Why Locking Them Up Will Not Work

Abstract

In Voltaire’s Candide, the protagonist and his traveling companion, Martin, arrive in England to see an admiral being shot for losing a battle. Martin explains to Candide that Britain finds it necessary “to shoot an admiral from time to time to encourage the others.” We can see how this could work. Indeed it is what countless hollered should be the fate of bankers following the GFC after thousands had experienced great distress, lost homes, jobs, and pensions. Although banks were fined an unprecedented $100 billion in the five years post crisis, these punitive fines still left many victims and observers of the crisis dissatisfied. This discontent was exacerbated by the added insult that shareholders paid these fines rather the individual bankers. Moreover, a handful of the heavily fined banks, such as the Royal Bank of Scotland in the UK, were government owned at the time so ultimately the taxpayer paid the tab for the misdeeds of the loathed bankers. Hatred and anger towards bankers was immense—overflowing into the Occupy movement in New York, London and beyond.