President Obama and the Rule of Law
President Obama scolded investors who refused to just accept what he said they should take for their Chrysler bonds, saying: “I don’t stand with those who held out when everyone else is making sacrifices.” According to the New York Times, one group, Perella Weinberg Partners, was “chastened” and “abruptly reversed course”.
How should we decide who makes what “sacrifice” when a corporation can not meet all of its financial obligations? In the U.S., we use bankruptcy court. Courts are effective for this purpose, in part because they are somewhat more insulated from immediate political pressures than are other agencies of the government. The reason that this matters is that investors require stability of rules in order to agree to put money at risk. This is Rule-of-Law 101. Given that a key political constituency that helped elect the President, unions, are a party to the Chrysler dispute, the potential for undermining the rule of law is obvious and severe.
Seeking Alpha reports an interview in which the eminent lawyer representing two of the hold-out investment funds, Tom Lauria, the Head of Restructuring at White & Case, claims on-the-record that:
One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight…That was Perella Weinberg.
Here’s the list of major banks that apparently led the negotiations and agreed to go along with the desires of the President: Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley. Do you notice any obvious commonality? All are major recipients of TARP funding. Unlike, say, the hold-outs. Perella Weinberg, the first of the hold-outs to crack, is a boutique firm that has a large contract advising on the execution of various government bailouts.
Funny how you tend to win negotiations when you: (i) have operational control of the armed forces, and (ii) are negotiating with entities that are directly dependent on your using your monopoly on coercion to collect money from taxpayers and give it to them. You just tell the other side what they’re going to accept, and never mind any legal technicalities.
For more, see the excellent post by Megan McArdle in which she gets to the key question:
[W]hen did it become the government’s job to intervene in the bankruptcy process to move junior creditors who belong to favored political constituencies to the front of the line?
<em>You just tell the other side what they’re going to accept, and never mind any legal technicalities.</em>
Maybe there are secret OLC memos that say it’s OK. Don’t sweat it.
— SomeCallMeTim · May 3, 06:07 PM · #
Jim, question:
Even if unintended, don’t you think these political pimp-slappings and ear-twistings mitigate some of the moral hazard concerns you had about the bailouts?
— Sargent · May 3, 06:18 PM · #
“Here’s the list of major banks that apparently led the negotiations and agreed to go along with the desires of the President: Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley. Do you notice any obvious commonality? All are major recipients of TARP funding. Unlike, say, the hold-outs. Perella Weinberg, the first of the hold-outs to crack, is a boutique firm that has a large contract advising on the execution of various government bailouts.”
Had this been a large company manipulating a small one I don’t believe Jim and Megan would care all that much: you’d say, well that’s the way business works, and this is the best system we’ve got, etc. Yes MS and Google and Walmart use their size to force other businesses to do things they’d rather not do, but those other businesses should stop whining and face reality and get on with life.
Oh but it’s the government (aka gubmint) doing it – well it must be wrong and evil. They would presumably prefer a deal along the lines of: “here’s your too-big-to-fail bailout from taxpayers, please take it as a gift from us, we promise not to bother you again”.
— Steve C · May 3, 06:19 PM · #
Steve C:
This sounds flippant, but I mean it literally: if Walmat had private armies, I would be very concerned about it. The key issue here, in my view, is the actor with control over large-scale military power “negotiating” with private economic actors.
Sargent:
This kind of direct political intervention is exactly what I’ve always seen as a key negative of the bailouts (including TARP, whihc I supported in spite of predicting exactly such problems).
— Jim Manzi · May 3, 06:24 PM · #
you can’t be serious, jim. Military power is only one form of power, and in our society not even the most important kind.
Wal Mart is immensely large and wealthy and politically connected. There is no operative difference whatsoever between Wal Mart going after some small union group, and the U.S. government going after Wal Mart, besides the fact that the government doesn’t nearly have the leverage over Wal Mart that Wal Mart does over union drives.
Now the intellectually coherent argument would be to object to any government meddling in the economy on libertarian grounds. But once you accept the government has the right to buy shares in companies—and it’s pretty fucking stupid to deny this right in principle—then on what possible grounds do you object to the government using its power to extract for itself the best favorable outcome it can (as long as it uses that power in legal ways, of course)?
