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Ending Subsidies For Wall Street, And Returning Finance To Its Roots

In: Capitalism in the 21st Century Why Global Capitalism Is Broken and How It Can Be Fixed

Author

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  • Donghyun Park

Abstract

Nevertheless, demonizing the financial industry itself on account of financial crisis is equivalent to demonizing the automobile industry itself on account of automobile accidents. Finance delivers enormous benefits to society notwithstanding financial crisis, even catastrophic ones such as the Global Financial Crisis, just as the automobile delivers enormous benefits to society notwithstanding automobile accidents, which cause a great deal of human pain and suffering across the world. Therefore, radical solutions to financial crisis, such as wholesale nationalization of the entire financial system, are unlikely to work. Government bureaucrats are not good at, in fact they are terrible at running business, and there is no reason why banks should be an exception. Even worse, state ownership of banks and other financial institutions will channel credit toward state-owned firms or politically well-connected private firms at the expense of more efficient firms. This is exactly what we observe in China, for example. In short, private banks pose plenty of risks and problems for the economy, but replacing them with state-owned banks is most definitely not the solution…

Suggested Citation

  • Donghyun Park, 2019. "Ending Subsidies For Wall Street, And Returning Finance To Its Roots," World Scientific Book Chapters, in: Capitalism in the 21st Century Why Global Capitalism Is Broken and How It Can Be Fixed, chapter 65, pages 301-304, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789813274242_0065
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    More about this item

    Keywords

    Capitalism; Globalization; Inequality; Entrepreneur; Financial Industry; Government; Socialism; Market;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • N2 - Economic History - - Financial Markets and Institutions
    • A1 - General Economics and Teaching - - General Economics
    • F00 - International Economics - - General - - - General

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