As I write this column, the Congress of the United States in its hopefully tentative lack of collective wisdom (at least among its rank and file members) has just voted to reject what can best be described as (in order of responsibility) as the Paulson – Bernanke – Bush – Pelosi – Reid “Wall Street Bailout” / “Financial Rescue” (Choose one) Plan. In doing so and thereby sending the stock market plummeting and the fears, anger and insecurities of their constituents rising, the leadership of both the legislative and executive branches of our federal government simultaneously illustrated several political and economic facts of life which are imbedded in our mixed economy and the constitutional representative democracy which governs and should regulate it more effectively.
These immutable political and economic facts of life are now converging and collectively manifesting themselves at the points in the system where they intersect in ways that if left unchecked by political leaders who are willing to rise above the mistrust and anger of a significant number of the people who elected them (and can unelect them) threaten the quality of all of our lives.
This Plan which embodies the most informed and educated guesses as to how to quickly address the causes of the failures of these now clearly under regulated markets is the product of the minds of people who have studied not only this country’s current economic crisis and its historical causes, but also how it relates to the global economy, which is inextricable intertwined with it and is suffering along with it. Can these people legitimately and in some quarters pejoratively be labeled an “Elite”? Perhaps. Can they individually or collectively guarantee that this plan will “work”? No, because the complexity of both the problem(s) and therefore the solution(s) are unprecedented and therefore not subject to any experiential or even anecdotal data or other information which could be used to analyze the probability of the Plans “success”. Are some of these very same people responsible for either causing this crisis or at least acquiescing in the public policy and private economic decisions which led to this crisis? Arguably, Yes. Does this plan even purport to address the entire range of issues which ultimately need to be systematically and thoroughly be addressed? Of course not! Most importantly are any of these issues which hover over the consideration of this plan reasons to reject it in lieu of either of the alternatives presented so far — (1) No action (2) Various incoherent “Talking Points” strung together or separately based on their ideological or political appeal to partisans on both sides of the aisle. You tell me!
The focus of the Plan must of necessity be to immediately address the need to provide the relief necessary to halt the imminent and again potentially irreparable systemic threat. That threat is that the institutions which provide and/or insure that credit is available and flows to the businesses and consumers who fuel our economy are not paralyzed by the mistrust, apprehension, anger and fear of both the institutions and the people running them in a way that causes immediate and wholesale business and personal financial failures before the executive and legislative branches of government can address the myriad of other causes and problems which will need to be dealt with in a more deliberative process.
So, the “Plan” is currently being politically fine tuned (perhaps unfortunately with political and economic goodies) until the votes in both chambers of the United States Congress can be secured. It is for sound political and economic reasons not comprehensive except to the extent necessary to address the minimal but paramount and immediate objective of maintaining the flow of credit necessary to lubricate the flow of goods and services in our country and the world while we assess more deliberatively the restructuring of the institutions and policies of the public and private sectors, the level of transparency and accountability required to do so and a host of other issues not yet articulated or in some cases even noticed. The “Plan” is the product of some of the finest minds we have, who have both the practical experience (Paulson, Rubin, Summers and Furman) as well as the academic, historical and practical perspective (Bernanke and Austin Goolsbee) along with the finest minds of all of the people they have consulted in the financial world around the globe in both the established and developing economies of Europe, Asia and Africa.
None of this can guarantee success. But it is the best hope we can have now in the year 2008 to buy the time to absorb the changes we have wrought in this “flattened world” as described by author, Tom Friedman. We must plan now how we need to reform both our political and economic institutions and policies. That more deliberative process should result in a more orderly consideration of the need for greater transparency and fairness than the chaotic process we are seeing on the nightly news as this column is written.
Arrayed against this Plan are the political agendas and interests of individual US Congressman and senators who voted No to this plan. Many of these are asserted in good faith and in the minds of these legislators in the public interest. Some of these agendas and interests have great merit and should be considered in the more deliberative legislative and executive processes that as noted earlier should follow this crisis relief. But they should not and indeed must not be allowed to block the road to relief from the immediate crisis any longer. The narrowness of these agendas and the fact that they are not even part of an alternative plan which addresses the immediate and paramount issues further compels this conclusion.
Also arrayed against this Plan are various economic interests which are more narrow and for that reason at best not necessarily aligned with the public interest. These interests are more easily deflected at least in the short run as simply not worthy of even minimal attention and certainly no deference at this moment in our Nations history.
The bottom line to this “debate” and the ultimate action which must be taken is that our elected leaders must not emulate the “long forgotten leader of the French Revolution” facetiously cited on more than one occasion by John F. Kennedy. That long forgotten leader was quoted by President Kennedy as exclaiming, “There go my people, I must find out where they are going, so I can lead them.” That leader was “long forgotten” and should be because he thought and said things like that. So be it for any federal legislator who justifies his or her vote on the basis of the number of letters, e-mails, and telephone calls for or against the Plan or because I want other things in the legislation unless they relate to the immediate objective of the legislation to stem the credit crisis.
As Felix Rohatyn, the brilliant, tough-minded businessman who did so much to save New York City in its time of crisis pointed out “Commitment in the form of compromise is not always viewed as desirable. Indeed at time it is viewed as downright unfashionable … we face the loss of our most precious assets all because we are cynical, self-indulgent and unwilling to make the effort.”
As to the argument that the success of the proposed plan is too uncertain to support it even though there is no alternative except the status quo on the table, I would counsel reluctant legislators to heed the words of no less than the master of politics, Machiavelli in “The Prince” . . . “There is nothing more difficult to take in hand, more perilous to conduct or more uncertain in its success than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders among those who may do well under the new.”
Some lessons from the past masters are clearly illuminating in our present circumstances. It is therefore clear that the resolution of this and other great issues that follow will not be found by those who are content with today, apathetic toward the problem or timid and fearful when confronted with new ideas and bold projects. Let us hope that our leaders willingly and enthusiastically accept the challenges that lie ahead of them and use the skills that brought them to their current positions of power and trust in our nation to implement change that is rational and serves all of the people not just their individual interests in the long term.