— raft · May 3, 06:46 PM · #
Jim:
I remember. My question is, doesn’t this manhandling by the administration mitigate the moral hazard problem that you talk about here, here and here. Example:
I’m analogizing to this bit:
My concern is not whether government interference is a net negative — from an Archimedean standpoint, it’s probably not a good thing for the government to get used to acting like Don Corleone dishing out favors — but whether this Don-like behavior effectively neutralizes one of your main concerns about the bailout, since it restores cost to ‘hat in hand, begging bowl’ failure in a way that really chafes.
— Sargent · May 3, 07:00 PM · #
Sargent, in this case the parties who are chafing are not the ones who went begging to the government, so I don’t think it helps the moral hazard problem.
— kenb · May 3, 08:18 PM · #
raft:
There is no operative difference whatsoever between Wal Mart going after some small union group, and the U.S. government going after Wal Mart, besides the fact that the government doesn’t nearly have the leverage over Wal Mart that Wal Mart does over union drives.
The difference, and I think it’s huge, is that Walmart can’t resort to ordering armed men to force union organizers to do as they are told (and yes, I know that this has been done in the past, and was illegitimate, and to the extent it goes on at any time, it is a crime).
But once you accept the government has the right to buy shares in companies—and it’s pretty fucking stupid to deny this right in principle—…
Why is it stupid to believe that government should not buy equity in private companies? For exactly the reasons indicated in the post, I think it should not.
…then on what possible grounds do you object to the government using its power to extract for itself the best favorable outcome it can (as long as it uses that power in legal ways, of course)?
The government can “extract” whatever terms it wants, because it can simply order any private actor to do anything, and force compliance. What would it mean for the government to do this in “legal ways”, if not in the sens of the title of my post, that is, by voluntarily adhering to defined procedures that are established law and enforced by checks and balances within a government of divided authority?
— Jim Manzi · May 3, 08:26 PM · #
“Even if unintended, don’t you think these political pimp-slappings and ear-twistings mitigate some of the moral hazard concerns you had about the bailouts?”
I’m wid Sarge. Some pimp-slapping is infinitely preferable to A LAW, which Obama has the undeniable street-cred to enact right now….acuz of YOUR GUYZ being total bourgie fuckups.
— matoko_chan · May 3, 09:14 PM · #
Ok, OUR GUYZ.
I voted for Bush.
But the lying about hESCR was it for me.
I quit him right then.
;)
— matoko_chan · May 3, 09:34 PM · #
KenB, the parties who are squealing right now are precisely the companies who decided it would be a good idea to owe a favor to Don Samuel. That creates an incentive against owing favors to Don Samuel.
— Sargent · May 3, 10:29 PM · #
But isn’t that all based on the faulty assumption that whatever a person in a business transaction can get away with legally is also moral? Aren’t there legal things that persons in economic transactions shouldn’t do, and should sustain moral criticism when they do?
There’s no other arena in life where we say “everything not illegal is a moral right.” Why the automatic assumption that when it comes to business, morality should go right out the window?
Is there any basis for that assumption but greed? Haven’t we realized, some 20 years after Gordon Gecko, that greed isn’t good?
— Chet · May 3, 10:30 PM · #
Chet, I think you’re focusing on the wrong thing. The point is that the government is an exceptional body, with exceptional powers. The point is not that business is business.
— Sargent · May 3, 10:39 PM · #
it is ILLEGAL for the government to threaten a hedge fund with violence for being uncooperative. It is not illegal for the government to use media pressure to shame the hedge fund into cooperating (just like it is not illegal for Wal Mart to conduct public relation campaigns against unions). Are you being willingly obtuse in not understanding this fundamental distinction? The President can’t send Delta Force in to kill Wall Street financiers. He does not have the power to do so, because—at least for now—we live in a constitutional democracy and the rule of law still means something.
I’m pretty sure all these hedge fund clowns know that. Or do you think they would still be defying Obama if they thought he could kill or arrest them?
