The bank bailout of 2008-09 has hampered economic activity by shielding investors from the consequences of failure, says Nobel laureate economist Vernon Smith of Chapman University.

"The rescue had a hidden cost for the economy that is difficult to quantify but can be crippling," he writes in The Wall Street Journal.

"New economic activity is hobbled if it is not freed from the burden of sharing its return with investors who bore risks that failed. . . . This is the function of bankruptcy in an economic system organized on loss as well as profit principles of motivation."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

Permission of failure lets new capital flow to successful businesses, Smith says.

"Requiring new investment to share its return with failed predecessors is tantamount to having required Henry Ford to share the return from investment in his new horseless carriage with the carriage makers, livery stables and horse-breeding farms that his innovation would render obsolete."

The bank bailout has helped to keep the economic recovery weak, Smith says. GDP has grown at a pace of only about 2 percent since the Great Recession ended in June 2009.

Many experts have expressed doubts about the strength of the U.S. and global economies. Dow Chemical CEO Andrew Liveris is one of them.

"We're living in a slow-growth world," he told CNBC. The economy was in a bubble prior to the 2008 financial crisis, Liveris said. "This 5 percent world economy, I think, is very much in the past. If we've got a 3 percent, 3.5 percent world economy we'll all be very happy."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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