The Impact of Summers
1) Thank God that The New Yorker is around to bankroll this kind of ambitious domestic affairs reporting — and kudos to Ryan Lizza for his reportorial feats.
2) On reading the piece, a lengthy profile of Larry Summers that puts the reader inside the room as White House staffers and President Obama grappled with the financial crisis, one can’t help but reflect on the wrongheadedness of those who insist that the Obama Administration is motivated by a desire to turn the country socialist.
3) Even so, anyone who understands the insights of Hayek cannot help but be troubled by passages like this one:
In January, the White House added a half-hour meeting each morning, in which Obama is briefed by the top members of his economic team: Summers, Geithner, Romer, Orszag, and Bernstein. Obama officials said that the extra layers were intended to insure that no one person dominates the economic advice going to the President.
This system was sharply tested during the debate over the fate of G.M. and Chrysler. In mid-March, Summers and eight advisers dealing with the issue met around the conference table in his office. Summers called for a vote: who thought Obama should save Chrysler? The group was deadlocked. Four were in favor and four were against. Summers abstained, but he believed that Chrysler should get another chance at survival, especially since the Italian automaker Fiat had announced that it was willing to take over the company. Austan Goolsbee, who is both the staff director of the PERAB and one of Romer’s deputies at the C.E.A., cast the strongest of the no votes, arguing forcefully that saving Chrysler would damage the long-term prospects of G.M. and Ford, and for that reason Chrysler should be allowed to go bankrupt and be liquidated. Summers and Goolsbee had argued the issue for weeks, and the debate had become a source of friction between them.
4) Here is one narrative of recent events, offered for the sake of argument from 10,000 feet: A huge economic crisis that no one entirely understood came along; the Obama Administration sensibly decided that massive spending and bailouts were preferable to the risk of complete economic collapse; and the American people became understandably alarmed by the level of spending and the greater control taken on by the government, creating a backlash.
Perhaps that back and forth is the best we could have done. But it sure would be nice if the healthy backlash could benefit an opposition party with actual alternative ideas that might be implemented, and a coherent plan in case it should be given the reins of government again in the future. 2010 is coming quick, GOP. If you don’t pour some kind of substantive foundation pretty damn quickly, you’re not going to have anyplace upon which anything worth building can be erected.
But conor, dude! Hayek was WRONG.
The welfare state doesn’t lead to socialism, it leads to secularism.
The welfare state kills off the local religious welfare providers by providing a form of welfare that doesn’t require church attendance or social cohesion, which was unavailable to people of color in the South n/e ways,
A kind of public option for welfare.
;)
See, Great Britian, Europe
— matoko_chan · Oct 5, 11:08 AM · #
“one can’t help but reflect on the wrongheadedness of those who insist that the Obama Administration is motivated by a desire to turn the country socialist.”
I think the Obama administration apologists are hung up on the literal meaning of “socialism”. Even if the administration wanted to turn the country socialist, they wouldn’t dare try, nor would they be allowed. No, our problem is the progressive tendency to centrally plan, over-regulate and interfere in the workings of businesses, support corporate welfare and tinker financially. The word “socialism” is not even necessary, since progressive policies in general are quite bad enough. While this article is confident that central planning has pulled the country from the brink, there is no real evidence that it hasn’t, instead, delayed recovery and set the stage for a long stagnation, high unemployment and a huge increase of national debt. With more burdens being placed on small businesses, we might be on the brink of a financial collapse worse than what they tried to fix. Our fixation on particular administrations and particular players within these administrations conceals the danger of central planning which has been creating unintended consequences for decades and decades. When consequences are so far removed in time from the causes, you lose sight of the chain of events which lead to crises, therefore, the same mistakes are made and we’re caught in a loop — one that is spiralling downward.
— mike farmer · Oct 5, 11:28 AM · #
Part of the problem with arguing about Hayek is that no one can decide when his ideas should be taken seriously or not. When I point out that the central thesis of Hayek’s most prominent work was just inescapably wrong— the European social democracies did not descend into a totalitarian nightmare, or anything like it— people immediately shout that Hayek wasn’t talking about mere social democracies with large government spending and redistributive taxation, but rather far more aggressively centrally planned economies. And OK, fine. But if that’s true, than surely his argument has even less to say about America than it does about European social democracies. Countries and cultures far more friendly to the command economy not only didn’t descend into a “Hayekian nightmare,” they now have the highest quality of living on earth.
So I think we need to decide: is Hayek’s vision relevant to America, or not? If it is, then it’s subject to the criticism that far more economically intrusive governments have not led to anything resembling what he feared. If, on the other hand, Hayek wasn’t talking about a situation at all analogous to us today, then what purpose is there in bringing it up in the course of political discussion?
