All animals are equal. . .but some

have been exposed to Orwellian thinking a little too early in their life ;-).

Clearly, the enviable outcome from a market system is a society full of winners and losers. And when I say losers, I mean it in a very harsh sense. The market is cold and uncaring in its allocation decisions, there is no doubt about that. Further, beyond the ability to win and win big, the fear of losing everything is also a powerful incentive to motivate individuals to be productive within the market (or to lobby the government for bailout funds).

Although I do not have an answer to your bigger question about how to both encourage and control greed, this tension between how much the government should control and how much should be left to the market control is very real for policymakers. Of course, we all now know that the government was not willing to take a gamble on AIG failing. The potential number of losers created from that failure was far too great for most politicians.

But now that the deed is done, we seem to be experiencing quite a fallout over these bonuses. Many Americans want these fat cats to pay back these big bonuses as retribution--to make sure they are the losers. But that fact is, these people will never be the losers. They have too much talent (at making money in the market) and too many connections in society to let that happen--ever--even if you take away those bonuses.

The losers in the scenario are not those on the top, they will survive this crisis just find. Instead, the government needs to focus on the individuals at the bottom. They lose without even playing the game (or knowing the rules). We must ensure a basic standard of living for all individuals including health care, food and shelter, and rewarding employment opportunities. These must be paid for with a progressive tax system. Because although we cannot control greed completely with government regulation at least we can protect ourselves from the fall out. Because the market will not protect the losers, even if they did not even know they were playing in the game.