On June 4, my Hoover colleague Bill Whalen interviewed me about my latest article for Hoover’s Defining Ideas, “Just Say No to State & Local Bailouts,” June 3. I had heard and seen a talk by Bill on Zoom a week earlier and was impressed with his deep knowledge of California politics. His show is titled “Area 45.”
The interview was really a conversation, something I prefer to a standard interview. Bill has a charming personality, with just the right amount of humor.
In the first 20 or some minutes I make the case that I made in my article, in response to Bill’s questions. But he also raised an issue I hadn’t addressed in my article: whether on grounds of emergency aid, California’s state government should be given a bailout. I said no and I said why.
Some highlights from the rest of the conversation:
23:20: Why I worry that Senate Majority Leader Mitch McConnell will go along with some kind of bailout.
36:00: My case for bonds instead of tax increases. (My first choice, of course, is budget cuts.)
37:10: Why, if the feds do bail out California’s government, I would prefer aid with no strings over aid with strings.
38:30: States going their own way on coronavirus policy and why that’s important.
41:00: Related to what’s directly above: The states as laboratories of democracy and why that’s so important.
41:27: Why economists and other social scientists are almost orgasmic about the forthcoming data.
45:20: Eat the rich.
45:40: I’m seeing it as rich people saying “eat the rich.”
READER COMMENTS
Thomas Hutcheson
Jun 14 2020 at 7:35am
#36:00 Exactly. Federal bonds to finance no-strings, revenue loss and -Covid-19 intensity conditioned transfers.
SaveyourSelf
Jun 14 2020 at 8:28am
Really good interview. Sound recommendations on fiscal management. I was impressed with the number of arguments you brought to bear against the “bailout from the fed” proposal. The few comments at the end really struck me emotionally: African Americans vs. the police and the “eat the rich” vilification of financial success. The police issue I can understand. The vilification of achievement I cannot. And that makes me very nervous. If I can’t understand it I can’t model it. If I can’t model it I can’t predict what will happen. If I can’t predict what will happen I won’t be able to prepare. I’m raising my kids to be winners. It worries me that I might also be raising them to be targets.
David Henderson
Jun 14 2020 at 10:31am
Thank you.
Re your kids, even with all the upset, raising your kids to be winners and, presumably honest winners, is way better than raising them to be losers.
I learned in high school to hide my success in exams or, given the person I am, to at least not brag about it.
One good thing about financial success. People often have showy ways of communicating their success: the Rolex watch, the Mercedes, etc. But as I taught my students, the surest way to be financially successful is never to pay much more than $100 for a watch and never to buy a really expensive car. As my co-blogger Scott Sumner wrote some time ago, I think on this blog (I can’t quickly find it), virtually every car produced in the 21st century is a luxury car. So my 2015 Toyota Camry (which I finished paying for earlier this year–yay!) is incredibly luxurious. In short, you can have financial success and many of the nice things it buys without looking really successful to the world.
SaveyourSelf
Jun 14 2020 at 4:23pm
David, thanks. That’s good advice on multiple levels. Sorry. I kind of lost it there for a minute. And I can model rationing by violence. It’s just…not ideal. And I know how to deal with it too. But a rational response requires teaching my kids more about martial trades rather than intellectual ones. It’s a net loss for them and society. I hate to think that I might have to make compromises like that. But I will if it means their safety.
David Henderson
Jun 14 2020 at 6:04pm
Re martial trades, maybe. Some is probably good.
I became a master, though, at avoiding fights from about age 12 on. The two times I decided against (at age 19 and then at age 20) I regretted it. I’ve become a connoisseur of methods to avoid fights.
nobody.really
Jun 15 2020 at 3:09pm
As opposed to rich people simply responding “Eat me”?
Mark Z
Jun 16 2020 at 10:23pm
I guess that invites the question: how many of them know that they’re rich? It’s not uncommon for people who make a few times the average income to still think of themselves as ‘average’ (or for people in the top 10% to believe that the real villains are the top 1%). How rich do you usually have to be to know for sure that you’re on the menu?
nobody.really
Jun 15 2020 at 3:16pm
So you favor pro-cyclical policies? That is, you favor budget cuts during economic contractions–and budget expansions during expansions?
Or are you saying that you favor smaller government, and citing the state of the economy is merely a make-weight argument?
David Henderson
Jun 15 2020 at 7:39pm
I’d like to answer you but I don’t understand one of your key terms.
Please explain what a “make-weight” argument is and then maybe I can answer.
nobody.really
Jun 16 2020 at 11:08am
I use “makeweight” to refer to an idea injected into an argument that does not bear on the conclusion.
I’m asking about stimulus and response: Is your support for cutting spending caused by the current economic downturn? Would your preference differ if there were no economic downturn? (And, if not, is there any reason people should find your preferences more persuasive now than in the past?)
Comments are closed.