Re: buying equity in private companies, I should clarify the point I’m making. Obviously the government shouldn’t as a matter of general policy be going around buying up companies, or directly intervening in private contract negotiations. I agree. But once you accept that, in certain very exceptional circumstances where the public interest is at stake, it might be appropriate for the government to take more direct action—and I think it’s stupid not to think there are SOME circumstances like this—then I don’t understand by what principle you think they ought not to use all the (legal) power at their disposal to make that action effective. And no, it wouldn’t undermine the rule of law in any substantial sense, because it’s not illegal.
— raft · May 3, 10:46 PM · #
Jim –
I don’t mean to be flippant either, but Walmart and Google’s political connections, army of corporate lawyers, and pile of cash for funding lawsuits are only a little less effective at bringing down state coercion on those who oppose them.
This is from someone who’s been involved with businesses on the receiving end on this kind of power on several occasions. There is not a bright line between the coercive power of a major corporation and Barack Obama.
-Steve
— Steve C · May 3, 11:00 PM · #
So? That doesn’t change what’s right and wrong. The government exists to serve the public interest. I don’t see what’s being transgressed when the President uses nothing more than his ability to speak to serve that interest.
Gosh, if hedge fund managers can’t stand to hear about it when they’re acting selfishly against the public interest, maybe they should either 1) quit or 2) stop working selfishly against the public interest.
What am I supposed to be concerned about, here? An I really supposed to think that hedge fund managers were afraid that Obama would send troops in? Absurd.
— Chet · May 4, 12:15 AM · #
You know Dr. Manzi….I think you should come out and admit it…..you are flailing around trying to find something bad about Obama…but he is far more conservative than Bush was. And I think…there are two wholly separate cohorts of the conservative intelligentsia. The Dr. Jekyll cohort and the Mr. Hyde cohort.
The Mr. Hyde cohort owns the base.
That is a huge problem for the Dr. Jekylls.
— matoko_chan · May 4, 12:50 AM · #
Jim says:
“The government can “extract” whatever terms it wants, because it can simply order any private actor to do anything, and force compliance. What would it mean for the government to do this in “legal ways”, if not in the sens of the title of my post, that is, by voluntarily adhering to defined procedures that are established law and enforced by checks and balances within a government of divided authority?”
Which I rewrite to say:
“Walmart can “extract” whatever terms it wants, because it can simply sick its army of corporate lawyers, or threat thereof, or call in favors from politicians, to in effect order any private actor to do anything, and force compliance. “
I’m guessing Jim is operating off the kinds of assumptions you get by osmosis from libertarianism or the study of economics from 1960-1990 or so. The Hayek/Mises POV, in which we’re supposed to take as given – mostly by bald assertion, these days – that there are bright lines between the power of private and public interests, and that the mere FACT that a public actor is involved in a transaction automatically taints it, automatically makes it worthy of scorn and fear – I’m pretty sure Jim can’t budge on that assumption without taking a wrecking ball to a good chunk of his worldview.
Why are we supposed to treat large corporations, who employ lobbyists and exploit our public institutions to the maximum possible degree to suit their interests, as inherently more desirable or safe? Because they respond to profit motives, and that makes them pure and efficient and good?
Plus Jim, your actual argument is pretty weak – Obama’s people threatened to out these investors, using PR. He’s not sending hooded men with guns out against them. The argument that coercive force is a problem here needs some basis in reality, doesn’t it?
— Steve C · May 4, 12:58 AM · #
It’s interesting to watch how matoko_chan and others have become defenders of robber-baron capitalism.
Back in the old days of robber barons, we had a government that could attempt to referee between the robber barons and the people. For a time it was too weak to do so effectively, but it was at least something. Now the robber baron has the heavy weaponry, the prison system, the tax system, and more wealth on its side to influence people than the old robber barons ever dreamed of. And there is nobody left to referee.
— The Reticulator · May 4, 12:59 AM · #
It’s also interesting how all the people who once pretended to criticize the Bush administration for no-bid contracts to Halliburton have now come up with all kinds of reasons to be defenders of the same kind of crony capitalism. Except now it’s on a much grander scale.
— The Reticulator · May 4, 01:15 AM · #
Sargent, perhaps I’m missing something, but it seems that according to Jim’s post, it’s primarily the organizations who did not take TARP money who are the target of Obama’s jabs. No?
