McArdle on the bailout
Normally I don’t quote Megan McArdle at much length — sometimes I don’t quote her at all because I think she’s way off base — but in this particular instance, we’re seeing eye to eye, which is a neat trick considering she’s a thousand miles away and two inches taller. Assuming she’s not wearing heels.
So, I quote:
“I used to think the brain was my most important organ. But then I thought: Wait a minute, who’s telling me that?” — Emo Philips
Every time I ponder this bailout, I come back to that quote. Wall Street is telling us that Wall Street needs to be bailed out. A Goldman man has run the Treasury for six of the last thirteen years. I am sure that they think what they are doing is necessary. But anyone who works long in any industry comes to view it as having an outsized importance in the world. If you doubt this, spend a few moments listening to journalists prate about the sacred privileges of the press.
The problem is that they’re sort of right. There is no industry in America that does not depend upon Wall Street. If credit seizes up and the banks fail, everyone will suffer deeply as businesses cut back for lack of capital, mortgage capital dries up, credit card rates rise and car loans become hard to get.
But that doesn’t mean one has to support the current bailout — you can add me to the list of libertarians standing athwart history shouting “stop!!!” I don’t think we can punish risk-taking managers and the shareholders who enabled them as thoroughly as we might like without possibly taking the rest of us down with them. But allowing banks to selectively offload their crap on the government without so much as a rap on the knuckles for having bought the crap in the first place is taking things too far.
My biggest fear here is that in the rush to Do Something, they’ll do something horrible. I do not presume that McArdle agrees with that premise.
Tim Ramsey »
22 September 2008 · 7:50 pm
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.
Tim Ramsey
unimpressed »
22 September 2008 · 8:18 pm
If there’s a politician in charge (and there will be), you can bet your bottom dollar that (1) he’ll do something horrible, and (2) he’ll do his level best to get his hands on that same bottom dollar.
McGehee »
22 September 2008 · 10:21 pm
“My biggest
fearcertainty based on experience here is that in the rush to Do Something, they’ll do something horrible.”Fixed that for you.
Tat »
22 September 2008 · 11:53 pm
Er, a few years back, having read Megan regularly and talked with her a few times at the parties, I would have no doubts she’d agree with your last premise.
But I lived and learned…
Francis W. Porretto »
23 September 2008 · 3:58 am
This is one of those genuiinely soul trying times when we can’t just do something; we’ve got to stand there and watch. Absorb the losses, absorb the lesson, and resolve to do better next time.
Capitalism — a free market buttressed by strong property rights — is superior to other economic arrangements for many reasons, not the least of which is that it confines the losses from bad decisions and poor performance to the bad deciders and the poor performers, rather than spreading them among the uninvolved. A bailout with federal tax money is the exact opposite of what the government of a capitalist country should do. Yet I have no doubt that it will occur…because our rulers have an agenda of their own, and to put it gently, it’s not compatible with capitalism.
Stay tuned.
Violins and Starships »
23 September 2008 · 7:52 am
To Bail or Not to Bail…
That’s fairly close to my thoughts on the subject. I’m not shouting “Stop!” yet; I don’t think we should let the whole economy collapse because we want to punish a few big banks but, on the other hand, when you reward people for being stupid or co…
Charles Pergiel »
25 September 2008 · 2:57 am
What is this? Emo Philips week? Last week I had never heard of him and now I see him quoted for the second time. And what kind of name is Emo anyway? Sounds like a commie. I’ll bet he’s the one behind this big Wall Street flapper-doodle.