"I've abandoned free-market principles to save the free-market system"

Matt Welch | December 16, 2008

That's my Bush!

Agence France Presse adds the inaccurate context:

Bush's comments reflect an extraordinary departure from his longtime advocacy for an unfettered free market

If by "unfettered" AFP means "most fettered since Richard Nixon," etc.

More from our lamest duck:

"I am sorry we're having to do it," Bush said. [...]

"I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse." [...]

In the interview, Bush said that a "disorganized bankruptcy" of the carmakers could create "enormous" economic difficulties.

One reason that this series of events, starting with Bush's four-paragraph white flag of Sept. 24 and on through a bailout season that may climb to $10 trillion before Barack Obama even shows up for work, has driven some of us near-crazy with apoplexy, is that every last detail has been straight out of the classic playbook of reluctant central planners everywhere. It's not the bankruptcy, it's the disorganized bankruptcy. Messy! Heedless risk-takers deserve to fail, but, c'mon, Goldman Sachs!  Theory X is great, but we've got a crisis here!

Back when the subject was still the War on Islamo-jerkoffs, I called this phenomenon "Women's Shoe Libertarianism"–fun to wear on a sunny day, but useless in a storm. Same goes for the Women's Shoe Capitalism of George W. Bush, the modern Republican Party (until we see any proof otherwise), and the playground scheming of would-be kingmakers from the once-proud intellectual Right. They blinked, tightened the screws, and embraced big government when 19 hijackers killed 3,000 people on that terrible day, and they're blinking, tightening the screws, and embracing big government before handing off the reins to the alleged "party of Big Government."

All this doesn't mean, despite the fervent wishes of feeble anti-libertarians, that those of us who on balance prefer less government refuse to acknowledge when private actors in the market royally fuck up, or when the government does its regulatin' badly. Quite the contrary–as Katherine Mangu-Ward ably demonstrates in our dynamite January issue (would you people subscribe, already?), the failure to create a clearinghouse for credit default swaps, among other financial instruments, was a critical mistake.

But the real failure here is one of nerve, of imagination, of historical memory. You cannot save something by destroying it, or abandoning it, or even giving it a few stiff raps in the kneecaps. "Paternalism" is too mild a word for the mentality that produces such a sentiment, let alone the disastrous policies to back it up.

Here's the Abandoner in his own words:

Comments

</|12.16.08 @ 10:56PM|#

Tell Jesse Walker this is how the real pros do a H%R post Matt.I been waitin' for this one.

BoBDylan(ish)|12.16.08 @ 11:48PM|#

You got a lotta nerve
To say you are my friend
When I was down
You just stood there grinning

You got a lotta nerve
To say you gota helping hand to lend
You just want to be on
The side that's winning

You say I let you down
You know it's not like that
If you're so hurt
Why then don't you show it

You say you lost your faith
But that's not where it's at
You had no faith to lose
And you know it

You heard it here first...|12.16.08 @ 11:50PM|#

"I am sorry we're having to do it," Bush said. [...]

"I feel a sense of obligation to my successor to make sure there is not a, you know, a huge economic crisis. Look, we're in a crisis now. I mean, this is -- we're in a huge recession, but I don't want to make it even worse." [...]

"Therefore I have issued an executive order postponing the inauguration until we get this crisis sufficiently under control."

In the interview, Bush said that a "destabilizing transfer of power" could create "enormous" economic difficulties.

"It would simply be irresponsible of me to leave my successor this kind of crisis. Secretary Paulson assures me that the TARP legislation gives him the authority to postpone Obama's swearing in if it is necessary to prevent further erosion in the housing and finance markets. As much as I hate to do it, extraordinary times call for extraordinary actions so I must abandon democratic principles in order to save democracy."

"Further, in order to make sure that we have the stability in power necessary to fix the enormous problems, my executive order will not be subject to any kind of judicial or legislative review. Of course I assure the American people that I will no stay in office one day longer than is absolutely necessary. I know they will understand and support this unprecedented but necessary action."

Leftnuti|12.16.08 @ 11:50PM|#

Uhm, since when has Dylan been an advocate of the free market?

BoBDylan(ish)|12.16.08 @ 11:52PM|#

Ever since those Stalinist fuckers axed
my electricity back there at Newport.

|12.16.08 @ 11:55PM|#

McCain would have been worse.

donkey lips|12.17.08 @ 12:02AM|#

The thing came apart.

|12.17.08 @ 12:21AM|#

Gag me with a spoon!

