Chapman on the wisdom of Washington

by Russ Roberts on March 19, 2009

in Politics

Superb. Read it.

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{ 12 comments }

Randy March 19, 2009 at 11:29 am

"…every politician assumes that because he has a driver's license and an ATM card, he must have all the necessary skills to run an automaker and operate a bank."

Actually, its because they are lawyers.

I watched the hearing. Liddy came off well. The congressmen… not so much. That's just no way to run a business. Liddy said at least twice that he expected those who received the retention bonuses to turn them in – along with their resignations. I sincerely hope that is exactly what happens. And I hope the government loses its entire investment. It would be a harsh lesson, but I think a necessary one.

Speedmaster March 19, 2009 at 11:33 am

Wow, great column. Thanks!

Methinks March 19, 2009 at 11:36 am

House Speaker Nancy Pelosi and Senate Democratic Leader Harry Reid, for example, said Detroit should use its bailout money to become "a global, competitive leader in fuel efficiency."

It's crack decisions like that by politicians that led to the collapse of the Soviet economy in a mere 70 years. Anyone still deluding themselves with the fantasy that American politicians are somehow different should wake up from their day dream and take a good look around.

H1-B visa holders are leaving the country and going back home. I wonder when the brain drain will begin in earnest.

Socal Bill March 19, 2009 at 12:04 pm

I believe in baseball lexicon you could say, "Chapman just went yard".

Mike March 19, 2009 at 12:27 pm

I'm in complete agreement that the congress and other government agencies are not knowledgeable enough to properly run AIG, unfortunately for the taxpayers neither were the people that were running AIG before congress took over.

Further, I would be more worried if instead of running AIG poorly they were to run it well. If it were the case that through some stroke of luck congress or other government agencies were to run AIG well it would reduce the hesitancy of the government to take over industries that might work better under free market conditions.

Put more simply, in my opinion, government’s involvement necessary, hopefully temporary and the incentives should be put in place to limit future necessity and ensure its being temporary. Therefore this story is great news.

BoscoH March 19, 2009 at 2:02 pm

This captures the true moral hazard of these bailouts. The part about companies taking too much risk because the government would bail them out was peanuts.

CRC March 19, 2009 at 2:35 pm

You know, I've kind of come to the point where I'm only watching or reading the news out of the same spirit of morbid curiosity that causes some people to stop and look at a car accident. I'm just watching to see what the damage will be.

Frankly the economic Keystone Cop routine being played out by our wise, fearless, honest and humble leaders would be hilariously comical if I had no notion of the real harm it will end up causing to millions of innocent people. But hey, as that old saying goes, "you have to break a few eggs to make an omelet."

ben March 19, 2009 at 3:09 pm

From the article:

"Politicians were shocked when Northern Trust hosted a client event featuring the band Earth, Wind and Fire… And did anyone notice that after Earth, Wind and Fire did the Northern Trust gig, it performed at a White House dinner?"

FFS!

Mike Laursen March 19, 2009 at 4:15 pm

If Congress keeps piling on punitive measures like taxing the AIG bonuses there might be an up side: businesses will start saying no to bailout loot.

vidyohs March 19, 2009 at 4:54 pm

Chapman wrote an excellent piece, how do we make sure Obama, Pelosi, and Reid actually read it?

Yeah, I know. Too bad.

Drain the cesspool inside the beltway, fill it in, pave over it, and then scorch the Earth and contaminate it so bad no one ever goes there again.

TP March 20, 2009 at 8:57 am

If for AIG, government bailout should not allow for bonus payments which are based on employee compensation contracts, then why is it that for GM, union members are allowed to continue receiving salaries which are also bound by contracts?

If we want to run this country by populism instead of laws, we might as well wake up Mao, Zedong and let the Chinese Communists take over.

Sam Grove March 20, 2009 at 4:44 pm

Jumbo Shrimp
Military Intelligence
Department of Justice
Wisdom of Washington

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