What the Economy Does: Kristof on the Auto Bailout

Quick update, as I am ensconced in discourse analysis a la Foucault until Tuesday. Nicholas Kristof of the NYTImes has a straightforward op-ed today on the auto bailout and why its needed. Here’s the opening:

For the first time in human history, I agree with Dick Cheney. According to The Los Angeles Times, he warned Republican senators that if they refused to bail out the auto companies, “we will be known as the party of Herbert Hoover forever.”

The senators from the Herbert Hoover Party promptly fumbled, but President Bush seems poised to rescue the car companies anyway. Thank heaven!

Look, there are plenty of sound arguments against a bailout. But there’s a practical argument that trumps everything: when conditions are so fragile, we can’t risk a staggering blow to the national economy. When you see a hole in the dike, don’t discuss the virtues of laissez-faire policies — plug it!

I wonder (and hopefully will soon find out) how this case was or wasn’t made in 1929. But I’ll tell you this – it wasn’t made with reference to “the national economy” because it didn’t exist yet (as an object of knowledge, a discursive thing). I wonder, purely speculatively of course, if the economy defined as a measurable, integrated totality of production and distribution in a given region had gained prominence by 1929, would an early fiscal stimulus by the government (and bailout of various industries, etc.) been easier?

The economy opposes the market here – markets are efficient mechanisms for distribution, with coherent rules that productively punish incompetence. while economies are messy totalities with interaction effects that make possible Kristof’s argument. The market for automobiles might be functioning perfectly (although I would wager it is not and has never, think about the externalities alone), and with respect to that market perhaps the Big 3 should fail. Thankfully, we don’t live in a system governed by markets anymore, but rather by economies. And this economy is too dependent on this industry to let it fail today. (Also, there’s a strong case that Kristof does not make that because of the crisis loans are not forthcoming from the private sector and the government is merely taking an opportunity to make a profit based on its status as one of the only liquid lenders right now. If the state were not defined out of the market, this solution might be more obvious.)

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