The Politics of Bailouts

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Tom Edsall quotes me and several other political scientists at the Huffington Post.  My take away:

A carefully modulated analysis of likely trends by Princeton political scientist Nolan McCarty suggests modest gains for proponents of intervention.

"Whether intervention changes attitude toward government more broadly depends whether the public perceives that intervention primarily benefits 'haves' or the 'have nots.' Free markets and deregulation have long been justified by the notion that markets will provide discipline by punishing bad decisions. If it appears that government is stepping in only to protect those responsible for those mistakes, Americans could become even more cynical about government and trusts it less," says McCarty. Conversely, "government intervention that tries to hold bad executives accountable has its own problems. It generates huge incentives for companies and executives to cultivate political favoritism to avoid punishment -- pay-to-play writ large." The net outcome, according to McCarty, is likely to be "somewhat more support for macroeconomic intervention and broad forms of regulation, but continued skepticism about government ownership and microeconomic planning."

Not sure how "modulated" my analysis was, but I do come down squarely between Gary Jacobson and John Ferejohn. 

 

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