Windfall Profits

In which Rat asks essentially rhetorical questions

Hardly anyone loves the banksters, and slapping them with an extra tax has lately been quite a popular idea in parts of Europe. But is the government really better or more prudent?

Actually, «just paying bonuses» is one of the least bad things that could happen. They could as well start new programs or create new agencies that would add to the deficit later when the windfall revenue dries out. One could of course wish the government paid down its debt but when was the last time it actually happened?

Also, the very concept of «windfall profit» might be misguided. Sure, it’s not a product of hard labor, sweat and toil; but it’s still a product of earlier decisions, correct risk assessment and positioning. Taxing it away is destructive to the motivation of economic agents, just as bad as bailing out those who made bad decisions. Why bother with risk analysis if the government will take «care» both of extreme losses and extreme profits?