that they work by bribing electors with their own money. Or in the case of the Greeks, the taxes of of rich neighbouring states. The problem is that, eventually, this state-sponsored Ponzi scheme collapses in sovereign default or rampant inflation.