— kenb · May 4, 01:20 AM · #
KenB, I’m relying on reporting, but I’m pretty sure. Here’s Jim:
Take money, get subsumed into “the public interest.”
— Sargent · May 4, 02:16 AM · #
One more angle at it:
I was driving through south Alabama about a month ago, and noticed a church sign which read, “Give the Devil an inch, and he’ll take your soul.”
That’s the lesson being learned right now — by corporations, about the government.
— Sargent · May 4, 02:38 AM · #
Chet, Matthew Yglesias made exactly the same argument two days ago. Perhaps even verbatim.
The reality is that the federal government has an exceptionally compelling interesting in ensuring the viability of the auto-industry. While you may not agree with this reality and the propositions it entails, you are being intellectually dishonest, I would even say daft, if you can’t appreciate the federal government’s obligation.
Now where I would say a concern arises, it specifically relates to the administration’s communications with the firms that didn’t accept TARP funds, in this instance Perella Weinberg, among other firms. Obviously Perella Weinberg wasn’t willing to go along with the final deal and make the type of concessions all of the other parties believed were reasonable. That’s unfortunate. But even though it’s a little unsettling to discover that the White House put pressure on this firm, they were well within their rights as an equity holder. Your misgivings are warranted, and duly noted, but so what?
If the “key issue” in your view, Jim, is that the, lets call him, “exceptional equity holder” controls a large-scale military, then I can only assume your being silly, because that’s a really silly argument. You don’t usually make silly arguments.
— ron · May 4, 02:43 AM · #
It’s interesting to watch how matoko_chan and others have become defenders of robber-baron capitalism.
I have to defend it….its evolution in action.
— matoko_chan · May 4, 02:47 AM · #
As a purely academic concern, I’ve got to know:
Matoko Chan, would you be in favor of “evolution in action” if it decided to phase you out? To make it an even more compelling question, assume you’ve been cannibalized by an idiocracy (remember, evolution preserves those who survive until reproduction; there are no other metrics).
— Sargent · May 4, 02:51 AM · #
Article in the Times has a bunch of people in position to know saying Pella was not pressured. IF true—which it sounds like it is—does this make this whole argument moot?
Also, there is no way Jim Manzi can really think that Obama is going to sick the military on some hedge funds and there is no way the hedge funds thought that was going to happen. That strand of the argument doesn’t really do much for me at all.
“W]hen did it become the government’s job to intervene in the bankruptcy process to move junior creditors who belong to favored political constituencies to the front of the line?”
And I don’t think this is even accurate. THe gov didn’t intervene in any bankruptcy process. As major share holders they were in volved in negotiation that would have avoided bankruptcy. And there is nothing wrong with the Admin. trying to get the best deal they can in those negotiations. Just like the hedge funds are trying to get the best deal they can. They resisted, no deal was made, now it’s going to bankruptcy court where a judge will decide. I don’t see where the rule of law has been subverted.
— cw · May 4, 03:06 AM · #
Perella, I meant.
— cw · May 4, 03:09 AM · #
And there is nothing wrong with the Admin. trying to get the best deal they can in those negotiations.
There is a lot wrong with the administration picking winners and losers in these affairs. There is a lot wrong with the administration trying to get the best deal for its campaign donors.
— The Reticulator · May 4, 04:23 AM · #
The reality is that the federal government has an exceptionally compelling interesting in ensuring the viability of the auto-industry.
Since when? (And what does “compelling” mean, anyway?)
And even if it did have a basis for “ensuring the viability” of the auto industry, that’s not what it’s doing in any possible sense of the term. It’s bailing out particular players in the auto industry. GM and Chrysler do not constitute the auto industry.
— The Reticulator · May 4, 04:27 AM · #
matoko_chan: “I have to defend it….its evolution in action.”
If you have to defend it, it’s not a natural-selection type of evolution that you’re talking about. So perhaps you’re saying you believe in intelligent design?
— The Reticulator · May 4, 04:31 AM · #
After we get universal health care, it’s going to be interesting to see all the intrusions that people are then going to justify on the basis of the govt having become a major share holder in our lives. (We already get some of that now on a small scale.)
— The Reticulator · May 4, 04:35 AM · #
Hrm. So, warrantless wiretapping and indefinite detention of American citizens is “small scale”, but the government setting up incentives to get this treatment over that one, where the difference in effectiveness is small but the difference in cost is great, is an “intrusion.”
