I have sometimes bristled at the arguments presented by Geroge Will, and his dig at Obama seems particularly unneeccessary in his piece, nevertheless, I find myself very sympathetic to his arguments today. A must read in these troubled times.
The most important part of the piece is the linkage between economic regulation, executive power, and the clueless nature of the legislature. As economic regulation grows, it strengthens the hand of the executive. It does this for two reasons. First, the bureaucracy is primarily, though not solely, under the thumb of the Executive branch. Secondly, and more importantly, because when bureacratizers are asked to use economic rationality to regulate means-ends calculations, it is desirable that the ends are as clear as possible, and the branch that can define the ends most clearly is the Executive since the executive speaks with one voice. The bilout represents a triumph of the executive over de-centered economic rationality – economic decisions whose ends are freely chosen by the individuals who choose them based on the incentive structures they find around them – which portends the destabiliztion of the commercial republic on both of its axes. The constitutional arrangment of our society that free commerce creates and the arrangement of separating and balancing powers between the institutions of government may find themselves altered so substantially by this “recovery” process, that they will be too far gone to recognize on the other side.
September 29, 2008 at 7:46 am |
The logic of the bailout, and of the financial industry in general, is based on the assumption that the financial industry is already ruled by a marketized bureaucratic rationality, where the end is clearly defined as profit and the means is clearly defined as risk. I think this is the basis of a credit market, in general: reduce all potential investments to a risk/profit profile, and then allow individuals and firms to make value-rational decisions within those constraints. Instead of the state capturing economic decisions from the commanding heights as chief capitalist, it can involve itself in these transactions at the creditor level so long as it preserves the overall commitment to profitability and risk management.
Besides, capitalist waste coal and fish just as quickly as socialists do. That’s a dishonest move on Will’s part that largely undermines his argument.