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The Disease Of Abstraction

By Kleinheider Posted on November 16, 2008 at 7:04 pm

A left-libertarian struggles with a proposed bailout of the auto industry:

Now, the heart of the libertarian argument against these bailouts has always been that we should let the free market sort things out, that companies go bankrupt because they deserve it, and that we have to let the invisible hand smack ‘em around to get them to work properly.

In the abstract, I think that’s absolutely correct.

But here’s the problem — as I’ve said many times, we don’t have a free market, and we apply free-market principles to the system we have often at our own peril. We have a mercantilist system rooted in statist corporate privilege and a perverted allodial take on capitalism. Together these things result in a degree of centralization and concentration of wealth that could never happen in a truly free market.

In other words, never in a free market would some 3 million jobs of real human beings who have little control over the major decisions of a small handful of corporations hang in the balance while we let the invisible hand do its job.

I’m not necessarily arguing in favor of bailing out the auto industry — I’m no economist, and I don’t have the data to crunch the numbers myself. All I’m saying is that sometimes, such bailouts may be necessary evils.

UPDATE: Jon Wright (the aforementioned left-libertarian) with the quote of the day in the comments:

I feel I should elaborate, and I’m almost drunk enough to do so.

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Comments

8 Responses to “The Disease Of Abstraction”

  1. Glen Dean writes
    November 16th, 2008 8:29 pm

    Oh Lord. Rationalize and justify everything. GM spends more on healthcare than they do on steel. It’s just a mini-welfare state doing what welfare states are destined to do.

  2. Glen Dean writes
    November 16th, 2008 8:30 pm

    Btw…

  3. Wintermute writes
    November 16th, 2008 9:09 pm

    Jon, the three million “innocents” you fret about used an exemption from antitrust law to blackmail these auto companies into defined benefits pensions, wage rates, and lifetime health care insurance that are unaffordable.

    This is why Chapter 11 is better than bailouts: these companies can shed these obligations as essentially unfundable, while these greedy trade unionists have to fall back like the rest of us on Social Security, Medicare, and savings.

  4. Jon writes
    November 16th, 2008 9:39 pm

    As I said in the post, I’m not arguing for against this particular proposal. I’m merely saying that the issue of bailouts in general is more complicated than regurgitated partisan talking points.

  5. Jon writes
    November 16th, 2008 11:36 pm

    I feel I should elaborate, and I’m almost drunk enough to do so. I was using this particular bailout proposal only as an example to illustrate that:

    1) bailouts are a poor litmus test for partisanship, and illustrate the insufficiency of the linear left-right spectrum, as both support for, and opposition to, cross partisan and spectrum boundaries. I doubt Glen will become a Kucinich supporter even though Denis generally sides in opposition.

    2) bailouts, while always evil, may *sometimes* be a necessary evil. Is this one necessary? I haven’t decided. There is merit to the argument that chapter 11 may be preferable in this case. (However, try to pretend that chapter 11 bankruptcy is itself somehow a laissez faire institution and I’ll likely snort vodka out my nose)

    and, 3) If bailouts are to happen, necessary or not, strings can be attached to at least minimize the evil, and, if we’re going to get partisan, of the two groups that ally in favor of these actions, one is clearly more likely than the other to architect the deal to favor the interests of the people over the interests of the corporate welfare recipients.

  6. Jon writes
    November 17th, 2008 1:30 am

    Aside: as Glen mentioned steel — I’ve always held an unresearched hunch that the Bush steel tariffs played a greater than acknowledged role in the economic difficulties faced during his term.

    I say that less from my usual perch as ivory tower philosopher but for once from my vantage points as someone who worked in the automotive aftermarket parts industry during his heyday. I can witness firsthand how his policy created steel prices that nearly put ArvinMeritor out of business.

    I can’t help but wonder what effect from there has trickled down to the crises of the day.

  7. volvoice writes
    November 17th, 2008 8:08 am

    The problem with GM and Ford is the fact that they are SO big that if they go down it will certainly hurt alot of people. These guys are so big that they cannot react to change easily. I cannot help but to believe that it has been subsidies and government benefits to the likes of GM, over the years, that has allowed them to grow to the size they are. America would be much better off with 15-20 car manufacturers than with the three major ones, that way when one of the companies’ business model goes bad then there are 15-20 more that can step up to the plate for their turn at the American dream. To me it just makes sense, but getting there is going to cause a lot of pain in the short term. These large companies operate much like the U.S. Government and the war in Iraq, once a piece of bad policy is put into place it becomes very hard to change directions and do something else. In the end it becomes bad for everyone involved.

  8. Donna Locke writes
    November 17th, 2008 6:39 pm

    These are very interesting comments, with broad application. Thanks for taking the time to offer them.

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