Like millions of Americans who invested their retirement accounts in the stock market, I was relieved that the mere suggestion of a governmental bailout of $85 billion for the insurance giant AIG reversed the market arrow up for two days. Relief turned to despair the next two trading sessions, however, until Washington bureaucrats promised another $700 billion for the financial industry in general, leading to another couple of happy trading days and sleep-filled nights. When the plan was scuttled the market crashed again, until it was finally passed, at which point I thought we were headed for greener pastures. Alas, it’s been red-filled days on the iPhone stock ticker ever since. (And all of this market anguish and elation happened before Congress approved the allocation of even a single dollar. That’s the mind of the market for you — it is as much psychology as economics.)

But then it dawned on me: since when is the government in the business of protecting corporations from self-inflicted high-risk losses? The whole point of capitalism is risk taking to make a profit. Low risk taking typically results in slow and steady growth, whereas high risk taking historically produces both high profits and steep losses. By entering the business of risk protection, the government is sending a clear signal to the market: don’t worry about taking big risks with your own and investors’ money; we’ll bail you out. In profits we’re capitalists, in losses we’re socialists.

Welcome to the Welfare Queens of Wall Street. This is corporate welfare, and once the $700 billion are allocated every employee of all the corporations receiving our money will be on the dole. (Don’t believe the caveats that this is a one-time fix for a once-in-a-lifetime catastrophe — precedence is everything in government handouts, and nearly every government program began as an emergency fix.)

The CEOs and COOs of AIG and all the other Wall Street financial giants in receipt of this corporate welfare will be welfare queens. And like the welfare queens during the reform movement of the 1990s, they should all be put on a very public welfare-to-work program in which their salaries (I recommend that they be paid minimum wage to start) are tethered directly to the amount of money paid back — with interest — to the people who earned the money in the first place (us taxpayers). The corporate leaders could be even be featured in a new Fortune 500 list, ranked by how much of our money they have returned.

Contrast the Bernanke/Bush plan with the actions of billionaire investor Warren Buffet, who put his money where the bureaucrat’s mouth is by committing $5 billion of his company’s assets in Goldman Sachs stocks. This investment gave the company’s stock a bump of nearly 20 percent in three days of trading, and boosted investor confidence in the market as a whole. This is different from what the feds did in two important ways.

One, the $5 billion is Buffet’s property and as such he can do whatever he wants with it. Two, we are confident that one of the greatest investors in history is basing his risk assessment on sound fiscal reasoning. Contrast this with Ben Bernanke’s comments to Congress, in which he called the $700 billion “not an expenditure, it is an acquisition of assets.” No it isn’t. You cannot acquire assets with other people’s money that you’ve confiscated without their permission. That’s called theft. When Warren Buffet invested in Goldman Sachs he was doing so in order to make a profit for his company. That’s called investment. It is fully moral because it is his money and his risk. You can voluntarily join Buffet in the risk by purchasing stocks in Goldman Sachs (or any of Buffet’s other corporate holdings), but Warren Buffet will never compel you to contribute to his holdings.

A short lesson in economic civics: the primary job of government is to protect our private property from being plundered by foreign powers and domestic criminals (through the military and the police respectively), to resolve disputes over property (through the courts), and to protect our civil liberties (another form of property) by enforcing the Constitution and Bill of Rights (through legislation). The government does not produce property, so in order to pay for these services (military, police, courts, legislature) it taxes us. According to the Oxford English Dictionary, a tax is “a compulsory contribution to the support of government”. A “compulsory contribution” is an oxymoron. It is compulsory confiscation, and we are all about to have $700 billion confiscated from us. For what? For protection from foreign plunder or domestic crimes against our property? No. For resolving property disputes? No. For defending our Constitutional rights and civil liberties. No. For covering the losses of corporations suffering from taking undue risks? Yes.

So, we are all about to have $700 billion confiscated from us in order to buy homes and mortgages (and the financial instruments tied to them) that are so worthless that even our most stable and endowed financial institutions could not retain their value. At least Bernanke recognizes the risk, as he told Congress: “That does expose the taxpayer to significant risk, there’s no question about it.”

Behavioral economists have demonstrated experimentally and experientially that humans are normally very risk averse. Specifically, the research shows that losses hurt twice as much as gains feel good. That is, in order to get someone to invest their hard-earned money you have to convince them that the potential gains are twice as much as the possible losses.

Why didn’t risk aversion work in the housing industry? Two reasons: short term thinking and reduced risk signals. First, potential home buyers and investors mistakenly assumed that the increasing trend line in housing prices would continue unabated indefinitely. Two, loan officers and their financial institutions intentionally and deceptively reduced the normal risk signals sent to potential customers in hopes that the artificial bubble would not burst. It did, and here we are.

Like everyone else, my emotional brain would love it if the government bailout program drives the market back up and my retirement account recovers. But that’s just greed and short-term thinking on my part. My rational brain knows that such a bailout program sends the wrong risk signals to the market. Why? Because the government is not in the business of risk management because only the people who produce the wealth can properly assess how best to risk it in future investments.

The Buffets of the world can do that. The Bernankes of the world cannot.