Megan McArdle has been righteous on the Detroit bailout. The argument from justice is most hard-hitting in this post. Lots of companies fail. Lots of cities, built around those companies, decline. If employees of the Big Three deserve to have taxpayers pay part of their relatively lavish salaries, then employees at thousands of failing businesses deserved the same. They had no chance of getting it, though, simply because they don’t have the right history with Washington. There is no other reason.
There is nothing that helps people more than high rates of economic growth, compounding, compounding. But everyone is not helped equally. Economic growth requires dynamism, requires “creative destruction,” and some people get trapped in the wreckage, become wreckage. Not everyone is hurt equally. That irks. We should do what we can to limit downside risk consistent with the goal of producing broad prosperity. And we should feel a pang for those whose expectations are disappointed, whose lives turn out harder than they’d hoped. But the impulse to freeze the system, to try to tape all the cracks and staple all the cleavages, to ensure that nobody has to explain to their kid why Christmas this year is going to be a lousy Christmas, that is one of our greatest dangers. Our sympathy, untutored by a grasp of the larger scheme, can perversely make itself ever more necessary. When we feel compelled to act on our uncoached fellow-feeling, next year’s Christmas is likely to turn a bit worse for everybody. And then somebody has to explain to the kids that they can’t find a job at all. Businesses that would get started don’t get started, wealth that would be created isn’t. And in just a few decades, the prevailing standard of living is much, much lower than it could have been had our sympathy been more far-seeing. There is no justice, and great harm, in diminishing the whole array of future opportunity to save a few people now from a regrettable fate.
Large-scale market dislocation is not the worst possible thing, but it does put me in mind of a passage from my favorite tragic memoir, Joan Didion’s masterful The Year of Magical Thinking, about the aftermath of her beloved husband’s sudden death:
After a few years of failing to find meaning in the more commonly recommended venues I learned that I could find it in geology, so I did. This in turn enabled me to find meaning in the Episcopal litany, most acutely in the words as it was in the beggining, is now and ever shall be, world without end, which I interpreted as a literal description of the constant changing of the earth, the unending erosion of the shores and mountains, the inexorable shifting of the geological structures that could throw up mountains and islands and could just as reliably take them away. I found earthquakes, even when I was in them, deeply satisfying, abruptly revealed evidence of the scheme in action. That the scheme could destroy the works of man might be a personal regret but remained, in the larger picture I had come to recognize, a matter of abiding indifference. No eye was on the sparrow. No one was watching me. As it was in the beginning, is now and ever shall be, world without end.
Unlike slipping tectonic plates, adjustments in the market, even violent ones, tend to make the human world more hospitable over time. The principles that govern the earth as it works out its tensions are indifferent to our welfare. The principles that govern a well-ordered economy favor it. No eye is on the sparrow. No one is watching you. Your job and your dreams may suddenly evaporate. But mostly we find that, as if guided by an invisible hand, the scheme has made available opportunities to work, has made available opportunities to buy the things that make life comfortable, interesting, and long. We can stop the hand from pushing the mountain into the sea, but then we will never enjoy the abundance of the future island we’ve erased. We can put an eye on the sparrow, but more sparrows will fall if we try to save every rotting tree.