Thursday, October 22, 2009

Hidden Costs

We're all angry about the government bailout of the financial industry. Well, all of us except the banks, of course. Your savings may be in the toilet, but you can take heart that there's still plenty of money out there to pay huge bonuses to the folks who engineered the collapse of the economy in the first place. Yes, I know we're all responsible in part, but it's nice to have a scapegoat, isn't it?

Now I've lost my train of thought...where was I going with this rant?

Oh, yes - I remember now.

Nobody quite knows how much the bailouts of the economy will cost in the end. The only thing I know for sure is that my grandchildren - and yours - will still be paying for it. But beyond the fiscal cost of making sure that financial managers will continue to enjoy bonuses and corner offices, there's a larger cost that hasn't really been addressed up to now. I saw the first mention of it in this article yesterday on CNNMoney: Bailout's Hidden Costs, by David Goldman.

That larger cost is trust.

Neil Barofsky, special inspector general for Treasury's financial sector rescue, has reported that the bailout has several hidden costs. He points out that the government's lack of transparency about the bailout could result in "a growing distrust of the government (that) could impede its ability to enact important legislation." Mr Barofsky went on to tell CNNMoney that, "I think we are already seeing the political costs of people losing trust and faith in their government, such as the palpable anger this summer in response to health care ... It requires a certain amount of good will to support extremely important and expensive programs like bailouts."

That loss of trust and good will is the true cost of the bailouts. Americans have always had a healthy skepticism about their government, a skepticism that goes all the way back to Colonial Americans' anger at the tax policies of King George III. But that skepticism has given way to a level of anger, cynicism, and a deep mistrust of government at every level, attitudes that can paralyze the ability of our leaders to do anything ... even conduct the routine business of government, much less tackle the truly difficult problems like health care reform, tax policy, and our defense against terrorism.

My grandchildren - Marcy, Joe, Noah, and Leya - will probably still be paying taxes to pay off the bailouts of 2009 when they are my age. I can only hope that they will be able to have the level of faith and trust in their leaders that I have long lost.

Have a good day. More thoughts tomorrow.



Bandit said...

Can you help me learn to speak Chinese?

Anonymous said...


You've discovered the critical issue. The Average Joe in this country is clearly very unhappy. Those Tea Parties weren't political, those people who showed up are expressing their distrust. There's a reason guns are selling like crazy and there's an ammunition shortage; we don't have tribes here (unless you are lucky enough to be a Native American) so Average Joe has no local organization he can count on to protect his interest. A political party as an object of trust? Give me a break. The only one left to trust is your immediate family, yourself, and your two best friends, Mr. Smith and Mr. Wesson. How sad. This is as serious as it gets. We have the best soldiers on earth because we have the country most worth fighting for. (The principal determinant of victory in battle is motivation. Lanchester had no idea what he was talking about.) But when enough people don't trust the government, those brave and intrepid souls who keep our country safe will be busy at home defending their loved ones and private property, not overseas defending us old fogeys.

In the depression, the people trusted Roosevelt. Now they are not so sure.

Eminence Grise

Bandit said...

Sir Grise, I could not have said it better.

Mike said...

I need cartoon Saturday.

Bilbo said...

Bandit - sorry about the Chinese. I think you and the Eminence Grise would get along well.

Eminence - you are, of course, on the money (so to speak). It occurred to me after I wrote this that I limited the decline of trust to trust in government. We have, of course, also lost faith and trust in the entire "financial management" industry, insurance, the health care industry, and - not related to the economy, but declining in trust as well - teh clergy. Forget heroes...we just need someone we can trust.

Mike - it's coming. Hang in there.

Mrs. Geezerette said...

I've lost trust in government because of its size. It is too big and complicated and costly. It has acquired a life of its own. No one seems to know how to manage it anymore and keep it under control. It is controlling us.