An editorial “Money clipped”, starts out “Several of the major banks that received government bailouts are now seeking to repay the money. While this is good – it indicates that economic problems may be easing – it also demonstrated the greed that helped trigger the crisis is also still with us.”
WATCHDOG:
“Greed?” This suggests a lack of knowledge of how the capitalistic system works and the powers of a republic to encourage a more even distribution of wealth.
Profits is what drives capitalism. So long as it is legal, it is a fools game to try to figure out what earnings are excessive and what are not. Rather, we have the mechanism of progressive taxation and inheritance tax to assure that those most fortunate have to share their wealth.
Raise the income tax rate on amounts earned over $500,000 a year, further over a million dollars a year, and still more over $5,000,000 a year, the last perhaps being at the 45% level. Simplify the tax code to avoid legal avoidance of paying the intended amount. Reconstitute inheritance taxes on amounts over $5,000,000. (Bequests go to those who have done little more than win the birth lottery, and whose youthful impetuousness and inexperience may at times endanger society.)
Concerning the distribution of profits, if retained by Goldman Sachs they may be invested. When distributed in bonuses, the funds will be taxed and most likely used either for consumption or investment, both of which creates jobs. There is no reason to think that Goldman Sachs possessing the money is more desirable for the economy than the funds being distributed to its employees.
The only legitimate concern is if an entity “too large to fail” pays dividends and bonuses to an extent that endangers its ability to continue without a government bail out. It doesn’t appear that anyone is suggesting this is a worry with Goldman Sachs.
