Who's the Fools?

$700 billion bailouts are worth the time to think through.

As long as there have been governments, common folk have complained that their rulers know nothing of their lives and care even less.  Throughout most of history, that's pretty much been true - what did Marie Antoinette, King George, or the Emperor of China know about what was really going on in their vast domains?  The high and mighty royals and aristocrats lived artificial lives of separation; a prince could go from birth to death without ever having a free conversation with a commoner.

This sort of arrogance, though, didn't end well.  Today's successful countries recognize that what the ordinary people think matters a lot, and should be listened to - if it isn't heard in the halls of legislation, then it will surely be heard at the ballot box.

So while it's quite normal for politicians to have different agendas and goals from those of the voters, it's not often that the vast majority of political leaders in a democracy and the vast majority of their constituents are completely at odds on an issue.

Which really has to make you wonder what's going on.  In a little over a year, we have had not one but two major issues on which the American people were nearly unanimous one way, and the politicians and elites were nearly unanimous the other way.

Amnesty for Illegals

Consider last summer's amnesty bill.  Simply put, all of our great and good wanted some variant of open borders and citizenship for all comers; the American people, on the other hand, want illegal immigrants thrown out forthwith and any new ones prevented from entering by whatever means necessary up to and including mine fields.

Only after the relentless pounding of the alternative media and the recurring shutdown of Capitol Hill switchboards by infuriated constituents did the amnesty bill squeak to a defeat.  Even now, our leaders say they have every intention of passing it again as soon as the voters' backs are turned.  It's difficult to imagine a more thorough disconnect.

Amnesty for Fat Cats

Or it would have been until recently.  As furious as voters are at foreigners being allowed to freely come in and take their jobs, they hit the roof at the thought that their hard-earned tax dollars should be doled out to fat cats who don't want to suffer the penalties of their own bad decisions.  Once again, we have a profound and total disagreement: All our leaders in politics and industry, on both sides of the aisle, unanimously support the $700 billion Wall Street bailout plan; and, polls seem to show, as much as 80% of the voting public is just as vehement in opposition.

When there is a disagreement between two sides, it's usual to say that the truth lies somewhere in the middle, but on disagreements as stark as these, it's hard to imagine how this could be true.  Would the voters and politicians both support, say, a $100 billion bailout or amnesty for, say, half the illegals?  Probably not.

So, logically, one side or the other must be flat wrong.  Either this bailout is urgently needed to save our economy, no matter the cost; or it is not, and our elites are merely exercising self-dealing as usual.  Which is it?

The Death of Partisanship

It's truly astounding to see how the anger cuts across all party lines and classifications; everyone who's complained about all the recent inter-party bickering should be overjoyed at the unanimity we've found on this question.

How many issues are there on which the John Birch Society and the Daily Kos are both calling on their members to grab pitchforks and torches and storm the barricades to deliver the same message of rage?  What sort of a strange situation is it when Speaker of the House Nancy Pelosi on the one hand says she supports the bailout bill, and on the other hand reportedly suggests that Republicans who vote for it should have that vote used against them in campaign ads by their Democratic opponents?

To add to the confusion, in online forums which are usually echo-chambers preaching to the choir longstanding political allies are coming to blows.  Some believe the bailout to be essential for our salvation and argue for it as if their very life depended on it.  In response, the majority antis consider the pro-bailout forces to be traitors to the Cause, whether that Cause be small-government conservatism, welfare liberalism, or something else

We have right-wing bloggers screaming at each other.  Those who favor the bailout say, "The economy is going in the tank, we have to fix it."  The antis say "Government involvement always leads to trouble, government meddling in Fannie and Freddie caused this, how can the government fix it?  If you'll sacrifice principles for convenience, what good are your principles?"

The lefties are no more united.  Some say, "We have to fix the economy to keep poor people in their homes."  Their antis say, "Let the fat cats go broke! If you'll sacrifice principles for convenience, what good are your principles?"

In neither case nor in any venue can anyone muster the credibility or arguments to be truly persuasive, and there is no help from on high.  It's impossible to imagine anyone no matter how erudite or respected who is calm enough and trusted enough to sit down with the American people and explain just what the heck is going on.

In Search of an Honest Pundit

The trouble is, we can't separate the players from their self-interest.  Modern financial markets are impossibly complex; there are very few people who even pretend to understand how they work.  Even winners of the Nobel Prize for Economics have humiliated themselves when it comes to actually running investment firms.

So it makes sense to listen to experts, all of whom are by definition wealthy: if you're an expert on the stock market, how could you not be?  But by virtue of the very wealth that proves their expertise, they and their wealthy friends would perforce benefit from using our money to stop their fortunes being lost, regardless of whether or not bailing them out is, in fact, what the country needs.

It's easy for the little people on the ground to complain about the expense, but by definition, the fact that they are ordinary people proves that they don't understand our financial system.  If they did, they wouldn't be ordinary.

