I’ve heard friends giving Paul Ryan a hard time for voting for Bush’s Troubled Assets Relief Program in 2008. Was it conservative to vote for TARP? No. Of course not. Was it responsible to vote for TARP? Yes.
The GOP platform should be one of standing against bailouts. Our philosophy should remain one of free markets and free people. But it cannot be done in the vacuum of a conservative classroom. While we may call ourselves a free market system, most of us realize that unfortunately, we aren’t really all that free anymore. Likewise, many of the rules that govern us render the U.S. anything but a free market. And so to advocate solutions that might work in a free market system in a system that is so blatantly intertwined with the state, is to stick our heads in the sand.
To be clear, I don’t disagree with those R’s who voted against TARP on principal. I respect that. But we must also realize that voting against a bailout for the banks, when the banks were going down like dominoes was a real threat.
To advocate letting them fail is something akin to Jerry West and Pistol Pete coming into the National Basketball Association today to compete with Lebron James and Kobe Bryant. It may seem like the same game with the same rules. But it’s not. And anyone who chooses to play by the rules of yesterday in such a league is in danger of getting their asses handed to them.
Banks are not businesses in the sense that Adam Smith wrote about. Though they offer services, they act as more of a facilitator for business than an actual business. And because their loans were part of the foundation of so many businesses across the nation, their failure had the potential to be cataclysmic. It wasn’t as easy as letting GM go bankrupt was.
The GM bailout was simply a matter of American pride and convenience. Would we have lost jobs? Sure. Would we have not had cars or financing or vehicle parts? No, the market would have taken care of those problems. GM would have entered bankruptcy proceedings where the strong would survive and the weak would fail. In their place, we would have foreign companies giving jobs locally as well as small domestic businesses taking its place.
To be frank, the situation would have hurt. It would have involved job losses and it would have shipped business overseas. But this type of failure is necessary to create a healthy economy.
Had Citigroup or JP Morgan or Bank of America gone under, it wouldn’t have been replaced by more banks. Each bank held notes and debts that belonged to the others. It would have ended with each bank falling in a series, as the failure of the last bank would leave the operation of a surviving bank unable to survive due to its massive holdings in the failing bank.
You can hold Government Motors against Paul Ryan that was politics getting ahead of country, but voting TARP was probably the opposite.