As the US Treasury Secretary Henry Paulson was promoting his $700 billion scheme to use tax revenues to buy bad debt from the US financial system – there are critical perspectives by Paul Krugman and in Dissent, and also at the Centre for Research on Globalization – I found myself at the National Gallery, looking at Sassetta’s 15th century picture of St Francis and the Wolf of Gubbio (see the right-hand panel above).
The legend of the wolf of Gubbio goes like this: The wolf had been terrorising the good people of Gubbio, killing and eating them, savaging those who tried to hunt it down. St Francis goes into the forest and brokers a deal with the wolf. If it stops killing and eating the townspeople, they will forgive it its past wrongs, and the townspeople will feed it instead. The deal works. The wolf lives in the town among the people, and they feed it until the wolf dies.
In the legend, the people of Gubbio are sad when the wolf dies. The criticisms from Congress of the Paulson plan are summarised succinctly by the Wall Street Journal as being that they want the rescue to benefit Main Street, not Wall Street. Feeding the wolf is about politics, not economics.