What Would Madison Have Thought Of The Bailout?

A Washington Times column by Bruce Fein asks that question and comes to the conclusion--not much. Madison warned in the Federalist papers of over-complicating government rules. He argued that it would tip the playing field in favor of those able to navigate the complexities of regulations over those who were innovators and hard workers. Fein's whole column is great, but here's the meat:

Writing 220 years ago in Federalist 62, James Madison descried incessant changes in the law that altered the economic playing field. Legal instability confers on lobbyists and their clients a preferred position over men and women whose labors are economically productive. Anticipating modern-day Jack Abramoffs, Madison observed that mutability in government financial decrees gives "unreasonable advantage ... to the sagacious, the enterprising, and the moneyed few over the industrious and uninformed mass of the people. Every new regulation concerning commerce or revenue, or in any way affecting the value of the different species of property, presents a new harvest to those who watch the change, and can trace its consequences; a harvest, reared not by themselves, but by the toils and cares of the great body of their fellow citizens. This is a state of things in which it may be said with some truth that laws are made for the FEW, not for the MANY."

TARA fits Madison's observation like a glove. Its strategy for boosting the economy has changed more rapidly than George Steinbrenner's firing of New York Yankee managers. The Treasury Department's initial plan was to purchase "toxic" mortgage-backed securities from financial institutions in jeopardy. A few days later, it changed to purchases of preferred stock in major banks in futile hope that the beneficiaries would make loans out of gratitude for their government benefactor. Next came the plan to inject capital into institutions offering consumer credit, and then the AIG bailout enlargement.