02
Dec
2016
On My Anti-Anti-Trumpism: I Regret Nothing!
Some people in the comments of previous posts have been psychoanalyzing me, wondering why I spend so much of my precious time pointing out hypocrisy in Trump’s critics (as opposed to ridiculing Trump’s ridiculous statements). I actually thought maybe they had a point, and then this happened on Twitter.
.@LHSummers Didn't you recommend to new prez Obama that he bail out Chrysler? Did that hurt American capitalism? https://t.co/BK8wiUK77i
— Robert P. Murphy (@BobMurphyEcon) December 3, 2016
Clearly Summers is praising the damaging of American capitalism, by Trump.
Right? Right?
Example #745,898 of liberal hypocrisy.
Today.
In the city where Summers lives.
Between the hours of 12:00 pm and 12:05 pm.
By one individual.
Are you really saying that all Keynsian economists who come our against Carrier-type antics are hypocrites ?
If Summers had said in response to Carrier “All intervention in the economy is wrong” then clearly this would have been in direct contradiction to his advice to Obama on GM. A quick reading of the Summers post you link to indicates that his views on Carrier are more nuanced than that and related to specific issues of ‘ad hoc deal capitalism ‘.
I know that Austrians would tend to see all intervention as forms of ”ad hoc deal capitalism ” but as this clearly is not true in Summers framework this post (for me) misses the mark as a serious criticism.
Transformer, sometimes I think you are good at holding my feet to the fire, but other times…
From Summers’ critique of the Carrier deal:
I have always thought of American capitalism as dominantly rule and law based. Courts enforce contracts and property rights in ways that are largely independent of just who it is who is before them. Taxes are calculable on the basis of an arithmetic algorithm. Companies and governments buy from the cheapest bidder. Regulation follows previously promulgated rules. In the economic arena, the state’s monopoly on the use of force is used to enforce contract and property rights and to enforce previously promulgated laws.
Is that how you would describe the auto bailouts that Summers oversaw? Here’s an article critiquing them *precisely* on the grounds that they violated the rule of law. An excerpt:
But it wasn’t long before these hopes were dashed by the government’s management of the process. Instead of a regular bankruptcy proceeding, the Obama administration, working with the automakers, patched together a process without precedent — a bankruptcy combined with a bailout, incorporating the worst elements of both.
Of the two proceedings, Chrysler’s was clearly the more egregious. In the years leading up to the economic crisis, Chrysler had been unable to acquire routine financing and so had been forced to turn to so-called secured debt in order to fund its operations. Secured debt takes first priority in payment; it is also typically preserved during bankruptcy under what is referred to as the “absolute priority” rule — since the lender of secured debt offers a loan to a troubled borrower only because he is guaranteed first repayment when the loan is up. In the Chrysler case, however, creditors who held the company’s secured bonds were steamrolled into accepting 29 cents on the dollar for their loans. Meanwhile, the underfunded pension plans of the United Auto Workers — unsecured creditors, but possessed of better political connections — received more than 40 cents on the dollar.
Moreover, in a typical bankruptcy case in which a secured creditor is not paid in full, he is entitled to a “deficiency claim” — the terms of which keep the bankrupt company liable for a portion of the unpaid debt. In both the Chrysler and GM bankruptcies, however, no deficiency claims were awarded to the wronged creditors. Were bankruptcy experts to comb through American history, they would be hard-pressed to identify any bankruptcy case with similar terms.
Some people who clearly are not generally in favor of bail outs of bankrupt industries saw the auto-industry bailouts as a special case due to the perceived seriousness of the crisis at the time. It is not that hard to see the logic (even if one disagrees with it) that would lead one to support them while being against Carrier.
Now I have absolutely no doubt that the bailouts were handled in a very political and pork-barrelling kind of way. I believe (and observe) that to be true of all government controlled projects. The movie “waiting for Superman” (http://www.imdb.com/title/tt1566648/) which I highly recommend shows how this plays out in public education.
But are we then to say that anyone who supports any govt program (such as public education) is a hypocrite for criticizing Trump’s Carrier intervention? To do so would seem to me to set the bar too low and be more like cheap shots than serious arguments.
Transformer, you’re being extra obtuse about this. Where exactly did you read Bob say he was making a point about anyone who favors any government program?
Your defense of Summers’ hypocrisy is like, the dictionary definition of special pleading.
He’s gone full Harold. Never go full Harold.
Having recently been accused of such myself, I concur.
Wow. Let’s recap shall we? Bob implies Summers is a hypocrite. You imply Bob is crazy. Bob quotes Summers talking about previously promulgated laws and known rules, and why that makes Trump wrong. Bob points out Summers stomped all over just precisely those things.