Then you have to look at the actions of those in charge.  Are the beltway bandits acting as if there's a real crisis?  Well, Congress surely is not.  If the members of Congress truly thought our economy was about to collapse, they wouldn't have larded up the bailout bill with $100 billion worth of pork for special interests, if for no other reason than they wouldn't have had time to do so.

Do the President and his advisers act like there's a crisis?  Well, they say there is a crisis, but the interesting thing is that they won't bother to explain - at least, not to us.  The President has addressed the nation, but what he's said amounts to not much more than, "Trust me, we need to spend all your money, but it's for your own good."

This isn't reassuring, the more so when, as Forbes reports:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.  "It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."  Wow. If it wants to see a bailout bill passed soon, the administration's going to have to come up with some hard answers to hard questions.

Is it possible that Secretary Paulson knows something we don't?  It's better than possible, it's absolutely guaranteed: he's rich and we aren't. Similarly, President Bush knows more than we do, but something important enough to require our shelling out almost a trillion dollars with no strings attached is important enough to at least attempt a cogent explanation.

When the American people aren't being treated as though they deserve an explanation, nobody should be surprised when they return the disrespect.  Our leaders are acting like tyrants all through history have acted when they wanted to do something the people didn't want - tell 'em to shut up and do it regardless.

What few explanations have been given make little sense.  It's been said that $700 billion is urgently needed.  Then it was explained that the American people will actually make a profit on this money - we're just buying securities when they're down, and when the price goes back up again, the Treasury will sell them for more than they paid.

But if this is true, surely there are lots of other people, firms, and governments in the world who collectively can come up with $700 billion - why aren't they out there shopping if our securities are such a bargain?  Or has Warren Buffet already bought all the good stuff, leaving nothing but junk for the taxpayers?

So Where's the Fire?

It's obvious that, as much of a problem as we clearly have, the problem cannot possibly be the "Act Today!" crisis it was painted as - after all, the markets went down, then they went back up again, then down, then up, just like normal, only more so.  The trend is not our friend, but the decks are not yet awash.  Shouldn't we take the time to clearly understand where the holes are before we start randomly running around in circles throwing bales of cash around?

We may be about to find out just who are the fools and who the wise, level heads.  Our leaders who are running around screaming?  Or the American people, who are badly frightened but don't want to do anything without both thinking it through and clearly understanding it first?  Thomas Jefferson once said:

Convinced that the people are the only safe depositories of their own liberty, and that they are not safe unless enlightened to a certain degree, I have looked on our present state of liberty as a short-lived possession unless the mass of the people could be informed to a certain degree.

When the used-car salesman says the great deal is good only today, that's a good time to sit back and read the papers very closely to find the scam.  This rescue plan, be it bailout, investment, or soaking the poor to save the rich, deserves even more scrutiny, not less.

Petrarch is a contributing editor for Scragged.  Read other Scragged.com articles by Petrarch or other articles on Society.
Reader Comments
The financiers are snookering us again. We, the taxpayers, will never see that money once Congress caves in to special interests, (as usual). If we try to get it back by taxing these businesses, then they will take the good parts of their portfolios and flee to other countries. Suckers!

If we use that money to enhance social security, then all of the retirees that lost their retirement funds in the stock market will at least be guaranteed a reasonably comfortable retirement. (The only ones who will still be unhappy are the ones trying to retire to their mansions.)

Finally! Congress has found the money to make social security work.

Let Congress know that if they get fooled by this bailout, then the only thing for voters to do is punish congress the way it was punished for the gulf war.

Bryant Arms
October 3, 2008 9:07 AM
"In a little over a year, we have had not one but two major issues on which the American people were nearly unanimous one way, and the politicians and elites were nearly unanimous the other way."

And nothing seems to change.

"...if it isn't heard in the halls of legislation, then it will surely be heard at the ballot box."

The problem is that it's NOT being heard at the ballot box. The people are NOT up in arms, and ousting those who vote against their wishes.

We'll see if this one, being right before an election, turns out any different.
October 3, 2008 2:35 PM
It won't, because as Jefferson said, the people have to be well informed in order to make a wise decision. Thanks to the transparent bias of the MSM, all the people hear is the lie that this is all the Republican's fault. So the same Dems that caused this problem in the first place will be rewarded by a landslide in November.
October 3, 2008 3:32 PM
@ Tony

Who would the people oust? Both sides voted for the bailout.
October 3, 2008 3:40 PM
Oust anyone who voted for it.

Or, just throw out ALL the incumbents. I wouldn't mind seeing that happen.
October 3, 2008 4:14 PM
@ Tony

I agree with your sentiment, but there is no mechanism by which that can be done. It would take some 33,000,000 people, voting for some specific OTHER person, to defeat both Obama and McCain.

Which is precisely the problem. Both big parties know that as long as they get along and BOTH rob us blind, they'll both stay in office. As long as they are equally hated, neither side is going anywhere.
October 3, 2008 4:22 PM
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