Monday, September 29, 2008

Bailout?

Sometimes others just say it better:

Dick Armey on voting no to the bailout.

Thomas Sowell on bailout politicians.

Alex Epstein on bailouts without reform.

Robert Bidinotto on the bailout and the crisis.

Martin Masse on the bailout as socialism.

Yaron Brook: stop the bailouts.

Edward Cline on the history of bailouts, etc.

Jeff Perren comments on several aspects of the problem.

John Allison against helping the losers. (H/T Ghate)
John Allison on the “rescue.” (H/T Hicks)

Michael Graham on bailout and personal responsibility.

Nicholas Provenzo explains the history in clear terms.

Charles N. Steele celebrates the "no" vote.

Pamela Geller … well, let her say it.

Update1: Robert Trancinski: Kill it for good!

6 Comments:

Anonymous Anonymous said...

I concur with the articles decrying the bailout. Our economic problems derive from our governmental policies, and would be corrected by the free market and individual responsibility; in the free market Fannie and Freddie would have vanished; we ought not give control to those who created and furthered the insolvency, nor continue the Fed; rewarding failure creates moral hazard; people will now experience the failures of government intervention.

Yet if the advocates of the free market have had a sound perspective, why have they lost the war of ideas to the statists and interventionists? In other words, if the same arguments that the Austrian economists are repeatedly defeated (in terms of public opinion) does it not behoove us to inquire why?

I submit that those who advocate the economic free market have been out-competed in the political free market of ideas, on two planes: the moral and the intellectual. Perhaps this appears fatuous, for isn’t the free market moral in comparison to governmental theft, and isn’t Austrian economics sounder than the fallacies of the Keynesians? Let us consider the way in which our adversaries operate. They claim that it is moral for the government to take from those who have too much, to give to those in need. Although that is surely mistaken, that argument is rarely examined or refuted. The Austrians in particular eschew moral considerations, and von Mises (as a utilitarian) prefers to keep the area scientific and consequently Wertfrei. We should heed Ayn Rand who advocated the moral case for capitalism, and apply this in the area of economics. Here, a moral starting point is that one should not spend more than he can afford, let alone spend what does not belong to him. (Can there be a moral refutation to our decrying becoming a debtor nation, with $53 trillion in unfunded liabilities?) Also, theft and deception are wrong. (Can there be a moral refutation to the view that lying is not right?) Such moral guides are comprehensible to the layman, and not easily gainsaid. (The answer that people ought to help the needy is a matter of private choice, so it is not applicable to the force of government.) The second plane is that of intellectual simplicity. The Keynesian positions are incoherent, but easy for the public to understand: CEO’s should not earn millions for faulty work, while others work hard and remain poor; give people money and they will purchase consumer goods, which create jobs and build the economy. Austrian economics can fill volumes of books, and require sophisticated understanding, to address such matters. They do not however reach the public, for they are difficult to follow.

An alternative is to provide brief and clear positions. For example, there are but three ways for economic deterioration to occur: poor business practices, fraud, or government intervention. Poor business practices are corrected by the market, as they are out-competed and fail; fraud is criminal behavior, to be seriously prosecuted; government intervention can only aid unprofitable ventures, at the expense of solvent ones, and should be curtailed. To repeat, the remedies are to let poor businesses fail, prosecute fraud, and preclude intervention. Here, capitalism permits correction, while government is committed to (and rewarded by) economic failure.

So my point is that we can be competitive in the war of ideas, by competing on the moral plane, and by employing intellectual arguments that are simplified to the point where the layman can judge for himself. This can be done for dealing with Ponzi schemes, creative destruction, fiat money, artificial credit, and clarifying who wins and loses by transfers of wealth.

In sum: the advocates of the free market are technically correct and sound in principle;
they are defeated however by not entering the war of ideas on the moral and intellectual plane; a moral perspective is not Wertfrei, but calls for a brief statement of what is right or wrong; a competitive intellectual position must be simple enough for the layman to comprehend; this yields remedies based on the fundamentals of what is right and sound.

Weingarten

9/30/08, 7:16 PM  
Blogger Jason_Pappas said...

I agree. I purposely didn’t write on the topic because, for professional reasons, I have to immerse myself in the economic details yet I believe our fellow citizens can understand the problem and what to do from the common moral concepts that we are all familiar. I want to resist talking about the economic details (which both you and I can do with ease).

It’s important not to lose sight of the moral issues at stake and the virtues that one might be tempted to abandon for the sake of expediency during a panic. To talk about this while stressing enduring moral principles takes a focus that I believe is lost in most of the articles in the links above.

I believe we talked about this in the past and I’m glad you brought forward these concerns once again.

10/2/08, 11:00 AM  
Anonymous Americaneocon said...

That's a nice roundup, Jason.

I appreciate your comments on my blog, and as you know I haven't endorsed the bailout so much as I've defended state power in economic crisis. Yet, WSJ has a good editorial this morning, where they say:

"The Paulson plan isn't what we would have drawn up. It will not by itself inject capital into troubled banks, and it carries risks in how Treasury will price toxic assets when it buys them. But it is one more policy tool at a time when something needs to be done, and it is the only one currently up for a vote. Passing it won't by itself revive the banking system, but defeating it will guarantee far more damage to far more Americans"

"Bailing Out Ourselves," WSJ, 10-2-08.

10/2/08, 11:49 AM  
Blogger Jason_Pappas said...

Protecting bankrupt Americans from their own folly by denying others their rightful property is ethically questionable and in the long-run self-defeating. Yes, we suffer from the loss of opportunities when others fail to act rationally and virtuously. But we can’t prop them up; and worse, violate the rights of those who acted with prudence, foresight, and restraint.

A coordinated liquidation of mal-investment will be economically painful. But let’s not compound that pain. And let’s not delude ourselves that we can continue to double-down and avoid the inevitable liquidation.

Given that the regulations and monetary policy were the major factor in creating the problem, might we be less willing to turn more of our lives over to the regulators and monetary authorities? Are we not to own our own lives? Should we not stand on our own feet at some point? When is that point? If not now when?

10/2/08, 12:18 PM  
Anonymous Anonymous said...

I thank Jason for focusing upon the “common moral concepts” and for noting that “stressing enduring moral principles takes a focus that I believe is lost in most of the articles in the links above.” As he notes, we “talked about this in the past” so my sole addition is advocating the need to present economic issues in simplified terms.

Americaneocon concurs with the WSJ editorial that “something needs to be done”. I believe that on this issue (as well as on illegal immigration) the WSJ follows a vested interest in helping certain businesses. Here again, I concur with Jason that “Protecting bankrupt Americans from their own folly by denying others their rightful property is ethically questionable and in the long-run self-defeating.” As to how best to proceed, I recommend the following article.

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html
Commentary: Bankruptcy, not bailout, is the right answer, By Jeffrey A. Miron

Weingarten

10/2/08, 2:03 PM  
Blogger Always On Watch said...

Almost two months later, we are now witnessing the burgeoning of the bailout. Remember the promises, tacit and expressed, that the trend we now see would not be happening?

11/27/08, 10:41 PM  

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