Privatize the BOOM, Socialize the BU$T: How Wall Street’s Risks Keep Getting Dumped on Main Street

Written By Justin Dues

America has run the same rigged play for more than a century: financiers load up on risk during the boom, pocket the upside, and when the music stops, the public gets handed the bill—directly through bailouts or indirectly through lost jobs, wrecked savings, and years of slower growth. Call it what it is: a standing promise that Wall Street’s mistakes will be paid for by Main Street.

Gains go to Wall Street, Losses go to Main Street

The bailout pattern—again and again

  • 1998, Long-Term Capital Management: A hyper-levered hedge fund nearly topples markets. The New York Fed corrals fourteen banks to inject $3.6 billion and unwind the mess in an “orderly” way. No public money changed hands—but the message was crystal clear: when the system wobbles, the official sector will organize a rescue. Moral hazard, baked in. Federal Reserve HistoryFederal Reserve

  • 2008, global financial crisis: Congress authorizes up to $700 billion through TARP (later capped at $475 billion). Treasury ultimately disburses about $443.5 billion; after repayments and income, the official net cost is placed around $31 billion. Those numbers understate the broader support: trillions in emergency lending and guarantees stabilized Wall Street while households ate the foreclosure wave. WikipediaU.S. Department of the Treasury

  • 2020, pandemic panic: The Fed launches alphabet-soup facilities—including the Primary and Secondary Market Corporate Credit Facilities—explicitly backstopping investment-grade corporate debt. The central bank’s safety net rushed first to capital markets, long before workers saw relief. Federal Reserve+1

  • 2023, bank runs (SVB/Signature): Regulators invoke a systemic risk exception to guarantee all deposits, even those far above the $250k limit. Losses to the insurance fund will be recovered via a special assessment on banks—costs ultimately recouped from customers and the wider economy. Once again, the public order is mobilized to protect private mistakes. FDIC+2FDIC+2

Different crises, same choreography: when speculation goes sideways, losses are socialized. And in the quiet that follows, lobbyists push to water down rules…until the next crash.

Why this keeps happening: incentives inside shareholder-first capitalism

Capitalism’s default setting is simple: maximize profit. In the financial sector, that means piling leverage on top of complexity until returns look magical—right up to the edge of catastrophe. In the broader economy, it means three structural tendencies:

  1. Concentration and monopoly power
    Decades of mergers, network effects, and lax antitrust have left many industries dominated by a few giants. Empirical work shows markups and market power rising across advanced economies—especially in the U.S.—a sign firms can charge more over cost because competition has thinned. IMF+1Brookings

  2. Squeezing labor
    A core path to profits is making labor cheaper: offshoring, fissured workforces, algorithmic scheduling, temping, gig-ification, and union avoidance. The union membership rate has fallen from 20.1% in 1983 to about 10% in 2023, sapping worker bargaining power. Meanwhile, the labor share of income has trended down for decades; one analysis estimates a ~5-point drop in the private sector since the late 1990s alone. Bureau of Labor StatisticsMcKinsey & Company

  3. Financialization
    Profits flow to buybacks, dividends, and deals before paychecks and product. When a shock hits, credit markets get the first air mask—as in 2020’s corporate bond backstops—because the system is hard-wired to protect capital first. Federal Reserve+1

Put bluntly: unbounded capitalism trends toward consolidation, monopoly pricing, and relentless pressure to replace labor or cut its cost. Crash risk rises, and the tab rolls downhill.

“But bailouts ‘made money,’ right?”

Even when narrow programs like TARP are later shown—on paper—to have low net costs, that accounting misses the forest: the mass unemployment, lost homes, shattered small businesses, and ruined retirements borne by households. The official ledgers don’t record the decade of underinvestment in communities after the smoke clears. U.S. Department of the Treasury

A different playbook: humane, ethical, democratic economics

If the working class is tired of funding financial arsonists, there’s another way. Not utopia—guardrails and redesign:

1) End the bailout cycle (for real).

  • Enforce hard pre-funded resolution and bail-in rules for big banks and nonbanks: investors eat losses automatically; no “weekend exceptions.”

  • Impose dynamic capital and liquidity surcharges that ratchet up with measured systemic risk; if you’re too interconnected to fail, you carry more buffer, period.

  • Add a modest Financial Transaction Tax to dampen flash speculation and fund crisis readiness.

2) Reignite competition and defang monopoly.

  • Block anti-competitive mega-mergers; break up chronic abusers where necessary.

  • Police digital gatekeepers, app stores, ad markets, and logistics chokepoints with bright-line rules on self-preferencing and data tying.

  • Mandate interoperability and data portability to lower switching costs and revive rivalry.

3) Rebalance power at work.

  • Legalize fast paths to sectoral bargaining (wage boards that set floors across an industry).

  • Strengthen the right to organize; ban captive-audience meetings and union-busting delays.

  • Tie large corporate subsidies and contracts to binding labor standards (living wages, predictable schedules, apprenticeship pipelines).

4) Share the gains by design.

  • Encourage employee ownership (ESOPs, worker cooperatives) and codetermination (worker seats on boards) so decisions include the people who make the value.

  • Convert a slice of profits into broad-based profit sharing, not just executive stock awards.

5) Public options where markets fail.

  • Stand up public banking options (including postal banking) to serve households and small firms lenders ignore.

  • Expand universal basic services—health care, childcare, transit, broadband—so families aren’t one bill away from disaster and workers have real leverage to say no to bad jobs.

6) Tax what’s undertaxed.

  • Close the unrealized-gains loophole at the very top (deemed realization at death, or a billionaire minimum income tax).

  • Enforce parity between capital and labor income; stop letting the tax code value speculation over work.

  • Fund the IRS to audit the complex evasions used by the ultra-rich; the top 1% drives a large share of the ongoing “tax gap.” Federal Reserve

7) Crisis support with strings.

  • If emergency facilities are truly needed, attach strict conditions: no buybacks/dividends, worker retention, wage floors, board-level labor representation, and equity warrants for taxpayers so upside finally flows back to the public. (TARP did some of this; make it the rule, not the exception.) U.S. Department of the Treasury

The bottom line

Wall Street didn’t get lucky. It got a system—crafted over decades—that privatizes booms and socializes busts. Left to its own devices, shareholder-first capitalism will drift toward corruption, consolidation, and a relentless hunt for cheaper labor. It’s not a glitch; it’s the incentive structure.

Americans are ready for something new: a rules-based, pro-worker, pro-competition economy where finance serves the real world, not the other way around. We know how to build it. We just have to stop paying for the fires and start changing the wiring.

Sources & key references

Justin Dues
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