Tuesday, September 30, 2008

Quick Take on the Bailout

While most of my libertarian friends are behind the "failout"--it probably won't last. And, as often happens in Washington, the second version is likely to be worse than the first. So much for small victories...

But I wanted to address the few friends of mine who actually support the bailout--specifically a self-proclaimed anarcho-capitalist/anarchist friend of mine who works in the finance sector. We'll call him "Jim."

Jim tells me yesterday that while the bailout may not work, it may slow the domino effect of "runs on the bank" that we're seeing as Wachovia, WaMu, Merrill Lynch, etc. all fall. Apparently, Jim explained, they all lent money to each other while hiding the riskier sides of their holdings and now when that risk bites them in the ass it's the least the government can do to infuse $700 billion into proven bad investments. And, he argues, because of their holdings, all these failures could collapse the economy because, well, the banks don't trust each other anymore. So, in short, we should limit the consequences of those hidden shady investments by giving them more money so they can...do more of the same again?

Um, excuse me for not being sympathetic.

Broke people borrow and lend money all the time. The difference being is that they don't have the federal government backing their bad loans/defaulters in case things go wrong. Often, the loans are illegal and thus not enforceable by law; often resulting in--shall we say?--alternative punitive techniques.

People will be ok, bailout or no. (But a bailout is coming in all likelihood.) We're not going to see breadlines and 30% unemployment--but if we, as libertarians, back "shock therapy" for other economies when they need to get their houses in order, I see no moral reason we should expect any different for our own ( lest we only support creative destruction for brown people). If we are opposed to bailouts and government intervention on principle, then we must face the consequences of shady trading and lending which shouldn't have been going on in the first place. The proverb that you shouldn't rob Peter to pay Paul applies--the fact that (apparently) so much of our economy is based on such practices is disturbing and those involved should get what's coming to them.

Such is the destructive power of the market.

Effectively, the debate comes down to the consequentialists versus the natural rights folks within the broader "movement" and illustrates my problem with the former: it's the principle, stupid. (Small "l")Libertarians disregarding their long-held and strident principled opposition to redistribution is just as bad as the hypocrites on Capitol Hill who only espouse limited government when it suits them and chuck it out the window when it benefits them. I thought we were better than that.

And forgive me, Jim, for saying this: but an anarchist supporting government bailouts is akin to a praying atheist. There's nothing wrong with it, per se, but it doesn't make a whole lot of sense.

1 comment:

Jenny said...

Anarcho-capitalist? I've heard of anarcho-primitivist, but this one is new to me....