Is this lack of perspective endemic to conservatives in general?
— Chet · May 4, 06:59 AM · #
cw / ron / chet / raft / et al:
I (obviously, I hope) don’t think that the adminstration threatened to send the 82nd Airborne into Manhattan to enforce its demands; but of course when everybody knows you have the only gun in the room, you don’t really have to mention it. The point is that the government, because it holds a monolopoly on coercion, makes all the rules. This is what makes it an “exceptional equity holder” to quote a prior commenter.
The government is not necessarily the servant of the people, we establish, among other things, constitutional structures to try to make it serve this purpose as well as as possible. The division of power between branches of government is one of the most important of these structures. When, as I said earlier, people invested money, time and other things into debt, equity and careers in Chrysler, other auto companies, other companies, non-profit venturers and so forth, they did this under the assumption that a given set of rules would be followed. One of the most important (especially for those who have made debt investments in the last few years into Chrysler, as it has had a non-trivial bankruptcy risk for some time) was that in the event of failure of Chrysler a bankruptcy court would be the vehicle for settling claims. By changing these rules retroactively, the administration will make it much less likely that anyone holding capital will invest it in the future, at least in the US.
Calling hedge fund managers mean names is not “changing the rules”. However mistaken I think it is, this is one of the President’s perogatives. One of the reasons it’s not a big deal is that, as per Megan’s post, it’s amusingly both polticially shrewd of Obama and great PR for the firms he attacked. Using taxpayer money to fund specific financial entitites; making unpredictable decisions without clear accountability about which comapnies will be rescued or not; awarding contracts to some parties to a negotation and not others, and so on is a high degree of entanglement in the economy. The root of the power to do all of these things is the monopoly on coercion. When the government that has shown it is ready, willing and able to do all of this then goes into a “negotiation” with a financial firm, in what sense is this really a negotiation?
Now, of course, one can say that “yes, but the possibility of retroactive intervention is one of the rules of the game that any astute investor should have considered, so this isn’t really retroactive at all”. At a high level of abstraction, this is true. But it raises te question of which set of rules for organizing the inetraction between the eocnomy and government will work best (however we define best) in the long-run. The basic insight of the modern West, IMHO, in this area has been that restraint by those who hold military power – what we in common parlance call “the rule of law” – in whihc the government acts as a ref, not a player in the economy, produces the best results over time. Such a guideline is, of course, a bumper sticker; it is never followed absolutely, not could it be. But the debate over whether it is fundamentally true, and should be attempted whenever practicable is, I think, the root of the current economic debate.
As an aside, it would have amazed me if you had told me two years ago that we would be having this debate at this level in 2009 – it is in essence a re-argument of the soclialist calculation debate of the early 20th century. we need an update on Hayek to make this argument all over again.
— Jim Manzi · May 4, 11:23 AM · #
If Chet wants to talk about perspective I’d like to help provide some. Bush arrogated to himself the right to do warrantless wiretapping (though the seeds of that arrogation go back to his father’s day, and even more, to Clinton’s). But that pales alongside what our latest president is demanding, namely the right to pull the plug on any internet segment when there is a national emergency, as he defines it.
But in that case, the intrusion is not being justified on the grounds that the government is now a major shareowner, though I wouldn’t be surprised if the Obamanites add that one to their rhetorical repertoire: “The govt paid for getting it started, and the government taxes your use of the phone system to provide free internet for schools and libraries so they won’t have to support free market alternatives. So why shouldn’t that give the govt the right to shut it down?”
— The Reticulator · May 4, 11:59 AM · #
Neal Stephenson on political power disruptions
(Sorry for the long quote – but I think that it is extremely applicable to what Jim and others are saying)
“It’s clear that the body politic is subject to power disorders. By this I mean events where some person or group suddenly concentrates a lot of power and abuses it. Power disorders frequently come as a surprise, and cause a lot of damage. This has been true since the beginning of human history. Exactly how and why power disorders occur is poorly understood.
