Rewarding Irresponsibility?

There is a local insurance company's slogan that is "Rewarding Responsibility." That is a pretty good principle to stand on. I think most people would agree that the fundamental purpose of government is to encourage good behavior and punish evil. Sometimes I think that we get a little confused as to what we should expect from the government and what its role should be. Should the government bail people out for making poor decisions? For example, the housing industry is struggling right now because people made some poor decisions. Is it the government's responsibility to keep people from foreclosures? I know it sounds harsh, but I don't think so. That would be rewarding bad behavior on both the part of the borrower and the lender, which in turn, punishes those who have maintained good behavior. Perhaps it could be argued that the government should have stepped in sooner to punish the bad behavior of the lenders before this happened, but now to bail them out would be inferring that what they did was not their fault.

Objective observers of the housing market predicted that it was overinflated because of the low interest rates and easy credit. However, many people chose to ignore the signs because they were hoping to make a bunch of money. The market will eventually correct itself. Yes, some banks and some people will probably lose in the process, but that is the risk they took when they decided to loan/borrow high-risk mortgages.

There are some Presidential hopefuls encouraging a bailout of the mortgage industry, but I don't think there is a enough money in the already depleted coffers to easily remedy this situation. Plus, as I said above it will only continue to encourage irresponsibility.

FYI: Listen to this interesting interview on NPR that I heard in December.