— Freddie · Oct 5, 01:21 PM · #
re: Hayek – the more appropriate reference is probably Schumpeter.
Mike: “No, our problem is the progressive tendency to centrally plan, over-regulate and interfere in the workings of businesses, support corporate welfare and tinker financially. The word “socialism” is not even necessary, since progressive policies in general are quite bad enough.”
So, most of this financial rescue stuff happened under the Bush administration. Obama’s policies are only barely progressive, and by the way didn’t he win the election talking about things like healthcare reform? The environment? This wasn’t a secret, he’s executing on campaign promises.
He’s a pretty plain-oatmeal, conservative (small-c, Burkean, real conservative, vs the populist radicalism that passes as Conservatism in 2009 America) president, but that doesn’t stop people on the right from suddenly rediscovering their Hayek (Hayek was in favor of a state-supported health insurance system btw).
Mike were you posting messages to comment forums about socialism when Bush raised steel tariffs? How would you balance what you perceive as Obama’s dangerous ideological inclinations against, say, a failed, massively expensive war of choice? Or disregarding laws and treaties and torturing prisoners?
— Steve C · Oct 5, 03:03 PM · #
Speaking of healthcare reform….. single payer federalism
Think of it as a stealth public option.
lulz
— matoko_chan · Oct 5, 03:58 PM · #
I’m going to commit a fallacy here and appeal to authority. Not because I believe it, or in it, but because it is a something we should think about when talking about a citizen’s ‘quality of life.’
That’s Tocqueville of course. But he was optimistic about America.
I wonder how true that is now.
— Kristoffer V. Sargent · Oct 5, 04:19 PM · #
“Mike were you posting messages to comment forums about socialism when Bush raised steel tariffs? How would you balance what you perceive as Obama’s dangerous ideological inclinations against, say, a failed, massively expensive war of choice? Or disregarding laws and treaties and torturing prisoners?”
I am so fucking sick of this lame reply I’m turning green. YES, I blasted Bush, and I have stated over and over that my problem has been with the progressive tendencies of both parties. People just can’t believe that someone would have a principled stand against progressive policies regardless of which party is enacting them — our two party system has created a mental disorder of split thinking that may never be healed.
— mike farmer · Oct 5, 05:07 PM · #
I’m curious how Mike Farmer arrives from robust regulations to central planning. It’s a curious leap of logic.
— Erik Vanderhoff · Oct 5, 06:32 PM · #
“I’m curious how Mike Farmer arrives from robust regulations to central planning. It’s a curious leap of logic.”
I suppose regulations spring from the collective spirit of Washington, D.C. without planning?
Technocrat 1: Let’s regulate this economy back to health.
Technocrat 2: Gather them all.
All the Technocrats in Unison: Healing, come forth!
Citizens: It’s a miracle!
________________________________
Besides, I’m not sure where I attempted a logical connection to start with — the progressives are over-regulating, and have been for quite some time, and they are too confident in central planning — stimulus, bailouts, financial manipulation, on and on and on and on…..
— mike farmer · Oct 5, 06:46 PM · #
@Mike Farmer
I want to ask you a question to see if I’m reading you right…you survey the economic problems of the last twenty years or so and conclude the problem is ~over~regulation? Is that right?
— bakum · Oct 5, 08:30 PM · #
bakum — that’s one of the problems. There are many more.
— mike farmer · Oct 5, 09:47 PM · #
There’s some confusion about the meaning of “central planning.” The term has a stable meaning that’s disputed only around the margins of economic & ideological debate. It refers to arrangements like the former Soviet system, in which a central administrator calculated & implemented a comprehensive program for the allocation of economic resources; his commands did, or were meant to do, the work that would be done elsewhere by firms in decentralized markets. (The socialist calculation debate of the 1920s-30s called into question whether the center could ever know enough to function as well as markets.)
In the standard sense of the term, a centrally planned economy isn’t the same thing as a mixed economy. It would be false to say that any economy w/ an active monetary or fiscal policy, developed financial regulations, or non-trivial public sector is an instance of central planning. People who say this is are either confused or are intentionally using words in idiosyncratic ways. They may want to borrow the authority of the critique of central planning, & misapply it to stigmatize something very different – the monetary, fiscal, & regulatory, policies of a mixed or market-based economy.
It’s not to say the socialist calculation debate holds no lessons for our beleaguered non-centrally-planned mixed economy. But I don’t think it asks too much to hope that people ackowledge at the outset that ARRA 2009 doesn’t re-enact the Gosplan in Washington.— K · Oct 7, 06:47 AM · #