As of today, the Troubled Asset Relief Program, known as TARP, the emergency bailouts born in the financial panic of 2008, is no more. Done. Finished. Kaput.
Last month the Congressional Oversight Panel issued a report assessing the program. It makes for grim reading. Once it is conceded that government intervention was necessary and generally successful in heading off an economic disaster, the narrative heads downhill quickly: TARP was badly mismanaged, the report says, it created significant moral hazard and failed miserably in providing mortgage foreclosure relief.
That may not seem like a shocking revelation. Everyone left, right, center, red state, blue state, even Martians — hated the bailout of Wall Street, apart of course from the bankers and dealers themselves, who could not even manage a grace moment of red-faced shame before they eagerly restocked their far from empty vaults. A perhaps bare majority, or more likely just a significant minority, nonetheless thought the bailouts were necessary. But even those who thought them necessary were grieved and repulsed. There was, I am suggesting, no moral disagreement about TARP and the bailouts — they stank. The only significant disagreement was practical and causal: would the impact of not bailing out the banks be catastrophic for the economy as a whole or not? No one truly knew the answer to this question, but that being so the government decided that it could not and should not play roulette with the future of the nation and did the dirty deed.
That we all agreed about the moral ugliness of the bailouts should have led us to implementing new and powerful regulatory mechanisms. The financial overhaul bill that passed congress in July certainly fell well short of what would be necessary to head-off the next crisis. Clearly, political deal-making and the influence of Wall Street over our politicians is part of the explanation for this failure; but the failure also expressed continuing disagreement about the nature of the free market. In pondering this issue I want to, again, draw on the resources of Georg W.F. Hegel. He is not, by a long shot, the only philosopher who could provide a glimmer of philosophical illumination in this area. But the primary topic of his practical philosophy was analyzing the exact point where modern individualism and the essential institutions of modern life meet. And right now, this is also where many of the hot-button topics of the day reside.