The Diane Rehm show on NPR today had a guest host from George Mason University who was of course discussing the bailout. I caught a few calls from listeners, including “Chris from Clevelend Heights, OH.” His question was basically “What if we do nothing? Am I missing something, or wouldn’t this mean that there would be tough times ahead, but that it wouldn’t be Armageddon, and it may be better than sticking the taxpayers with $700 billion?”
Way to go, Chris (whoever you are)!
Of course, the guest host then responded by asking Chris if he’s looked at his 401k recently. I don’t think Chris was fooled by this distraction, but how many other listeners were? This is how the banking system gets us: we mere mortals work and save, and when there’s a crash we see our savings wiped out through no fault of our own. Therefore, this is a catastrophe and the government must do something!
One of the guests of the show made an analogy to a plane with 3 blown engines just before Chris called in. This guest said you can’t spend weeks deciding on how to land the plane – you need to let the pilot decide. Presumably, this guy thinks Paulson is the pilot, but in reality, the pilot is the market. It is true that you can’t have a committee (Congress) deciding how to land the plane, but you wouldn’t want to have the stewardess (Paulson) land it just because her uniform indicates that she has authority. You need to identify the actual pilot (the market) and let him do his job.
Chris’ analogy was that of broken levees – very apt since the previous caller had the host talking about FEMA. Chris said it seems that it would really be better to stop trying to redirect the river, and let the river go where it needs to go. When you redirect it with levees, you prevent the natural flow and stave off flooding for a time. But when the levees break, it is worse than if there had been no levees, and trying to fix the levees just prolongs the pain. Chris’ analogy is right on the money.
12:58 pm on October 1, 2008
