Richard Epstein, "Forget the Envy Principle"
This past week JPMorgan Chase turned a nifty $11.7 billion profit, virtually all of it from its investment and trading divisions. In calmer times that news would have been greeted with pleasure by people who didn't get a dime in payouts. They would realize that large profits and high salaries for banks and bankers make life better all round.
On the public side, those profits generate additional tax revenues. On the private side, what remains allows firms and individuals to save and consume in ways that prop up the rest of the economy. By getting richer, successful people make others richer, not poorer. So everyone is made better off and no one is made worse off. What's not to like?
Plenty it turns out if, like the president of the U.S., you cling to the envy principle, which holds that I am worse off solely because you have become better off. The remedy for this purported malady is a raft of special taxes on the profits of the banks and the bonuses to the executives who turned things around, all on the misguided theory that there's only a dime's worth of difference between a successful entrepreneur and a common thief.
Yet there is little sense in this self-righteous political adventurism whose likely consequence is to undermine the very financial institutions on which a sustainable recovery depends. But Obama thinks otherwise when he excoriates the bankers for believing "That by some twisted logic it is more appropriate for the American people to bear the cost of the bailout rather than the industry that benefited from it, even though these executives are out there giving themselves huge bonuses."