Views on the Bailout: Part 3

Thanks to Matt for starting up a quality series of posts related to the bailout. I found an editorial I wanted to post yesterday or the day before about the bailout, socialism, and hypocrisy but it took me a day to get it up here, so I'll add it as part 3 in this ongoing series. Thomas F. Schaller writes for the Baltimore Sun (and Salon.com) and in a rather scathing and brilliant bit of rhetoric (cause that's all we liberals really care about these days anyway) he give us the following:

To social conservatives, Darwinism is merely an unproven "theory" about how our species evolved. But "social Darwinism" is an ineluctable fact: The smart and hardworking prosper, while the stupid and lazy fail.

Yet notice how those same chest-thumping capitalists of talk radio and at the corporate-funded think tanks often fall silent in the face of fixed markets, no-bid contracts, bailouts and subsidies for the very corporations that demand less government oversight when things are going well, then turn to Washington when things go horribly wrong.

The hypocrisies abound.

Now, pointing out the hypocrisies involved here doesn't necessarily have any bearing on the question of whether or not bailing-out is an economic necessity, I suppose. Still, I think it does have a direct bearing on some of the particulars at stake this week as the congress weighs and negotiates what a bill may look like.

These issues bear into the picture on questions around executive pay and the need for oversight. This sort of governmental largess in terms of spending cannot be made without the possibility for oversight, to do so would be somewhere way beyond reckless. Again, Shaller puts it well when he says:

Those of us who work hard and pay our taxes are getting screwed. Our Christmas bonus this year? The privilege of covering the tab for greedy executives in the deregulated insurance and mortgage industries who scoff at safety nets for you but demand a safety trapeze for themselves.

Since it's looking more and more inevitable that we'll all be screwed by this to some degree, ie: the taxpayers will be footing something in the way of a bailout, let's at least have someone watching the ways in which this screwing is taking place to make sure it doesn't become slimy and despicable on top of how ridiculous (if perhaps necessary) it already is.

Views on the Bailout: Part 2

So here is a completely opposing view from Ron Paul, of Internet fame. This might surprise you, but he believes government intervention in the economy is a bad idea. Shocking right?

Here's an interesting tidbit:
Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

This is a pretty classic conservative/libertarian/ federalist viewpoint. Well-intentioned(?) Senators in Washington pass legislation that warps the market and has unintended effects. There might be something there, but it would require a pretty massive study. Paul doesn't come close to making a real argument for that, but then it's just a piece on CNN, not really the place for Paul to get all Austrian on us.

I still think that Ron Paul may end up being the most influential candidate of this cycle... eventually.

Views on the Bailout: Part 1

Just to get it out of the way, I know pretty much nothing about the proposed bailout. I've read about it in the newspaper and heard people talking about it online, but my understanding of what's really going on is as superficial as Paris Hilton. But of course this is America and mere ignorance will not stop me from voicing my opinions, or, more accurately, repeating the opinions of smarter people.

The first opinion piece that I enjoyed is from the Times (London, not NY). It essentially argues that free-market concern about the bailout is misplaced. It's a well-written piece by someone who knows vastly more about the whole mess than I do and it is full of very British humour:

As Charles Goodhart said in the FT this week, the time to worry about moral hazard is in the boom. Worrying about moral hazard now is like “refusing to sell fire insurance just after the Great Fire of London for fear of adversely affecting future behaviour”.

I can't help but wonder, though, if it does not unfairly simplify some of the concerns that people have about the bailout. Moral hazard is surely one of the boogymen that has been invoked, but I suspect their are other legitimate worries. In any case, it is worth reading and will make for good conversation over the proverbial dinner table or water cooler.