Critical Patriotism: To bail out? Or, not to bail out?
Lehman Brothers in its pre-crash prime, complete with its trademark: “Where vision gets built.” Photo by David Shankbone courtesy Wikimedia Commons.
Editor's note: This post is part of a series by Dr. Baker on Our Values about core American values. This week Dr. Baker is discussing critical patriotism.
If you stay up late tonight, pause for a moment of silence at 1 a.m. That’s the time, four years ago, when Lehman Brothers announced it planned to file for protection under the bankruptcy code. But the company couldn’t survive the financial firestorm in the rest of that day: Sept. 15, 2008. So fell the biggest bank that the federal government decided not to save.
Lehman’s collapse may have fueled the deeping financial crisis. Looking back, should the government have bailed out Lehman Brothers along with the other banks and financial institutions? Or, was letting it fail a worthwile warning that no company was too big to fail?
The federal bailouts of the financial system and the auto industry have received both vociferous opposition and acclaim. The Tea Party was among the most vehement opponents of the big bailouts, along with many other conservatives. Wall Street benefited more than Main Street. Others, however, said the bailouts prevented the economy from sliding into a deep recession.
Americans continue to debate the wisdom and efficacy of these bailouts. For many, it’s an exercise of critical patriotism — criticizing domestic policies because we want the nation to do better and live up to its ideals. This week, we’ve looked at different expressions of critical patriotism: insulting high elected officials, strikes and protests, Mark Twain and the irony that we live in a democracy but work in authoritarian workplaces. Today, we use the Lehman anniversary to consider what you think now about the big bailouts.
More than seven of 10 Americans now say that the government should let troubled big banks fall, according to a poll by Rasmussen Reports in May 2012. Only 19 percent say that the government should keep banks in business if they can’t meet their obligations. The same poll also found that seven of 10 Americans say the government hasn’t been diligent enough in pursuing criminal activity on Wall Street.
On the face of it, these poll figures seem to indicate that most Americans think big bailouts are bad ideas and a poor use of taxpayer money. But here’s the question I wish Rasmussen Reports had asked as a follow up:
“Should the government let a troubled big bank fail, even if failure meant a 50/50 chance of a deep recession?”
How would you answer that question?
Do you think government bailouts of big business are generally a bad idea?
How do you express your criticism of our domestic and foreign policies?
Dr. Wayne E. Baker is a sociologist on the faculty of the University of Michigan Ross School of Business. Baker blogs daily at Our Values and can be reached at firstname.lastname@example.org or on Facebook.