Posted by Jonathan Adler:
The Ever-Changing Bailout Game:
http://volokh.com/archives/archive_2009_05_03-2009_05_09.shtml#1241700094
Thomas Cooley, dean of NYU's Stern School of Business, [1]writes:
We are entering a precarious phase of the economic and financial
crisis. On the one hand, there are encouraging, if weak, signs of
an economic recovery. There is evidence of a revival in lending.
Consumer confidence is improving quite a bit both in the U.S. and
Europe.
But on the other hand, lots of things are not happening. Many
investors are sitting on the sidelines, as is much money. Why?
Because it is impossible to know what the rules of the game are.
And that's because the administration and the Congress keep
changing the rules in capricious ways in pursuit of larger
political objectives. . . .
Why would private capital get involved when the rules of the game
are so capricious? No one would take that gamble when it is clear
that, in dealing with the government, private capital will always
take a back seat to politically powerful entities.
And that is the larger worry that current policy has neglected.
Firms and markets can function quite well within a framework of
rules. Indeed, rules are good for the orderly conduct of business.
But when rules get imposed or dispensed with willy-nilly in the
interests of politics, it is very dangerous. We have should have
learned this lesson long ago.
Set aside the merits of various individual policy decisions -- whether
made by this Administration, the Bush folk, or Congress. When the
rules of the game can change at any moment, essential players won't
join the game -- and that's no good for any of us.
References
1.
http://www.forbes.com/2009/05/05/obama-talf-tarp-economy-uaw-opinions-columnists-chrysler.html
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