Quote:
Originally Posted by Grease
Forgive me for intruding on this debate but I believe that an objectivist/capitalist/individualist would argue that the banks are free to prosper or fail, but if they do so, they do it along and any capitalist would be completely indifferent to the fate of the financial institutions because they are private enterprises completely distinct from 'any' government function. (Obviously a person would want to see broad prosperity since it would generate more demand for his or her goods/services.)
In an ideal capitalist world, government would only protect people's rights, such as private property and freedom from violence and various other persecutions (race, religion, sexual orientation and the like.) It would be completely indifferent to the economy of the country it was in, and would simply be an objective force to make sure the rule of natural law was followed.
But, alas, in today's day and age people expect the government to 'do' something to fix a crisis (we can debate what actually caused the subprime mess if anyone likes, as well) that its duties have gone way beyond what was originally anticipated back when the Constitution was written.
Sorry I got off topic, but I would say that a capitalist would be glad to see the banks repay the money simply because it will mean the government will have less of a reason to regulate them.
The problem is, we don't live in a utopian capitalist world, so trying to apply any rationalism concepts is not going to work. Some address this by going down anarcho-capitalist routes, but as long as the state exists, it will be an imperfect system that can be gamed. As long as that door is open, a perfect capitalist society can never exist.
So the world you speak of is about as relevant as the world Marx speaks of. Its completely detached from reality and only half applying its concepts will only lead to exploitation by those in power (think capitalism for the poor, socialist for the rich). Those who control the resources and capital can impede progress for their own benefit, using the rhetoric of free markets, when under the hood, the markets are anything but free, with corruption in politics, business, and biased regulation.
To seek out this world and say 'well less regulation is always better' is completely and totally wrong. A world of zero regulation may be better. That world will never exist. A world of biased regulation, with corrupt law makers and double standard is what happens in practice when we try and de-regulate. Exhibit A: This whole crisis.
The fact is, if the large banks go under, we enter a great depression. Objectivism may say, so what, we have to learn. I say f-that, depression set society back too much and the crowd really doesn't learn much from them anyway (case in point: history). And people starve, die, and social fabrics get torn apart. Keynes may have had some flawed ideas, but his idea for the use of government was not one of them. Keynes new how important it was to control vicious cycles, and dealing with the reality, the only body who can do that is a legitimate government.
Its important to separate your views on the world from the reality of policy.