The Case for Tough Love
The risk-adverse side of me wants to see Congress pump $700,000,000,000.00 into the private sector. When bad things are happening, I think it is natural to want to see a proactive approach — to do something. What is tough for me is recognizing that my bailout desire is a product of fear, and not a reasoned decision based on what is best in the long term. Let’s face it, any Adam Smith worshipper should cringe at the thought of a “government bailout” of private markets.
That said, there is an argument for doing nothing, and it is an interesting one.
Hmm. Maybe I should have filed my last comment from “While we were…” under this thread. That’s sort of what my point is, although not being an economist tends to make my argument a bit less, um, succinct. However, I suspect (could be wrong) that a significant part of this IS in fact nothing more than fear mongering.
Since so many object to bailing out the culprits in this mess, and since so many are sure failing to do so will end the credit market as we know it, how about a 3rd option — make low interest loans to the guys that aren’t bankrupt so they have capital to lend to qualified borrowers.
Thoughts?
This guy is right on, though I can’t believe I’m agreeing with a CNN analyst from Harvard!
Does that qualify me for a “Maverick”?
” Let’s face it, any Adam Smith worshipper should cringe at the thought of a “government bailout†of private markets. ”
A a free market guy I would say the big problem is when we worship any Economic Ideology likes its Holy Writ.
There has always been a good bit of that on the conservative economic side and it has proven a purpose. BUt to be honest hearing a bunch of people scream SOCIALISM non stop and having all their friends fax their congress folks numerous times because they read Wealth of Nations or they took a Free Enterprise Class is getting silly.
Again a huge disconnect ( in fact very un Reagan like) between being slaves to Econoomic systems or political theories and real life.
If th eBush White House thought this owuld just be a hard recession they would have weathered it. THey are fearing much much more. How the GOvt responds to that is what we should fear if it occurs
I am very concerned about how bad things are going. Not about McCain or Obama winning (or not) that is irrelevant. It is how in the bag the MSM is for Obama and how willing many are to derail the economy (both pro Obama folks and those WTO conservative anarchists who want to see a melt down to bring on a mythical conservative age).
McCain has been holding back hoping to make a deal (we could all unleash on Dodd, Frank and Obama). It would be nice if accountability was shared. But instead we have a false meme that deregulation caused all of this. It did not.
I do not like this government intervention either, but if we are going to Ron Paul route we need to be honest about what that means. The tough love route might work in the long term, but it only works if you are consistent. A hybrid Ron Paul hands off approach with a massive Democratic entitlement expansion and tax increase is a recipe to Argentina style economics. This is a very big deal and people better start wrapping their heads around that.
The answer to the massive debt crisis cannot be more massive debt.
Insanity Defined: Keep repeating the same processes expecting different results.
jh:
I actually tend to think of what you call as being a “slave to economic systems” as having a unified theory of government and its purpose. I think that one the biggest problem with this country is with people playing grabass with whatever seems to make sense to them on that particular day — particularly liberals. Tell the country that you want to spend $100 billion dollars to save stray kittens in the US, and you’ll get a bunch of supporters who love kittens. To them the government is the tooth fairy distributing goodies. They don’t have a concept of what the proper powers of government are, just that it needs to do good things.
Economics is even worse. Either you believe that competition drives production and that people will seek to maximize their own self interest or you don’t. Taking a little from here and a little from there is what got us into this mess in the first place. If you believe that government should be able to take over finance companies (and don’t kid yourself, that’s the power of the purse) then accept your socialist leanings — embrace the power of the state. Don’t make excuses, be true to who you are.
Centinel, I understand what you’re saying about having a “unified theory,” but I think that notion can be taken too far.
In the midst of discussing this bailout, I heard conservatives accusing others of abandoning convservatism. I don’t think that’s entirely fair. Any human system is going to have weaknesses. I think economic conservatism is the best single system out there, but when I come up against a situation where these principles don’t seem to work, I’m not only free to but obliged to look for a workable solution.
Should we then reconsider how we frame conservatism? Perhaps. We can do that in the years after this crisis. Right now we’ve got to make decisions, and though conservative theory can be a guide, it shouldn’t be taken as law.
I’m not sold on this bailout by any means, but I’m not opposed to it simply because it’s not conservative.
See Austria vs. Chicago post supra.