Transcripts

"Commentary"-Bailout Fever

SUSIE GHARIB: Tonight's commentator says he's coming to terms with the need for Federal rescue plans. Here's Bernard Baumohl, director of the Economic Outlook Group.

BERNARD BAUMOHL, DIRECTOR, ECONOMIC OUTLOOK GROUP: Since the birth of this country, we have talked a good game about the virtues of free markets and laissez-faire capitalism. These concepts are taught in economics classrooms and have long been the backbone of our foreign economic policy. But when it came time recently to test our allegiance to market forces, we couldn't quite fully embrace it. Just look at the industries lining up to receive some form of government aid. They include auto makers, lenders, insurers, even homebuilders. Many are ailing because of corporate mismanagement and outright stupidity, prompting some to argue that any form of government assistance to them would be a repudiation of capitalism. Normally, I would agree. If the economy was healthy and growing, then market forces should determine who survives and who does not. But these are extraordinary times. The recession is shaping up to be the most painful in our lifetime and threatens the livelihood of tens of millions of Americans. Capitalism must not be allowed to trump humanism on such a massive scale. The smarter strategy now is policy flexibility, not rigid orthodoxy. So, yes, I'm a capitalist who has come to terms with the necessity of these rescue packages given the current economic backdrop. The far bigger challenge that policy makers face in 2009 and beyond is how the government will extricate itself from the private sector once the economy emerges from recession. That task will be hellishly difficult, but imperative. I'm Bernard Baumohl.