Putting the GM Bailout in Context: A Defense of Jim Manzi

Since we’re talking about it, I wanted to clarify my own views about the GM bailout.

I don’t believe this Administration, the prior one, or any likely future Administration thinks it’s a good idea for the government to be in the auto business. Higher education, maybe. Health care, perhaps. Mass transit, potentially. But I don’t know anyone making the case for socializing the auto industry.

I also don’t believe either this Administration, or the previous one, did anything resembling a serious cost-benefit analysis to arrive at the conclusion that te government should bail out GM. I think there’s value in that kind of analysis, but I don’t believe it can be done effectively on the fly – and anyway, I think it was very clear that all parties knew the political realities going in, and knew what result they wanted from any analysis.

The government simply was not going to let GM go bankrupt after bailing out the banks. Period. This was a political decision. That kind of decision happens all the time, and I don’t feel like very much is implicated by it philosophically. Each party doubtlessly has its debating points to make about how costly the bailout was (or how much less costly than expected) but they are just that: debating points. There is no great push to socialize American manufacturing generally, nor do I feel that anti-GM-bailout sentiment now will have any material bearing on whether the government acts similarly in the future under similar circumstances – such as an incipient global near-depression. In that sense, I really don’t see that GM “matters” all that much.

What matters a whole lot more than GM is learning something from the last decade’s financial debacle, as it was this debacle that both finally drove GM into bankruptcy and created the political climate in which a GM bailout was necessary. In that regard, it’s worth pointing out that Jim is far from a caricature of a right-wing ideologue. Rather, the lesson he takes from the crisis is that we need to restore something like Glass-Stegall: something that prevents banks that take insured deposits from taking certain kinds of risks. I’m skeptical that the G-S framework would actually achieve this, but I agree with the goal – but more to the point, this is a call, from a conservative, for fairly stringent and heavy-handed (albeit relatively uncomplicated) regulation of a major sector of the economy.

By way of putting GM in another context, how does the GM bailout compare, in terms of sheer dollars wasted on a venture undertaken with very little attempt to calculate an expected return, to the war in Iraq? In this regard as well, it’s worth pointing out that Jim has been consistently critical of the extremely forward nature of America’s defense posture. He’s not Ron Paul or Daniel Larison, but he is very far from a typical movement conservative on this score as well.

Finally, on many areas where Jim does line up on the “right” side of the debate, his perspective doesn’t always lead where you might think. For example, Jim has written a great deal about climate change, an about the difficulties with using the tax code to try to do anything meaningful about what he acknowledged could be a very serious problem. In my back-and-forth with him, it emerged that Jim agreed that a gas tax hike would be a more-optimal revenue-raiser from his perspective than a hike in income tax rates, or a carbon tax, or a VAT, or almost any other new tax. It might still be less-optimal from his perspective than, say, cutting the mortgage interest deduction or privatizing Medicare. But that conclusion – better than most other ta hikes! – is still a pretty significant one, and, if he were a legislator, the potential basis for fruitful negotiation.

Those are much more consequential debates than any debate about GM. However sympathetic or not I may be to Jim’s epistemic humility project, I defy regular readers of this blog to look at what Jim has written on these topics and conclude that his philosophical premises lead inexorably to predictable partisan conclusions.