Sunday, September 21, 2008

Toll Roads and Bailouts

I'm kind of glad that economists are starting to take a breath and realize the bailout program being crammed down Washington's throat as a "the only way" situation may not be. Governor Corzine told us here in NJ the only way to balance our state's budget was to lease or privatize our toll roads. Didn't happen, and we're still kicking.

People need to raise questions, loudly, about the wisdom of this plan. Simply deferring to Treasury Secretary Paulson's experience with Goldman Sachs as being all knowing is a dangerous path to take. So far, this is one of my favorite challenges to the plan:
For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of a few financiers will undermine the fundamental workings of the capitalist system," wrote University of Chicago Business School Economist Luigi Zingales, in a short essay titled "Why Paulson is Wrong" cited by Mallaby and a raft of other economics blogs across the ideological spectrum. "The time has come to save capitalism from the capitalists.

Should these large companies fail, the idea that other smaller competitors won't step up and give those with good credit loans runs counter to our American experience and the nature of our economy. This bailout plan is awful, and while still is likely to go through, it seems the reason they're trying to rush Congress through it is to prevent people from asking questions. The reality is, it's a handout to the bad actors on Wall Street who put profit over prudence. They made this bed.

1 comment:

Anu said...

Thanks for talking about this legislation because we all need to discuss this openly before they vote on it. The Sunlight Foundation put the two bailout bills online so people can comment on it. Feel free to visit publicmarkup.org to discuss these bills with other