We are in a position akin to that of early physicians who could see that people were getting sick but couldn’t do anything about it, because they didn’t understand the underlying causes. They knew of a few tricks that seemed to work. For example, nailing up plague houses tended to limit the spread of plague. But even the smart doctors tended to fall under the sway of pet theories that were wrong, such as the idea that diseases were caused by imbalanced humors or bad air. Once that happened, they ignored evidence that contradicted their theory. They became so invested in that theory that they treated any new ideas as threats. But from time to time you’d see someone like John Snow, who would point out, “Look, everyone who draws water from Well X is getting cholera.” Then he went and removed the pump handle from Well X and people stopped getting cholera. They still didn’t understand germ theory, but they were getting closer.
We can make a loose analogy to the way that people have addressed the problem of power disorders. We don’t really understand them. We know that there are a couple of tricks that seem to help, such as the rule of law and separation of powers. Beyond that, people tend to fall under the sway of this or that pet theory. And so you’ll get perfectly intelligent people saying, “All of our problems would be solved if only the workers controlled the means of production,” or what have you. Once they’ve settled on a totalizing political theory, they see everything through that lens and are hostile to other notions.”
— Johnny A · May 4, 12:03 PM · #
If you have to defend it, it’s not a natural-selection type of evolution that you’re talking about. So perhaps you’re saying you believe in intelligent design?
reticulator—
I don’t have to defend it in the sense that it is what SHOULD happen, only in the sense that it is what WILL happen. Arguments from “traditional wisdom” are for those fools at the Secular Right.
— matoko_chan · May 4, 12:18 PM · #
“I (obviously, I hope) don’t think that the adminstration threatened to send the 82nd Airborne into Manhattan to enforce its demands; but of course when everybody knows you have the only gun in the room, you don’t really have to mention it. The point is that the government, because it holds a monolopoly on coercion, makes all the rules. This is what makes it an “exceptional equity holder” to quote a prior commenter.”
My experience is that people don’t really understood this until they’ve felt the boot on their own neck; and even then their ablity to extrapolate from their own experience to other people’s experiences is often (surprisingly) limited.
— Tony Comstock · May 4, 12:19 PM · #
One of the things that has made America stable and prosperous is that people have a fair amount of confidence that public officials will more or less follow the law. Not all the time, sure, and there are plenty of examples of corrupt officials here and there, but compared to the rest of the world, the US is one of a few exceptional nations.
Obama could probably get away with a couple of these, but the troubling thing is that every time he puts his thumb on the scale because it seems more fair to him that one of his major contibutors get more out of a transaction than they would under the law ex ante, he shows a willingness to do this in the future.
Before long, you get (1) a lot of counterproductive economic decisions made by the ruling party in favor of their contributors and constitutents, which sap growth and make everyone poorer; and (2) an environment where people prefer not to invest because they can’t count on getting the deal they agreed to when they handed over their money.
Further to point (2), maybe some of the lefties could look up Bush-era Krugman policies and see what people thought would happen when overseas investors decide not to invest in dollar-denominated assets?
— J Mann · May 4, 01:46 PM · #
The problem with all this hyerventilting is that Obama in not breaking any rules as far as I can see. The rule of law has not been breeched. There is no law that says that senior debtors have to be paid first. The law basically says that people can enter into contracts and that contracts can be renegotiated. Obama says he has 8bill to pay off creditors of a company on the verge of bankruptcy. THis $ is contingent on rengotiating the contracts of the creditors in a way that Obama thinks will help this countries economy (if you think he is acting in good faith). One of the conditions was that Chrysler and the union renegotiate the 10 bil in pension and health care contracts they had, which they did. The union took less and got stock. Obama made offers to other debtors which most accepted. Some declined, the deal fell apart. Now it’s going to banrkuptcy. There were no broken rules or coercion or else the deal wouldn’t have fallen apart. The military was not called in.
These kind of negotiations go on all the time. Creditors balance what they can get in a renegotiation vrs what they can get in bankruptcy court. The idea that there was a threat of violence, tacit or otherwise, is just nuts. You can say the gov always has the threat of the military behind it, but if anyone really felt that threat then the gov would always win every negotiation. You guys are going way overboard here. There’s a compound somewhere in Idaho with an empty cot and an m16 just waiting for you.
