What do you think of "the" bailout? Not that there's an agreed on plan right now.
What about "a" bailout? I mean a politically feasible one, not one that involves socializing finance capital.
What bailout are we likely to get? What do you think of that hypothetical bailout?
andie
--- On Thu, 9/25/08, Doug Henwood <dhenwood at panix.com> wrote:
> From: Doug Henwood <dhenwood at panix.com>
> Subject: [lbo-talk] so what do "we" think of the bailout?
> To: "lbo-talk" <lbo-talk at lbo-talk.org>
> Date: Thursday, September 25, 2008, 3:21 PM
> <http://tbm.thebigmoney.com/articles/making-bail/2008/09/25/do-we-love-bailout
>
> >
>
> Do We Love the Bailout?
>
> By Liza Featherstone
>
> Last week, we—the American people—didn't seem to
> like the notion of a
> bailout, not one bit. A Rasmussen opinion poll [1] released
> Sept. 17
> found that just 7 percent of Americans favored "using
> taxpayer funds
> to keep a large institution solvent." Rasmussen's
> results tend to skew
> conservative compared with other pollsters, but it was
> still a
> dramatic finding. In fact, it's hard to find another
> idea we hate that
> much. For example, with 54 percent of Americans now saying
> we should
> have stayed out of Iraq, the war is unpopular-but nowhere
> near the
> depths of single digits. You might assume that, therefore,
> an even
> greater percentage would disdain Treasury Secretary Henry
> Paulson's
> scheme, announced only two days later, to push through, in
> great
> haste, the largest-scale government rescue of any financial
> system in
> history.
>
> But public opinion is way more complicated than that. A Pew
> survey
> released Wednesday [2] finds that 57 percent of the
> public-a margin of
> almost 2-to-1-favors Paulson's bailout scheme.
> Rasmussen's voters like
> it less than that-28 percent approved on Monday and 25
> percent Tuesday
> [3]-but they still like it better than they liked the
> abstract idea of
> a bailout last week. ABC News finds 44 percent approving of
> the
> Treasury's plan, while the Los Angeles Times/Bloomberg
> poll [4] finds
> only 31 percent approve, about the same as the Wall Street
> Journal/NBC
> poll [5]. These are radically different results. What in
> the world is
> going on here?
>
> As Gary Langer, director of polling at ABC News, points out
> [6] on his
> blog, everything depends on how you ask the question. The
> Pew survey
> asks how people feel about "investing" money to
> "try and keep
> financial institutions and markets secure," while L.A.
> Times/Bloomberg
> asked if the government should "bail out private
> companies" using
> "taxpayer dollars." ABC News, most neutrally,
> asked if people approved
> of "the steps the Federal Reserve and the treasury
> have taken to try
> to deal with the current situation involving the stock
> market and
> major financial institutions." Rasmussen asked last
> week how they like
> "using taxpayer funds" to help "large
> institutions"; this week, they
> asked, "Do you favor or oppose the proposal for the
> federal government
> to purchase up to $700 billion in assets from financial
> companies?"
> Far more sober wording, but notice it still includes the
> phrase
> "federal government"-truthful but, for some
> people, loaded. The Pew,
> Bloomberg, ABC, and Rasmussen respondents were answering
> completely
> different questions.
>
> Why is language so important here? Partly because most
> people don't
> know what to think about economic policy. As Larry Bartels,
> a
> Princeton University scholar who has extensively chronicled
> the
> muddled contradictions of American political opinion,
> reminded me
> Wednesday, "Most people have no way at all to judge
> for themselves
> whether a bailout would be sensible or crazy." They
> don't know what it
> would involve, he explained, nor whether "the risk of
> inaction is
> massively frightening or largely manufactured." Even
> worse, Bartels
> adds, "they don't even have any clear conception
> of how much money
> $700 billion is."
>
> The less we understand an issue, the more vulnerable we are
> to
> delicate shifts in framing (e.g., investing vs. spending).
> And in this
> as in many economic matters, emotions are more important
> than logic.
> Eric Schoenberg, a behavioral economist at Columbia
> Business School,
> points to psychological factors explaining the reactions to
> this
> bailout. "People are willing to accept a decision that
> harms them," he
> explains, "if the alternative means that someone else
> benefits
> unfairly." The phenomenon, which is called the
> "ultimatum game,"
> explains why even though people may realize that their own
> retirement
> savings or other investments could be imperiled by a
> financial crisis,
> they still find it unacceptable that the banks are
> receiving direct
> assistance. Schoenberg says, "People feel that is very
> unfair and they
> find it really distasteful." (And, rationally, they
> may also be
> skeptical that former Goldman Sachs head Henry Paulson will
> take steps
> to make the bailout more equitable.) That's why, when
> pollsters make
> clear who's benefiting from the Paulson plan, they find
> widespread
> disapproval.
>
> Schoenberg points out, too, that when people face two
> choices, both
> bad-give your hard-earned tax dollars to rich bankers or
> face a
> possible economic collapse-they have a hard time deciding
> and, in
> fact, don't want to decide. That means, he says, they
> are
> "particularly influenced by moments where the bigger
> loss is
> emphasized." Different framing strategies render
> different kinds of
> losses more vividly. Since it has been so long since
> Americans
> experienced a real economic disaster, the loss of $700
> billion in
> taxpayer dollars looms larger to most people. On the other
> hand,
> people do pay attention to the administration's
> reminders that
> ordinary Americans could be personally affected by trouble
> in the
> financial markets; we could lose our jobs and retirement
> savings and
> be unable to borrow money to buy a home or even a car. Our
> intense
> loss aversion also explains why we love the plan when
> it's framed as
> an "investment," as Pew's pollsters did.
> We're always on optimistic
> alert for the possible "win-win" situation, no
> matter how rare it may
> be in economic reality.
>
> Wording matters because unlike most pundits and
> politicians, who
> strive for a coherent worldview, much of the public instead
> harbors a
> set of discrete opinions (if that-Bartels points out that
> they may
> "merely pretend to have views to humor the people
> doing opinion
> surveys"). People who always oppose government action
> of any kind, or
> always like redistribution schemes and hate big business,
> constitute a
> minority. This makes it hard to organize Americans around a
> concrete,
> 10-point program but also presents an opportunity. Thus, to
> anyone
> advocating ways to make the Paulson plan better: Our minds
> are wide
> open. Just don't remind us who's winning or how
> much we stand to lose.
>
>
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