Summers did not say, look Carrier was small and Chrysler big, so different criteria apply. He just trotted out rules and ” previously promulgated”, such a fine, precise, legalistic phrase, like he was holding up a bright, shiny object for us to admire.
Transformer, you seem to think that my argument is, “Ha ha, Summers opposes the Carrier deal.” But no, I keep telling you to read HOW and WHY he opposes it. Let me quote it again:
I have always thought of American capitalism as dominantly rule and law based. Courts enforce contracts and property rights in ways that are largely independent of just who it is who is before them. Taxes are calculable on the basis of an arithmetic algorithm. Companies and governments buy from the cheapest bidder. Regulation follows previously promulgated rules. In the economic arena, the state’s monopoly on the use of force is used to enforce contract and property rights and to enforce previously promulgated laws.
So yes, someone who starts out LIKE THAT, and then says the Carrier deal signals the death of capitalism in America (or whatever apocalyptic language he used), who was also an architect of the auto bailout that overrode existing creditors in order to reward unions, is a total hypocrite.
This would make more sense to me if you could point out somewhere where Summers had said it was fine that the GM and Chrysler bailouts rode roughshod over contracts and property rights – rather than just giving general guidance to Obama that the bailout was in principal a good idea.
Are you saying that the only way that Summers could not be a hypocrite is to support the Carrier deal ? That sounds like odd reasoning to me.
Actually, the onus is on you to find where Summers, who helped oversee the bailouts of the auto companies, critiqued them on that basis.
I have no idea of the precise involvement of Summers in the specifics of the illegal treatment of GM and Chrysler creditors alleged in the linked to NR article (which actually says before getting into the details “a reasonable argument could be made that… it would have been appropriate to use funds from the Troubled Asset Relief Program to lend or guarantee debtor-in-possession financing to GM”.
Suppose the Summer article had been written instead by Krugman – someone who supported the bailouts but was not in any way directly involved. Would he be a hypocrite too ?
Transformer I’ll make three quick points and then I’m done on this particular dispute (you can of course have the last word if you want).
1) If Summers had said, “The Carrier deal is chump change and in the grand scheme doesn’t really matter, but it’s silly policy,” then no contradiction.
2) If Summers had said, “The Carrier deal will permanently damage capitalism, which of course has already suffered a fatal blow from the far far worse GM/Chrysler bailouts–which were implemented in a way that horrified me at the time, despite my earlier endorsement of the general plan,” then no contradiction.
3) But instead Summers made it sound like the Carrier deal was qualitatively new, and represented a novel threat to our way of life. Since he is credited as being one of the most important advisors responsible for the auto bailout which was way way worse on precisely the grounds Summers listed, the fact that he doesn’t even mention that episode is odd.
And my final comment:
I agree on refection that the Carrier deal is not qualitatively new and that kind of political wheeler-dealer stuff probably happens all the time – it just happens to have been spun up by Trump for PR purposes on this occasion.
But I still don’t think that makes Summers (necessarily) a hypocrite – he may just be looking at it through a different lens to you.
Transformer, you’re half right and half wrong.
“Are you saying that the only way that Summers could not be a hypocrite is to support the Carrier deal ?”
-No. Bob is saying some of Summers’ specific criticisms of the Carrier deal are nutty given his previous support for the auto bailout.
“Are you saying that the only way that Summers could not be a hypocrite is to support the Carrier deal ?”
No, I think Robert Murphy is saying that Larry Summers should, when criticizing the Carrier deal, also acknowledge that the Chrysler and GM deals were every bit as egregious violations of the rule of law as the Carrier deal.
Instead, Larry Summers is implying this is something new…and something he has never endorsed in the past.
“Some people who clearly are not generally in favor of bail outs of bankrupt industries saw the auto-industry bailouts as a special case due to the perceived seriousness of the crisis at the time.”
And the perceived party affiliations of the President and the union workers at Chrysler and GM…
https://web.archive.org/web/20160722080242/http://change.gov/newsroom/entry/letter_from_lawrence_h._summers_to_congressional_leaders/
Bailing out a broken GSE based mortgage system by tipping more government money into the puddle … you see that’s actually fixing American capitalism.
Good thing it’s all fixed now… phew! *mops sweaty brow after hard days work*
Lest anyone say I’m unfair. There’s another article (approx 6 months before the above letter) where he sketches out the strategy and he does include some nuance and comparisons with the Savings and Loans Crisis:
http://larrysummers.com/commentary/financial-times-columns/the-way-forward-for-fannie-and-freddie-july-27-2008/
Trump of course gets to make exactly the same argument with everything he does — this is an emergency, jobs are vanishing from the USA, the country is uncompetitive, need to act right now, fix it up later, etc, etc.
Never let a crisis go to waste, as the saying goes 🙂