I was moderately in the favor of the bailout. If I had been a member of congress yesterday, I would have voted for the bailout. I think the problem is real, and quite serious, and it seemed to me unlikely that a better plan could have been wrought in Congress, given the nature of the administration, and the nature of the Republican opposition. My sense is that most of the Democrats who voted against the bill basically agree with me, but just balance the risks and benefits of the bailout somewhat differently, deciding that it was a bad enough bill that there was no real harm in waiting a bit and see if something better could be devised. I think that is a plausible position, but I think in the end is a case of the best being the enemy of the good.
But on the other hand, leaving the question of whether we stand on the precipice of a cataclysmic depression aside, there is something heartening about the spectacle of this back benchers' revolt, the rank and file of both parties thumbing their nose at their respective leadership, the president (note to Republicans: too bad you had to wait till there was 100 days to go to demonstrate your independence from the thieves and liars who comprised the Bush administration on a vote that mattered), and at Wall Street, the Chamber of Commerce, and the punditocracy. Paulson’s maladroitness in the past few weeks is only now being fully examined, especially whether the big mistake was letting Lehman Brothers go down, and some troubling and interesting questions about whether the AIG rescue was really just a way of pulling Goldman Sachs’s chestnuts from the fire. And his bailout plan was to present something that was at best marginally acceptable to both parties, and then attempt a “cram-down” as I believe the term is, by making “my way or the highway” type threats and getting all of Wall Street’s ancestral voices to prophesy doom.
What the vote showed is there a great reluctance among legislators, and the American people as a whole, to simply patch up the status quo, and give money to Wall Street so they can go on being Wall Street. Underlying the vote was a confused, but clear cry for fundamental change. The Republicans haven’t figured this out yet; but when they realize that more of the free market simply won’t be able to solve a problem created by the excesses of the free market, it will leave only the ideologues in the free market camp. And Democrats need to realize that this is a call for fundamental sweeping transformation. Populism has been, at least from the time of Richard Hofstadter (if not since the time of William McKinley) been excoriated for anti-Wall Street rants devoid of substance, but this is a caricature, as historians have demonstrated again and again, most recently in Charles Postel’s excellent study The Populist Vision. The core populist demand was for the democratization of the American economy, a goal as elusive in the early 21st century as it was in the late 19th century, and just as pertinent. The goal is not to run against Wall Street, but to try to run Wall Street, and to try to run Wall Street differently. It is a cause that Barack Obama ignores at his own peril.
It is a sad fact of economic and political life that sometimes eggs fall. And rather than paying a king’s ransom to call out all the horses and men to try put it back together again, energies would perhaps be better spent on figuring out why it fell it fell in the first place, and, to beat the analogy to death, try either putting the egg is a less exposed position, or try putting something less fragile than an egg on the top of the wall.