The Financial Crisis and Social Costs

April 9th, 2011 by Rick Drain

“If anything, the various bailouts have actually strengthened the hands of the financial sector, increasing concentration in a small number of behemoth institutions that appear to control government policy. Meanwhile the “real” economy suffers, as unemployment, poverty, and homelessness rise, but policymakers claim we cannot afford to deal with these problems. Their only hope is to gently prod Wall Street to lend more—in other words, to bury the rest of the economy under even more debt. The rescue of Wall Street displaces other fiscal policy that would lead to recovery.”

The Financial Crisis Viewed from the Perspective of the “Social Costs” Theory
by L. Randall Wray
Levy Economics Institute of Bard College
March 2011

www.levyinstitute.org/pubs/wp_662.pdf