John Maynard Keynes, the British economist who literally wrote the book on how governments should handle severe economic downturns, penned a letter in 1938 to Franklin D. Roosevelt, offering advice on how to deal with the late 1930s recession. U.C. Berkeley economist Brad DeLong posts it in full on his blog. I am particularly taken with this paragraph, which might be useful for both President Bush and President-elect Obama in light of the current bailout deluge, auto, banking and otherwise.
Businessmen have a different set of delusions from politicians, and need, therefore, different handling. They are, however, much milder than politicians, at the same time allured and terrified by the glare of publicity, easily persuaded to be ‘patriots’, perplexed, bemused, indeed terrified, yet only too anxious to take a cheerful view, vain perhaps but very unsure of themselves, pathetically responsive to a kind word. You could do anything you liked with them, if you would treat them (even the big ones), not as wolves or tigers, but as domestic animals by nature, even though they have been badly brought up and not trained as you would wish. It is a mistake to think that they are more immoral than politicians. If you work them into the surly, obstinate, terrified mood, of which domestic animals, wrongly handled, are so capable, the nation’s burdens will not get carried to market; and in the end public opinion will veer their way.
UPDATE: Obama on auto bailout failure in Senate: “I am dissapointed. . .“
Dick Cheney on the failure: It’s “Herbert Hoover” time.
Also, TNR’s John Judis weighs in on what he calls the “despicable” and (quoting Keynes) “feather-brained” move by “politicians blinded by ideology or by narrow self-interest” who killed the auto bailout last night.