Is there a precedent for my Modest Proposal this week? And, if not, do we need a precedent? That’s my question today. Here are the issues as I see them:
Consider the long-term impact of the financial crisis. Main Street isn’t what it used to be. Now, businesses are shuttered, jobs lost, families evicted. While Main Street suffers, Wall Street reaps financial benefits. The creation of super-toxic financial products yielded billions in profits for a few, but, says George Soros, “culminated in a crash that caused wealth destruction amounting to trillions of dollars.” So, this week, I’m raising this Modest Proposal: Perhaps banks should be held accountable for selling and profiting from toxic products designed to fail. Perhaps they should pay reparations to the American people.
I wondered what the law would say about this sort of penalty. I’m not a lawyer but I know some law professors. Normally, one would have to prove that the actions taken were a proximate cause of the harm, and that these were foreseeable—in this case, that one could reasonably predict the harmful effects on the economy.
Even so, there are examples of situations where harm was caused even though it was not foreseen. Consider a drug called DES, which was prescribed to prevent miscarriages, among other indications. DES caused health problems, such as cancer, in so-called DES babies. The health hazards were unknown at the time DES was prescribed, yet the courts imposed an industry-wide penalty. DES manufacturers had to pay damages in proportion to their market share. The DES case doesn’t amount to a precedent, but it’s a good-enough analogy.
But, do we really need a precedent? This is a moral question. As a matter of public policy, maybe we need to set a new precedent—holding accountable parties that profit in a way that wreaks economic havoc.
What do you think? Would you support bank reparations?
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