What's The Difference Between Wall St. and D.C.?
From the WSJ's editorial today Wall Street Reckoning: A CEO gets "marked to market":
Washington is the one place where no one is being held accountable for the subprime boom and bust. That includes in particular the Federal Reserve, whose far too easy monetary policy created a subsidy for debt that fueled the housing and subprime mortgage excesses. One difference between Wall Street and Washington is that in the latter no one ever admits a mistake, much less suffers for it.
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Not only doesn't government acknowledge its mistakes, it chooses to reward those mistakes with higher budgets. "Our schools need more money", "Iraq needs more money (and American blood)", "our crumbling infrastructure needs more money" (despite a staggeringly large transportation budget, in large part devoted to bridges to nowhere, museums, things like the Big Dig in Boston which tore down a functioning "eyesore" of a highway that went through downtown and instead built insanely expensive and dangerous tunnels instead of expanding the highway) etc.
On Wall Street and Main Street, if you fail then you go out of business because your funding gets cuts off, while if you succeed you get still more funding.
Government takes money from institutions that are allocating resources productively and reallocates them to institutions that destroy the wealth that comes their way.
It is not about about putting the right people in charge, it is about institutional DNA. Government is designed to reward disastrous policies, and to punish successful policies (i.e. taxes and one size fits all regulations). The private sector is designed to punish destruction, and to reward the creation of what people need and desire.
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