Can't say I completely agree, but it does bring up some good points that are hard for me to counter. Countries that punish risk don't innovate as well.
There is a trick here. The Economist has equated risk with breaking the law. It might not be illegal to run a bank into the ground, however the Savings & Loans scandal of the 80's didn't result in bankers going to jail on trumped up charges. It is illegal to fix the LIBOR rate through collusion, and that has nothing to do with taking risks. Funny that the author cites clear evidence of criminal behavior and then goes on to argue that such evidence is difficult to come by. This is a bizarre statement considering that so few bankers have been charged, and that charges require evidence of criminal activity, not simply taking financial risks. The author (the anonymous author in the column "The Economist Explains"), argues that it's not worth prosecuting bankers for criminal behavior, because their job requires taking risks. The author doesn't want you to consider that those risks should take place in a legal framework, or that bankers are currently at very low risk of prosecution for working outside of it. How many countries are known for their vibrant start-up cultures, and which of these tend not to prosecute bankers for criminal activity? Are bankers in Russia often prosecuted for criminal activity? How vibrant is their 'startup culture'? A statement like this one about the UAE is meaningless, but the author uses it to make a point.Rather than spending their time looking for new ways to punish bankers, policymakers would do better to find ways to avoid having to bail out banks out in the first place.
Countries such as the United Arab Emirates that penalise bankruptcy and even threaten debtors with prison are not known for their vibrant start-up cultures.
Agreed this is a weird article from the Economist and sort of shitty. There are two chains of thought in this article that bother me. First, I think everyone accepts that capitalists businesses have to take risks, but there is also the question of taking responsibility. It isn't actually a risk if there is no....risk of things going poorly and getting in trouble. Second, is what you said mk. This article confuses the idea of risk and the idea of illegal practices. Something can be a risk and be illegal or be a risk and be legal. The LIBOR fixing is clearly illegal (and not really a risk either, the whole point of it it was to eliminate normal risk, instead they were risking getting caught by the law). In the US it might be more difficult, people were doing stupid things, but they weren't always illegal, which maybe speaks to the idea that we need to change our laws. PS. Just so you know the Economist doesn't give bylines in general. I think its because they want everything to be super uniform and feel more authoritative.
Yes, those are two reasons. But, I think there are others. We don't know if this article came from inside our from outside, or why it was written. Was it commissioned or submitted? This is a strong opinion piece, and nothing ends up in a publication as large as the Economist by accident.PS. Just so you know the Economist doesn't give bylines in general. I think its because they want everything to be super uniform and feel more authoritative.