By David Henderson
The [Washington] Post tells us how the people who designed the bank bailout were committed to the free market. Interestingly, the key decisions that they made gave the banks much better terms than they could have received from the free market.
Since the post [sic] doesn’t really know the inner most thoughts of the bailout designers, let’s try an alternative hypothesis. They wanted to help the banks as much as possible with public money, yet they wanted to rationalize this give away of taxpayer dollars as somehow consistent with the free market. Their alleged belief in the free market is simply a cover for efforts to aid the rich.
I don’t know if this alternative hypothesis is true, but the Post certainly does not know that the story it presented to readers as fact is true. How about we just get the news media to skip the speculation about people’s ideologies and just report on where the money went.
This is what Baker is best at: pointing out how shoddy is so much of economics reporting, even in the major high-quality newspapers like the Washington Post. You don’t have to agree with his ideology to learn from his penetrating analyses of the newspapers’ false certainty.
What would be great is if Baker learned more from the Public Choice school about the incentives of government officials that cause them to favor such bailouts and to realize that many of the people on his side of the issues face, and act on, those same incentives.
I tangled with Baker once over the issue of Social Security reform, with me advocating abolishing Social Security, Baker advocating keeping it and raising taxes occasionally, and Michael Boskin advocating personal accounts. [The transcript, by the way, is full of errors. For example, where I advocating de-indexing Social Security benefits by about one percent a year, it has me advocate “D indexing.”] Baker is a friendly, likeable guy with a great smile.
Responding to my abolition proposal, Baker said:
Well, one thing I have to say is he’s the first person I’ve heard that’s actually been honest enough to just say that we would just leave it up to everyone, because a lot of people will ostensibly say, “Let’s get the government out.” What they actually want to do is to have government-mandated saving. So they’re still talking about requiring people to put their money aside; the idea is that they would just put it in some private account rather than putting it with Social Security, but the government’s still forcing them to direct their money in a particular way.