Lending a BIG hand

Behind The News
September 22, 2008 1:19:15 PM PDT
Back when I was an economics and accounting major, my college professors were divided pretty much into two well-defined camps.

There were the leftists in one camp and the free-market advocates in the other.

The latter group loved, loved, loved Adam Smith, one of the fathers of capitalism from the 1700's. Smith believed that an individual's pursuit of money and profits was by definition a good thing for society as a whole, and he pushed as a metaphor the theory that this pursuit represented something of an "invisible hand" in the economy.

The leftist economists I think appreciated the individualism, but abhorred the lack of any sense of collective in Smith's theories. And they also saw the inherent problems in a philosophy that said the less government protection/intervention, the better.

Most of us thought that the Bush Administration and its neoconservative supporters were big proponents of the "invisible hand" approach. Wasn't get-the-government-off-our-backs kind of a catch phrase for the President's two-terms -- a Bush Doctrine, so to speak, for domestic policy? It seemed to be.

So maybe Sarah Palin was right when she said, "In what respect, Charlie?" in response to Charlie Gibson's question about whether she agreed with the Bush Doctrine.

Who really knows what that doctrine is anymore?

One thing's for sure -- there ain't no invisible hand at work. This hand is quite visible and enormous and about to get even bigger.

I suppose most Americans care only if this emerging giant bailout actually works. The most radical federal government involvement in the private sector since the Great Depression may not spark a great what-to-do debate among the populace, although perhaps it should.

If this works, if jobs are saved and the economy can be turned around, then maybe this massive dose of taxpayer money and government takeover will be worth it. Maybe the ends will justify the means.

But even if the problem is solved, there is a deeper, more troubling question - and it has nothing to do with whether the government should or should not get involved: Will the disease have been cured? And the disease isn't government; the disease is deceit and deception and trickery and lies and greed.

Unless all this upheaval leads to real reform of how people make money -- and so many people made so much money by just shuffling paper around and shifting balance sheets and overextending debts -- then we are, alas, doomed to repeat the entire scenario again.

I remember clearly in the 1980's -- when the Reaganomics Proponents morphed into the Reaganomics Retreaters after the savings and loan crisis in the 1980s (along with ill-advised tax cuts) helped create a monster deficit. There were those back then who said government's bailout of the financial institution scandals would solve the problem once and for all.

It didn't. It just shifted the focus, and changed the definition of how these supposed brilliant tycoons of business made their fortunes.

Unless we fundamentally change that, not just change the names of the players and the definitions of their monetary instruments (derivatives and hedge funds were not back then part of the lexicon, as they are now) -- then history will repeat itself in another 20 or 30 years.

And then there's this angle to the story: Aren't most of us, at least a little, enablers in this greed? Didn't anyone who owns a house or apartment in the New York metro area benefit from the rising prices of housing, which in large part was fed by the riches from Wall Street? You bet we are.

We'll once again have the latest on the economic crisis, and the proposed financial bailout by the Treasury Dept., tonight at 11.

Also at 11, we're on the campaign trail, where the bad news about the economy is good news for Barack Obama. The virtually tied race has, in the past week, according to the opinion polls, shifted back in Obama's favor. The weak economy, and the credit and banking crisis, not only plays to Obama's strengths in this campaign, but also to McCain's weakness, which is the past eight years of Republican control of the White House and the economy. And that's why Obama tries to tie McCain to President Bush, even as Sen. McCain tries to distance himself from Mr. Bush.

And what an interesting conundrum for McCain, who has suddenly gotten on the reform-Washington bandwagon. If - IF - these radical actions by the Bush Administration actually work, then McCain's reform message may not be what works. For example, yesterday he called for the firing of the Chairman of the S.E.C. Today, that Chairman, Chris Cox, was front and center in this bailout proposal - a clear signal that Pres. Bush is behind him.

I'm just sayin.

We'll also have any breaking news of the night, plus Lee Goldberg's AccuWeather forecast, and Scott Clark with the night's sports, including the last Friday night game at Yankee Stadium. I hope you can join Liz Cho and me, tonight at 11, right after 20/20.

And one more note before I sign off. We're saying goodbye in the newsroom today to our long-time assignment editor Howard Price. Howard, after 73 years here at Ch. 7 (in TV years), is leaving. But he's not going far. He's moving next door, to ABC, where he's going to be the head honcho in charge of the network's crisis management. It's a perfect job for Howard, who knows more about how to deal with emergencies, and how to keep us on the air, than just about anyone on the planet.

So we're happy for him, because this is something of a dream job for Howard. But it's also sad, because Howard is a true newsman. He lives, breathes and bleeds news. And we could count on Howard to always, ALWAYS, be there with information, story ideas, history lessons, and his tireless energy. Good luck Mr. Price.