Freddie|12.17.08 @ 12:27AM|#

OK.

But what's the alternative, I guess, besides Hooverism.

Douglas Gray|12.17.08 @ 12:31AM|#

At one point during the campaign, McCain said in so many words, "I don't know a damn thing about economics."

The main difference between him and Bush is that Bush doesn't even realize that he understands next to nothing about economics.

tarran|12.17.08 @ 12:38AM|#

Freddie,

What George Bush is doing is pretty much what Herbert Hoover did.

The myth that Herbert Hoover has a laissez faire attitude is a myth, much like the myth that George Washington chopped down a cherry tree and owned up to it.

Google Rothbard's America's Great Depression and you can read the gory details.

What we want is an alternative to Hooversism. Just as Herbert Hoover pushed the U.S. into a depression, George Bush is pushing us into one now.

Freddie|12.17.08 @ 12:47AM|#

The myth that Herbert Hoover has a laissez faire attitude is a myth, much like the myth that George Washington chopped down a cherry tree and owned up to it.

I'm sure you're right about that. My question is how government can possibly help to combat this economic crisis without increasing the government in some way, even if it's just in the mundane sense of increasing spending. I'm about the last person to ask on any economic question, but it seems to me to be pretty well argued that a) we need to generate growth through consumption and spending to alleviate this problem and b) the usual tools of interest rates and monetary policy are insufficient to the task, so direct government intervention is necessary.

I'm open to hearing different ideas, I'm just curious how they could be helpful to the current problems without increasing government.

bill|12.17.08 @ 1:34AM|#

C'mon Matt. It's all going exactly as the Illuminati planned.

Rimfax|12.17.08 @ 1:46AM|#

It's just like when someone says "The Constitution wasn't meant to be a suicide pact. That's why we have to violate it."

|12.17.08 @ 1:48AM|#

I'm open to hearing different ideas, I'm just curious how they could be helpful to the current problems without increasing government.

Well, if you want to increase spending without increasing government, you simply have the government issue debt and blindly mail checks to households.

If you believe that artificial consumption is critical in turning around a recession -- a very debatable point -- there is no reason that government consumption is required. In fact, government consumption is quite likely to be much worse than simply tolerating reduced consumption.

A recession is nothing but the capital of the economy allocated toward things people don't want to consume -- e.g., houses and securities. Recovery comes when the capital is reallocated toward things people do want to consume. Stimulating consumption may be helpful because it signals to capital what it is that people want. Government consumption, however, does not reflect what people want to buy: rather it reflects what politicians want to buy their constituents.

In short, you can stimulate consumption without growing government, and growing government to stimulate consumption is exactly counterproductive to recovery.

cuernimus|12.17.08 @ 2:54AM|#

Now I'm curious how Matt Welch dresses on a sunny day; I'm sure he looks fabulous. I, however, cannot get down the heel-toe motion that heels require, so I have to settle for flowery dresses and silky underwear.

Michael Powell|12.17.08 @ 4:32AM|#

If he's breaking away from free market principles in order to save the free market system, how about helping out those "hard working people" instead of the people that perpetrated the excesses of Wall Street???

|12.17.08 @ 4:46AM|#

Freddie the essential problem is that government stimulus results in no real increase in wealth. The stimulus must come from a) taxes, b) bonds, c) money creation. All three forms detract value from things already existing, further deduct an administrative surcharge, and then reincarnate the wealth as something else.

If you factor in the fact that government takes money to process extraction and distribution the result is almost always a net loss. This is why government stimulus has never worked, ever. Think about it, since this style of intervention has come about recessions have been longer, with higher levels of unemployment and higher inflation. It is not a coincidence.

thoreau|12.17.08 @ 5:13AM|#

Matt-

You like wearing women's shoes on sunny days?

I think that Republicans use the phrase "free market" in an attempt to discredit it.

Some Guy|12.17.08 @ 6:36AM|#

I'm going to have to work on starting my own massive insurance company. I just have to make myself too big to fail by the time the next bubble comes, then I'll pay myself massive bonuses until the bubble pops and get I bailed out.

Mike Farmer|12.17.08 @ 7:03AM|#

Freddie asks a good question. As long as every problem is a statist nail, then every answer is a statist hammer. Without restructuring government by limiting it, then the answers are limited to statist answers. Once government is limited, corporate welfare is ended, spending is cut, then taxes are cut, stifling regulations are abandoned, small to medium businesses have the freedom to grow, people have confidence to spend on things they actually want and free market principles begin to work.

