EJ Dionne has a column wherein he mentions something I had noticed:
If governments around the world, including our own, had not acted aggressively — and had not spent piles of money — a very bad economic situation would have become a cataclysm.
But because the cataclysm was avoided, this is an invisible achievement. Many whose bacon was saved, particularly in the banking and corporate sectors, do not want to admit how important the actions of government were. Anti-government ideologues try to pretend that no serious intervention was required.
This reminds me of Upton Sinclair’s comment, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
We’ll continue to get Enrons and World Coms and Lehman Brothers and the Bernie Madoffs and the rest of them so long as the Masters of the Universe type propaganda goes unchecked during the boom times. This is the story line that suggests a certain few individuals have earned untold riches through their unparalleled skill, hard work and intellect. The money flowing to their companies and to them is due, in this story line, to the infallible market giving them their due. Inevitably the boom times end and the mask is, at least briefly, ripped away. We learn that these folks are relatively ordinary human beings after all. Often the wealth flowing their way had as much or more to do with luck, fraud, oddities of our economic environment, bubble making, cronyism, and other variables than with reasonable compensation for the value actually created by these individuals.
There seems to be a powerful need to forget the moments – such as last fall – when the curtain is drawn away and the Great and Powerful Oz is revealed to be a jumped up huckster. Now we’ll see the rise of a narrative where the bail out was unnecessary because the fall out would not have been so bad. (I contrast this with a slightly different narrative where the fall out would have been catastrophic, but we should have let it happen anyway so the proper lessons would get learned.) The Masters of the Universe will get back to being Masterful, the government will get back to being the enemy that never did anyone any good, and the Masters’ dynastic fortunes will return to being viewed as nothing more than proper compensation set by a rational marketplace for a job well done. Rinse. Repeat.
So no one gets me wrong, it’s not that I think anyone could do any job or that compensation should be flat. It’s more that folks seem to prefer to ignore that compensation for some privileged few is wildly out of proportion to the value that they add. And, the imbalance causes economic turmoil.
His assertion is based on the equally-invisible. How does he know that “a very bad economic situation would have become a cataclysm”?
How does he know that the monies were generally well-spent– or should have been more (a la Krugman) or less?
Even if he’s (accidentally) correct, Mr. Dionne apparently needs to become acquainted with false-cause fallacy and basic economic theory.
After 20 months of Bush/Obama/Dem Congress bailouts– and a far longer recession than normal– maybe the burden of “proof” belongs on those who claim that govt activism has helped rather than hindered the recovery?
I’m with you Doug. It burns me up that way too many people will vote in a manner that reflects this false spinning of history.