Austrians on the current crisis II

another insular view from the Austrian corner of the universe...

On a related note, will folks on the Left attack the Paulson bailout plan for the naked violation of the rule of law that it is? From the proposal:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

This abrogation of the rule of law, after all, is precisely what the Left has correctly opposed about the Administration's conduct in the "war on terror," so why not continue the same opposition here? Anyone want to take a guess at the odds of that happening?

It's already happening. The problem with you Austrian folks is that you have no sense of the actual people behind the straw men you throw up as your main opponents. Then you pretend that you are simply presenting the objective truth as opposed to politicized rhetoric.

There are plenty of "leftists" or "folks on the Left," who oppose this plan--though not necessarily for the reasons you give (some, as Doug Henwood, point out that many "radical leftists" agree completely with your general position of non-intervention: "let the whole rotten system come smashing down and then “we” can rebuild it."
http://www.leftbusinessobserver.com/Turmoil2.html


In addition to conversations on the Left Business Observer, the Progressive Economists, and Lou Proyect's Marxism listservs discussing whether the plan can and should be opposed, there are blogs such as...

http://www.nakedcapitalism.com/2008/09/why-you-should-hate-treasury-bailout.html

which cites exactly this provision in the bill as being an exorbitant abuse of power. Likewise, Krugman opposes it, along with a bunch of other people who might be considered "Leftists" have critiqued this from various angles--

http://krugman.blogs.nytimes.com/2008/09/20/no-deal/

http://www.thenation.com/doc/20081006/howl/print

http://michaelperelman.wordpress.com/2008/09/20/hey-secretary-paulson-whatever-happened-to-shock-therapy/

http://www.truthout.org/article/paulson-bailout-plan-a-historic-swindle

http://mailman.lbo-talk.org/pipermail/lbo-talk/Week-of-Mon-20080915/015339.html

http://www.salon.com/opinion/greenwald/2008/09/20/bailout/index.html

http://debtonation.org/2008/09/comrade-paulson-nationalised-banks-socialism-for-the-rich/

http://www.rgemonitor.com/roubini-monitor/253529/comrades_bush_paulson_and_bernanke_welcome_you_to_the_ussra_united_socialist_state_republic_of_america

In fact, the opposition of this plan from people on the Left has been characterized by TPM as "a rising chorus"

http://talkingpointsmemo.com/archives/218515.php

and Talk Left has all sorts of posts to this effect. Obviously, they may not oppose it for all the reasons you do (or for the singular, though belated, interest in opposting government interventions of any kind: belated in this case because you seem reluctant to ever see when the state is working in the interest of naked capitalism since this seems like a natural state of affairs for you), but oppose it they do. Unlike the single dimension of this blog, they are able to recognize that this bailout--like the financial focus of the regulations that precipitated it--has a significant class aspect to it. The problem is not just that it is government intervention, but government intervention that will save the very people who have helped screw up the system through the demand for unfettered markets. The claim, ex post facto, that there simply wasn't enough deregulation, or it was the wrong kind, is ridiculous when the claim at the time that this was the necessary form of deregulation to help finance help us. Leftists knew exactly who those policies would effect and what kind of incentives they would create. The fact that this wasn't ever "the free market" was perfectly clear to them. Yet the people imposing those regulations claimed your Austrian mantle in slaying the regulations at the time. It all sounds contradictory--and yet it happened. Instead of focusing your energy on opposing the so-called Leftists, you should focus on the people who skewed the system to begin with, under the banner of deregulation. Trying to say that deregulation never happened or that it had no effect is an elegant, counterfactual argument, but it is a bit of a weasel move since everyone certainly agreed to all sorts of changes in the 1990s under the banner of "deregulation."

If the chosen solution to this is, as people at the Mises blog seem to indicate, deregulation, it is a bit disconcerting. And who should we trust to--let's face it, the word is IMPOSE--this deregulation authentically? Will the Austrians be the chosen experts to finally dismantle government in the proper fashion? And why should people trust this batch of economic wisdom more than the last one? As this unravels, it seems the critique is of "actually existing deregulation," which doesn't measure up to the ideal. This impure variety imposed in the nineties will not do and the frailties of the current situation are entirely due to the fact that it was inadequately deregulated. As much as this sounds like Communist stalwarts after 1958, we are supposed to see this as a simple misunderstanding that could be cured if we'd all just settle down and listen to the experts.

The supposed emphasis here on entrepreneurs and the vitality of individual action in the face of tragedy--the focus which seems to be the bulk of the new scholarship coming out of GMU (work on entrepreneurs after Katrina; informal economies in the former soviet union, etc.) have the unappealing correllary that, far from disproving Klein's thesis, they require a bit of tragedy for the real essence of human enginuity to shine through. The shift in emphasis, then, is simply one of degree and, of course, of the assumptions about the nature of human interaction (though even that phrase might be a little too socialist--too far away from the individual being responsible for everything alone.) It's not so much that tragedy is necessary for the imposition of these plans--it's just that tragedy is necessary: then the proof of the theology will come to fruition; people will work together, come up with creative local initiatives, make up for the fact that they no longer have any modern infrastructure or institutions.

In other words, not all that different from the "radical leftists" above, just without the idea that this is a conscious plan: by forcing people into this position, making large scale collective projects off limits except for those run by private industry, and turning them loose, you aren't forcing the model on them, right? It isn't a "plan" per se--just a hypothesis that cannot be disproven. People will be forced to use the particular mechanism of the market in the particular way that has been determined in advance: and determination will ensue. As Raymond Williams defined it: determination is the setting of limits and the application of pressures. In so far as it fails to determine some action, it will simply be left out of the analysis, except as it can be brought in later in discussion of any failures. Not much left to do except sit back and claim any success, no matter what mechanism is responsible, for the model you claim works: the opposite, of course, is true of any failures, which are accounted for by the weakness of those still wrapped up in their slave mentality and who fall back on anything that looks like collective, a.k.a. "statist" action. For them, four walls are three too many.

Of course, the pragmatic critics of the left variety have been fairly aware of all the problems in this line of deregulation. There was certainly resistance to the policies in question, but never simply because they like the state or get off on the metaphysical joy produced anytime they "destroy liberty." They were critical because they knew exactly what deregulation meant in practice: privatize the profit and socialize the losses. This was always the way it was working, but they got pilloried by people in the Austrian camp for this resistance. Now they get insulted again when they continue to point out this is how it was working--only this time with the mantra that deregulation never actually happened before, but "Leftists" are still resisting it. Which leftists, when or why are not relevant: all that is necessary is the knowledge that there remain people insufficiently faithful to the doctrine. This plays well to the insider crowd, but unfortunately, in mixed company, you can't have it both ways just by avoiding any interaction with your boogieman.

If the economists at this blog want to remain convincing I'd suggest branching out a bit instead of holding an echo chamber of back-patting and the vilification of caricatured enemies. Having a bit more nuance around what could possibly create crisis might also be useful since this has such an obvious, and enormous, market dimension to it. Refusing to call it a market failure on some level, hewing strictly to the line of the singular evil of the interventions of government makes it seem like a fairly one-sided conversation. I'm all for exercising your ability to come up with convincing arguments to counter any empirical observation made by your perceived opponents, but if that is all you're doing, it's hard not to call that simple propaganda as opposed to principled scholarship.