"First, the arbitrariness. Where do you stop?": In Politics, It Would Be Where You Agree To Stop

Here's an earlier post defending a bailout:

Sometimes posts are unintentionally humorous, especially when they're way behind the curve, or, have a view of human agency, and the politics based upon it, that is laughably theoretical. Here's an example from David Boaz on Cato:

"There have been plenty of criticisms here of neoconservatism and “national greatness conservatism,” but two of the occasional targets, Charles Krauthammer and David Brooks, have just published devastating critiques of the auto industry bailout. Here’s Krauthammer in the Washington Post:

First, the arbitrariness. Where do you stop? Once you’ve gone beyond the financial sector, every struggling industry will make a claim on the federal treasury. What are the grounds for saying yes or no?

The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policymaking that Obama ran against?"

The arbitrary gate was sauntered through quite a while back down the road. For one thing, these financial sector arguments are not obvious. Then, there have been so many changes of plan recently that arbitrary is a generous description, compared to say, oh, I don't know, frantic, say. There are a myriad of reasons that one could object to either the course of the bailout or even it's need on. I know that when people rank priorities in their own mind, they then seem obvious, but they aren't. In any case, politically you are into the realm of the arbitrary now, which means the power of constituencies matter. Oddly, in a democracy, if you spend money in one area, others are able to suggest that it would have been better spent in another. In other words, there's a kind of organic logic to the ebb and flow of politics in a representative democracy, that entails that the arbitrary knife cuts both ways, either we should stop now before it goes too far, or you cannot stop now because it will look arbitrary, stupid, and smack of cronyism, and , unless you're God, you will be suspect of having all of those human faults. To not understand the difference between politics and political theory, or economics and political economy, seems to be the common malady of pundits today. Here, for example, instead of running on about the reasons for this or that, as if you're writing a poorly thought out treatise, you should be surveying the political landscape and assessing whether or not, or, if so, you should compromise on the auto bailout to actually ease the political pressure for more spending. But no. You fancy yourself Kant, not a politician.

"Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping to shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations and unworkable work rules such as “job banks,” a euphemism for paying vast numbers of employees not to work.

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It’s the ultimate in lemon socialism."

In political economy, efficiency is only one variable. It can be trumped by ethical, political, even theological reasons. Besides, in a free market sense, if employers agreed to terms that were ruinous, astronomical, and massive, that's their right. They own the place. All a free market generally tries to do is limit the damage of businesses going out of business, as thousands do every year, to the things actually owned by the proprietor. There's no guarantee of sagacity involved. I'm constantly amazed how teleology creeps in to every kind of explanation. In general there is more efficiency in the private sector as opposed to the public sector, but it is actually an empirical question that needs to be answered each time. Otherwise, it constitutes an object of faith. In this case, one can surely wonder whether or not bailing out the automakers is worthwhile, but there are more reasons to be considered than arbitrary, which was a wash at best, and efficiency, which, while probably true, needs to be measured. After all, these banking and automakers, such paragons of wisdom and virtue, were in the private sector. You need a little more evidence to prove to me that they're any smarter than people in government, but be my guest.

"Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is “retool” Detroit to make cars for the coming green economy.

Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it."

Is it an a priori assumption that they're going to be wrong? What if it turns out to be efficient? What then? Oops. Didn't see that in my models or theories? This isn't a mechanistic realm of argument, although so many people think it is. There is good reason to believe that they will make a pig's breakfast of it, but you don't know that. How could you? Otherwise, you'd be investing in cars and be a billionaire. After all, you already know what's going to work. I wish I could see the future so clearly.

"And David Brooks in the New York Times:

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

It is all a reminder that the biggest threat to a healthy economy is not the socialists of campaign lore. It’s C.E.O.’s. It’s politically powerful crony capitalists who use their influence to create a stagnant corporate welfare state."

Hear, hear. The intellectual case for the bailout–if there was one–surely can’t survive these two clear and analytical critiques in the nation’s most influential newspapers. But then, protectionism couldn’t survive the analytical critique of Adam Smith in 1776, and yet it persists."

I've read Adam Smith. Believe me, he understood the difference between economics and political economy. Creative Destruction. That means some businesses go out of business, and other businesses are created. That's it. Calling it Creative Destruction reifies a simple description into a mechanical principle. Not. Once again, once reified, it takes on a teleological quality, outside the ken of human agency. Everyone will be glad to know that if the earth were desroyed today, it would simply be a matter, from the point of the physical universe, of creative destruction. Some planets are created, some are destroyed. That's the beauty of it. I hope everyone will get some solace from that.

There is some truth to the precedent point, but for the fact that this question exists in time, which is a continuum, and there have already been precedents. It's as if by putting his foot down, Brooks can say, " It all begins here!". Sorry, you're not that powerful. The automaker's bailout exists on a continuum of precedents. No analysis can prove fruitful without comprehending that simple fact. I've already made that point. That's the difference between politics and political theory.

Finally, God save us from slippery slope arguments. They're fallacious. In order for them to work, the two terms in the deduction need to be indistinguishable. Got that. You can't tell them apart. Period. The organic logic I'm describing is not mathematical or mechanistic, but akin to the flow of actual discourse as opposed to linguistic theory. You have to be in it to understand it, it cannot be reduced metamathematically, or to another abstract language. Such reductions aid our understanding, but do not comprehend it.

So, here's an example of organic logic. Contrary to what has been put forth, that, if we allow this auto bailout, the world will be bailed out like a mechanical process, it might work in exactly the opposite way by being the compromise that allows the opposition to agree with you and settle here, in this place, for now. And the reason that this can happen, is because, unlike a mechanical process, this one involves human agency, which is in no sense mechanical.

So, let's recap:

1) Arbitrary: True, but where on continuum? Cuts both ways.
2) Efficiency: Empirical matter. Must be explained. Not a priori.
3) Moral Considerations
4) Political Considerations

My own opinion:
1) At least as intelligent as TARP
2) Probably true, but not certain
3) In this case, given TARP, this seems a worthwhile bailout
4) More likely to end avalanche than continue it, but, if the avalanche continues, more of the blame lies with TARP and how it has been handled and presented

Doesn't this involve qualifying principles? Yes, that's what makes it politics, as opposed to political theory.