As long as statists are creating turmoil by interference, no one has the confidence to look and act long term because they don't know what to expect. And since there is no confidence, statist, who can't imagine free market principles at this point, think they have have to spend in an attempt to generate confidence and growth. We're caught in a cycle of symptomatic solutions to symptomatic problems and can't break out of the loop to begin applying fundamental solutions to fundamental problems.

Mike Farmer|12.17.08 @ 7:05AM|#

I left out an "s' on the last "statists". There may be other errors, it's early.

|12.17.08 @ 8:23AM|#

and they're blinking, tightening the screws, and embracing big government before handing off the reins to the alleged other "party of Big Government."

Fixed, Matt. Unless you're arguing that the political party that routinely gets 90%+ of the DC vote in presidential elections is secretly planning to downsize the federal government despite election rhetoric and a loooong track record of growing said government, and all those voters in DC missed that salient point and voted against their direct interests.

Abdul|12.17.08 @ 8:33AM|#

Village status: saved.

Also, somewhat destroyed.

|12.17.08 @ 8:34AM|#

I've been saying "worst president since Johnson" for so long, I never thought he'd really give Johnson a run for his money.

Travis|12.17.08 @ 8:43AM|#

I think it's time for someone to throw another shoe at him.

|12.17.08 @ 9:19AM|#

You cannot save something by destroying it, or abandoning it, or even giving it a few stiff raps in the kneecaps.

You know, like the car industry. Or the economy. Or the industrial midwest.

|12.17.08 @ 9:26AM|#

But what's the alternative, I guess, besides Hooverism?

This, of course, is the salient question. Old Herb did a fine job of limiting government and balancing the budget in 1928.

Long Ayn Rand-style theses decrying "statism" won't do us much good when AIG, Citigroup, Wachovia, Lehmann Brothers, Bear Stearns and General Motors have collapsed and a depression has arrived, although some may feel better as they stand in the soup line knowing they stood by their principles.

What's the alternative? Let the disaster come? Bring it on?

|12.17.08 @ 9:50AM|#

Every time I hear somebody say, "They oughtta/ gotta do something...." I have to fight back the urge to punch him (or her).

It's getting harder every day.

|12.17.08 @ 11:23AM|#

Long Ayn Rand-style theses decrying "statism"Gargantuan federal bailout programs and micromanaging of banks and heavy industry won't do us much good when AIG, Citigroup, Wachovia, Lehmann Brothers, Bear Stearns and General Motors have collapsed because the government cannot support a failed business model indefinitely and a depression has arrived,

Seriously, if we're in line for a depression, its because of structural problems in the economy that the government simply cannot make go away. Bailing out individual firms won't stop it. Bailing out major sectors of the economy won't stop it, either, because the government can't bail out a big chunk of the economy forever.

The Fed shot its next to last bolt yesterday in its fight against deflation when it lowered rates to zero. All that's left is to run the printing presses, which, as far as I can tell, guarantees snap-back inflation down the road.

|12.17.08 @ 11:51AM|#

The best part about this is that any suggestion of restraint or respect for free markets during the Obama years will be met with, "But even Bush (and the Republicans by osmosis) agreed with the need to take over everything!"

|12.17.08 @ 2:17PM|#

I'm sure you're right about that. My question is how government can possibly help to combat this economic crisis without increasing the government in some way, even if it's just in the mundane sense of increasing spending.

Step one, cut spending! The money comes from the private sector in one form or another. Keeping that money in the private sector is what is needed. Increased spending is like treating anemia by bleeding. Even if Bush were miraculously intelligent, there's still a net drain as the money works it's way through the bureaucratic system.

Step two, stop the bailouts! If you want to help mortgage holders, then help the mortgage holders, but stop bailing out every rich guy who comes begging.

Step three, fire Bernanke! The Fed is out of control, it needs to be slapped back into sanity. At a minimum we need to get back to the Taylor Rule. Set a low inflation target and STICK TO IT!. And stop shitting your pants everytime someone mentions the word "deflation".

Step four, get out of the way! There are a ton of regulations hindering the economy, and a flood of subsidies distorting it. Start trimming it down.

enabler|12.17.08 @ 2:27PM|#

joe | December 17, 2008, 9:19am | #
You cannot save something by destroying it, or abandoning it, or even giving it a few stiff raps in the kneecaps.

You know, like the car industry. Or the economy. Or the industrial midwest.

I guess it is my fault that he became a junky, locked in a cycle of destruction. Perhaps if I give him more cash, he will clean himself up and come around.