Karnati Varun ReddyAIR 7 · CSE 2018 · 187 wordsTheir whole copy
Opening · a recent event
Financial corporations like AIG were given bailout package from taxpayers money by U.S.A during 2008- financial crisis. Similarly recently by Greece. While bailout packages are given to protect financial stability and provide money to investors - it does raise many ethical questions.
Body · points
(i) Giving immunity to reckless behaviour :-
by giving bailout, banks will not have incentives to be prudent in lending, financial operations.
∴ this vicious cycle continues, at the end of the day with taxpayers losing
(ii) Morality of investing hard earned taxpayer money to save "greedy" bankers, financial investment operators instead in education, health sectors.
(iii) Ethicality of the behaviour of financial institutions like Morgan Stanley to pay fat paychecks to their executive from bailout package → i.e. to the people responsible for financial crisis
(iv) Capitalist principles - demand that it is natural process of evolution, for inefficient firms to fail to be replaced by better.
Close · a summary
Therefore there is certain "moral deficit" in bailing out failed and reckless, unethical firms. They must be allowed to fail, to be replaced by better institutions. Also steps should be taken to protect interests of innocent investors.