At Culture 11, Peter Suderman helpfully summarizes my own worries about opposition to the bailout:
On the other hand, I’m also bothered by the dogmatism of many of the bailout’s opponents. Few of them, it seems, have much in the way of specialized technical or economic expertise (though there are exceptions). They speak primarily in terms of principle and politics. Now, I’m not one to disparage principle. But applying good principles isn’t always as easy as it sounds; we can talk all day, for example, about how we won’t tolerate, say, drunk driving. But when someone drinks too much and runs into a telephone pole, is it really smart to refuse to come to that person’s aid simply to refuse to support to those who’ve made mistakes? Applying one’s principles — good and true as those principles may be — in a situation like we have currently is even more difficult because most people have only a vague, extremely simplified understanding of how credit markets work.
Suderman’s objection is pretty compelling. Many of the bailout’s detractors, however persuasive, lack formal training in economics. This post from Glenn Greenwald, for example, takes a fairly postmodern approach to a highly-technical debate grounded in economic empiricism. Yes, people on Capitol Hill have conflicting agendas, and yes, the Bush Administration has a history of mismanagement, but does that implicate the truth value of the bailout’s projected benefits? By all means, cite economists who disagree with the measure, but don’t hang your hat on impugning Paulson’s motives.
That said, guys like Greenwald and John Schwenkler have done a great job of marshaling respected economists who oppose the rescue passage on empirical grounds. The fact that highly-credentialed academics have been entirely shut out from the debate on Capitol Hill is the ultimate indictment of our approach to crisis management. If nothing else, the process should be dramatically slower and a lot more open to criticism. That would help reassure a lot of us who are suspicious of any bailout on principle, but otherwise willing to defer to outside expertise on highly-technical issues.