(Guest post by Greg Forster)
On this page I’ve cited comments by Canadian columnist David Warren as providing potential support for backers of the bailout. I don’t think, however, Warren had explicitly taken a position. Well, now he has, and it turns out he’s against. I figured out of fairness I should take note of it. I think Jay will particularly like the way he puts this:
Were it not for the panic, very little would be lost. The things that we produce by our labour we may continue to produce, so far as they are needed; and the things we need may continue to be produced, in exchange. Money itself, so long as it is taken at face value, may continue to be the convenient mode of exchange. Neither now, nor in 1929, nor in any of the other times of stock plunge and bank failure, has anything much been lost, until, to use Franklin Delano Roosevelt’s phrase, “fear itself” became the enemy of the people.
For in practical terms, the stocks on Wall Street are not worth nothing. Formidable agencies of production lie behind each of them. When their heads have cooled, investors may sort out which are over-valued, which under-valued by comparison, and what needs writing off. The more I try to think it through, the clearer it seems to me that every “rescue plan” is counter-productive. The sorting-out process is seriously confused when the government blunders in.
Indeed, the consensus of the economists I have read is that the Great Depression was largely an artifact of government intervention, reacting to a meltdown by freezing it into place. For politicians and bureaucracies characteristically mistake money for goods, words for things, pictures for reality.
Warren has actually been on fire for the past couple weeks; Mark Steyn has recirculated this thoughtful column on the “two solitudes” in U.S. politics, and with Canada having its own election underway, Warren’s relentless attacks on Conservative PM Stephen Harper (“Twice I have tried to unload the contents of a column over the head of Stephen Harper, whose betrayal of conservative causes I have been inclined to take personally. The other candidates do not annoy me nearly as much, since I have never been tempted to like, admire, or support any one of them.”) culminated in this paean to the (now apparently defunct) “returned ballot” rule, which once allowed a Canadian to show up at the polling place and formally register that there was no candidate for whom he would care to vote.