David Ignatius asks "what if the bailout policy "works," and prevents the deep global depression that many analysts had feared? In recent days, even super-bear Nouriel Roubini has seemed hopeful that the worst outcomes can be avoided. What would be the lessons of such a "near-miss" world? The first precept would be that bad behavior brings a rescue."
But haven’t we already gone rather far down that path. What are entitlements if not grants that help people from both their own mistakes and from the unavoidable tragedies of life? I am not saying that’s all bad, but I am saying that a government that grows accustomed to helping individual voters when life happens will tend to be the kind of government that will try to rescue corporations (classically regarded as artificial persons, created by law) when they are suffering. Can the welfare state be restricted to individuals and not include corporations? Do we have an example of it doing so for any length of time in any country? The character of the laws shapes the character of a people, both inside and outside of government. The more people who get hand-outs, it seems, the more likely it is that big corporations will get them too. Over time, history seems to suggest that’s the case.
We could make a similar point about the constitution and the bailout. Congress has grown accustomed to writing vague plenary grants to administrative agencies, as opposed to clear law. In that sense, the bailout is another continuation of a trend.
The bailout idea is hardly new. It is the central organizing principle of government in an age of entitlement.