Wednesday, 17 November 2010

Bush on free market ideology

Bush's recent memoirs contain more discussion of his decision to intervene dramatically in the markets in the face of the economic crisis facing the nation in 2008.   Bush comments: "It flew against all my instincts. But it was necessary to pull the country out of the panic. I decided that the only way to preserve the free market in the long run was to intervene in the short run."  He also says, "The lesson there is that I had to set aside an ideology."  It strikes me that Bush is playing a little fast and loose with his ideology here, wanting to recognize that he'd done the right thing without acknowledging that insofar as it was the right thing it refutes the ideology.  He doesn't get to just set aside his ideology and pick it up again, untarnished, when the dust has settled. 

Sometimes people set aside principle or ideology or fundamental beliefs because there's a competing interest at stake.  I might believe it's wrong to eat meat but set aside that principle when I'm visiting someone's home or when I'm starving, but in those cases, I'm setting aside the principle in favor of a competing interest, e.g., being respectful of my hosts or believing that my life trumps the life of a chicken.  However, something very different is going on in Bush's case.  

The ideology that free market proponents embrace involves a claim that markets work best when the government leaves them alone; that is the beauty of the invisible hand doctrine.  But if Bush is recognizing that the market system would have failed profoundly without intervention, that seems not so much a momentary abandoning of a principle for the sake of some other pragmatic consideration, it's a recognition that the ideology itself is just simply incorrect.  In fact, economies don't work best when government leaves them alone, sometimes they'll fail spectacularly when you leave them alone.  So, again, I think Bush and other people who will simultaneously advocate for free market ideology and TARP-style interventions owe us a clearer account of the economic ideology they embrace.  They've acknowledged , I'd contend, that free market principles are wrong.  This isn't a "setting aside", it's the recognition of a profound and fundamental flaw.  In the face of such evidence, it's incoherent to simply pick up the ideology and resume.  

This is more like a football coach claiming that the West Coast offense is the very best offense but abandoning that offense whenever playing a team with a good defense or whenever falling behind by two or more TDs, claiming, "I had to stop playing that offense or we'd get too far behind and it's hard to use the West Coast offense when you're far behind.  You see, the only way to save the West Coast offense was to not use the West Coast offense."  That would be an incoherent claim as would be carrying on with the pro-West Coast offense ideology.  A more coherent observation would be "The West Coast offense is very effective for some situations and in others it isn't -- here are places and times in which it's imprudent to rely on it."

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