Saturday, May 28, 2011

"Risk? What Risk?"

The news has been replete with examples of requests for protections against risk.

Insurers, especially health insurers for example, want to minimize exposure and look for ways to reduce risk by being selective in those they insure. It's natural and understandable if they want to maximize income. The costs of such 'guarantees' are borne by their customers of course. People at greater risk pay higher premiums or maybe can't even get insurance.

Mammoth corporations whose demise could devastate the economy claim that they are too big to fail and maybe they are right. They too have requested and received guarantees in the form of  emergency TARP funds while smaller companies receive state, federal and local tax breaks to entice them into an area.

Oil companies justify their huge tax breaks by pointing out that they take enormous risks and deserve to be compensated for those risks. Meanwhile they have announced the highest profits in history.

The Providence Journal recently mentioned legislation to protect municipal bond holders in the event of bankruptcies (Friday May 27, Page A7 "Senate approves bill on municipal bankruptcy"). Reducing the risk of buying bonds would help access to credit markets, it is believed.

What do all these have in common?  Risk. They are all efforts to reduce the inherent risk involved in what is, in many ways, gambling.

However, when the risk takers can reduce risk through various tax incentive programs, the people who provide those incentives with their tax money have a right to share in those huge profits that result. Those people however are struggling today, while the profits of the largest corporations and their executives' compensation packages have never been greater. There is something wrong with this picture.

The far right in this country howls that free enterprise is at stake, our very capitalist system is in danger if people, through their government, claim some of those profits. They characterize such efforts as harmful and suggest that companies will stop creating jobs, that rich people will move to places that don't require them to share those unheard of profits.

Sorry folks.  If corporate America accepts the people's money to help them reap historically high profits, then those corporations and their stockholders owe part of those profits back to the people who made it possible.

To be completely realistic one must acknowledge that special interest influence is not limited to corporate interests. Big labor has become what they were founded to counteract, just another group interested in only their own welfare.

Maybe it's just me.