Not All Government is Bad

"there's a man going around taking names
and he decides who to free and who to blame
everybody won't be treated all the same...
whoever is unjust, let him be unjust still
whoever is righteous, let him be righteous still
whoever is filthy, let him be filthy still
listen to the words long written down when the man comes around"
-Johnny Cash, "The Man Comes Around"

There's an interesting piece in the New York Times from over the weekend written by Michael Lewis (author of Liar's Poker which I'm told is an excellent book by some people at Jump) and David Einhorn about the financial situation we find ourselves in here at the beginning of 2009. Go ahead and go read it; it's seven pages, so I'll wait.

(time passes...)

I'm not certain exactly how to fit this information into my world view. The point of the first half of the piece is basically that greed, while obviously necessary to the calamity we find ourselves in, isn't really the problem; we have set up a system where all of the incentives (even for the non-greedy) back short-term gains at the expense of long-term self-interest. It gives reasoned argument that Madoff's Ponzi scheme shouldn't have been a surprise, and in fact parallels the incentives that led to the creation of that scheme to the complete lunacy of the ratings issued by the credit agencies.

It's actually the second half of the article that makes for interesting reading, however, and illuminates the problem I have with the binding of the Evangelical Christian community to the Republican party. Let me explain.

The solutions outlined in the article are:

1. Stop making big regulatory decisions with long-term consequences based on their short-term effect on stock prices.
2. End the official status of the rating agencies.
3. Regulate credit-default swaps.
4. Impose new capital requirements on banks.
5. Close the revolving door between the S.E.C. and Wall Street.
6. But keep the door open the other way.

I'm not going to take the space and bore you with an analysis of each of the above, but 3 and 4 require either restructuring current government regulation or adding new government regulation. Just a few paragraphs before these solutions, the authors talk about how Sweden handled a similar crisis a few years ago that involved actually demanding the government take something in return for the money it flooded the market with. The notion that many markets connect regulate themselves well because they do not correctly evaluate long-term self-interest flies in the face of small government philosophy.

(As an aside: it is easy to set up straw men on either side of this, and I'm sure many will argue against this using Japan as their example given their extreme interest in the long-term and the subsequent marriage of government to business present in that country. Some of you probably already think that I'm arguing against straw men. "No one is saying all government is bad, Kurtis. You're just talking to hear yourself talk." Really? How many times did I hear Reagan's "Government is not the solution; government is the problem" quote during the election? And it's not new. Phil Graham said "Both the economic crisis and the moral crisis have their roots in the explosion of government" back in 1995!)

The problem I see is that small government conservatives aren't anarchists, but they seem to play that role because they don't seem to know (or care) what that role ought to be. The leadership vacuum left by the Bush administration means that no one is articulating one, and the lack of desire (or ability) to try to fill that vacuum means we don't even have a discussion.

I'm not saying it's stupid to be a Christian and a Republican. I'm saying it's stupid to believe a party is the right party to govern simply because of its stance on a handful of social issues. You are free to pick an auto mechanic who only believes in Quaker State oil so long as he actually knows how to fix your car. Right now I think the Republican party seems completely ill-equipped to actually govern, and nobody is stepping up to prove me wrong.

Lots of good conservative friends of mine (who know I still have conservative roots deep down inside) want to know why I voted for Obama. This, more than anything else is the reason. I want somebody who knows how to govern and believes government has a role. Will I agree with the role he assigns? Probably not completely, but at least I think he understands he has one. You shouldn't hire somebody to do a job they don't believe is necessary or that they disdain because they don't see its purpose.

I think the article's commentary on the Bush Treasury and Fed response to the crisis summarizes this well:

When you shout at people “be confident,” you shouldn’t expect them to be anything but terrified.