And about the union. You can look at it like it is a political entity that Obama is favoring, or you can look at it as a group of workers and retirees who had contracts with Chrysler about thier compensation. THey worked for those benefits. As I understand it, they are the largest stake holder. Chrysler has 10 bil in commitments to them. THey owe the banks something like 6bill. So if you are the pres renegotiating contracts with creditors, why wouldn’t saving some of the retireees pension and health care benefits be one of your goals? I mean, if you get to pick and choose who loses money here—as you can becasue you are the one providing the bail out money—why wouldn’t you favor workers and retirees over hedge funds? Especialy when you are in a recession? this is a consumer driven economy. You want the money in the hands of the people who will spend it.
— cw · May 4, 02:41 PM · #
“we need an update on Hayek to make this argument all over again.”
Hayek’s thesis is that incremental increases in the power and breadth of the state lead to authoritarianism. We have 50 years’ worth of big-government Western democracies to examine, not one has tended to authoritarianism. The RTS hypothesis is a nice theory but it is actually wrong.
— Steve C · May 4, 04:06 PM · #
We have 50 years’ worth of big-government Western democracies to examine, not one has tended to authoritarianism
They haven’t? What, exactly, is your definition of authoritarianism?
— The Reticulator · May 4, 04:13 PM · #
A very bad sign, if this story holds. Clearly a lot of behind-the-scenes and too-frickin’-complex-for-most-of-us stuff in play here. Some he-said, she-said as well.
But assuming the story holds, I think the thing to notice is not the ultimate power of the Obama honchos, the military one Jim is focused upon, but the actual power they reputedly threatened to use here: THE POWER TO SLIME YOUR REPUTATION.
If the story holds, Obama needs to fire some people pronto.
In the meantime, don’t be surprised if every other U.S. business decides that no amount of money is too much to pay for access to a FOO (friend of Obama), or even to a FOAFOO (friend-of-a-friend of Obam) or an ETOLT (expert that Obama listens to).
— Carl Scott · May 4, 05:31 PM · #
…
Is it too early to coin the phrase “Obama Derangement Syndrome”?
— Chet · May 4, 05:42 PM · #
“They haven’t? What, exactly, is your definition of authoritarianism?”
It excludes western-style democracies, at a minimum.
— Steve C · May 5, 04:31 AM · #
It excludes western-style democracies, at a minimum.
I think I understand. Western-style democracies have not tended towards authoritarianism, because authoritarianism excludes western-style democracies, no matter how authoritarian they have become.
— The Reticulator · May 5, 04:54 AM · #
Chet writes: “Is it too early to coin the phrase “Obama Derangement Syndrome”?”
No, it’s not too early! You, especially should talk about Obama Derangement Syndrome. You’re the ideal person to do it! Who better, than someone who responds to the topic of government funding resulting in government control by saying, BUT BUT BUT BUSH!!!!. And then brings up some Bush topic not at all related to the privileges resulting from government funding.
Yes, such a person should talk loudly and often about Obama Derangement Syndrome. Go for it!
— The Reticulator · May 5, 05:02 AM · #
Dr. Manzi
Obama is both a Machiavellian pragmatist and a Lincolnist idealist. When Conor and James were at Culture11, one of them linked a beautiful piece on Obama, and I can’t find the link anymore….. But I was struck by how much Lincolnian philosophy informed Obama. But in action, Obama seems very pragmatic to me. In any given situ, he has considered the alternatives, and gone with the most practical. Where he is not constrained by circumstance, his inner Lincoln runs rampant. In this case, a little bullying I think was the pragmatic solution. The anti-pragmatic solution might have been a new regulatory law.
I think….like Lincoln, Obama is a subversive. And that is a compliment.
— matoko_chan · May 5, 12:15 PM · #
That’s right, folks – warrantless wiretapping is completely unconnected to government invasions of privacy. And, of course, Bush stopped being president, why, whole months ago, therefore everything he did must be forgotten at once.
I realize how the past 8 years are an episode conservative hacks would like to completely forget, but there needs to be some intellectual honesty here, and some perspective – like the perspective that recognizes that, say, a tersely-worded press release from the White House is nothing at all like, say, widespread illegal surveillance of Americans.
— Chet · May 6, 06:57 AM · #