Recession, stimulus, inequity, remorse

Thomas Friedman concludes his column “All Fall Down” in today’s New York Times: “That’s how we got here — a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash.”

The recession is upon us, not only Americans, other OECD countries residents, but also the billions of our fellow citizens in the global South. Indeed “All Fall Down” including future generations and even the planet herself on account of the ecological impacts of this recession, particularly the deepening climate crisis.

Though stimulus packages are being prepared by many governments—the term bailout is out, even stimulus is to be replaced by recovery—the growing inequity of the last 40 years which is also partly to blame of this recession and the 1930s depression is hardly being tackled in growth strategies that soft pedal the equity dimension. Remorse is also hard to find in those many different groups who contributed to the breakdown in “every link in our financial system.”

Are bailout and systemic crash the only options in the way forward as Friedman seems to suggest?

Three former UBS board members felt constrained to receive their full bonus packages given the $50 billion losses by the company and the infusion of Swiss tax payer’s dollars of a similar amount. They would forgo $27 million in compensation that was legally due to them.

Is it possible for those persons “in every link in our financial system” who made extraordinary bonuses or compensation also to bring themselves to feel remorseful and make restitution?

I for one would support fiscal policies that would revisit those very high income persons’ tax returns. Perhaps, Larry Summers’ example of bringing the present wealth gap back to the 1970s level by taxing the top 1% of families with an income of $1.7 million an amount of $800,000 and writing checks of $10,000 to the bottom 80% should be considered as an other option between bailout and system crash. While considering these fiscal measures, the Obama Administration could also device rules and regulations, particular by fiscal measures, that would prevent the emergence of more billionaires, not only in the US but also in developing nations where their numbers are growing, again showing the preponderance of growth over equity.