Why Bailouts Should Be Painful

An intriguing point by Adam Ozimek:

[W]e should be concerned about profitable bailouts. No matter how necessary bailouts are at some points in time we want them to be costly both for those being bailed out and for those doing the bailing. Long in the future when the economy is back at full employment, the argument that “we bailed out banks before and made money on it” or “we bailed out G.M. before and made money on it” will be more salient than today’s popular anti-bailout sentiments are. It is an easy debate point that I am afraid will stand the test of time whereas the popular backlash will fade into memory.