Over the past decades, Americans have developed an absurd view of the power of government. Many voters seem to think that government has the power to protect them from the consequences of their sins. Then they get angry and cynical when it turns out that it can’t.
That something along these lines has become something like the conventional wisdom in Washington is, to me, maddening. Here’s a story about bus drivers in Clark County, Nevada getting laid off as a result of state/local budget woes. Are those soon-to-be-unemployed bus drivers really suffering for their sins? Is it really true that a federal government currently able to borrow money at a negative real interest rate can’t do anything to protect them? The amazing thing about this crisis is the extent to which suffering and responsibility are completely out of proportion with one another. If you think about the people who are really suffering in the developed world today, none of them were executives at major banks, none of them were politicians involved in the construction of the euro, none of them were senior financial policymakers in any government, etc.
Governments around the world have immense power to protect people from negative consequences. And they’re using that power. Nobody, thank god, is starving to death in the United States of America. But the government has done immensely more to protect creditors, shareholders, and managers of major banks from the negative consequences of their sins than it’s done to protect bus drivers.