This:
At this point to wring the excesses out of the system and to stop the systemic incentives to keep blowing bubbles is going to require doing something to make it so it doesn’t pay. There are two parts to any solution. The first and simplest way is to put a very progressive tax on all income no matter how or where earned that probably comes in at over 95% of all income over, say, $500,000 or a million at the most. Suddenly, needing to actually keep the companies sound, and knowing that in 7 years when the loans go bad, they’ll still be there taking the heat for it, will tend to concentrate the mind not on “can I make enough money to be in a yacht in 3 years†but into “does this deal make sense over the longrunâ€.
What I’m wondering however is, leaving aside the question of whether there even now is the political will for such a move anywhere, if it is actually possible to tame the financial and banking sector when it’s the driving force in our current economies. The long social-democratic consensus of the twentieth century was made possible because the interests of both industry and workers were served by it, but industry is much less important now. A lot of the economic growth of the past two-three decades was driven by financial services; if these are restricted where will this growth come from and how will our growth addicted politicians and capitalists respond?