e-z dissertation topic: the moral pyschology of the bailout
Brayden recently drew attention to the nearly unanimous view that key financial institutions are in serious trouble. This has lead to the bailout plan – the Fed will come in to purchase control of banks and lending agencies to stem the pain. On the flip side, Bryan Caplan, over at econlog, makes an interesting point: Why aren’t Republicans opposing this? Don’t they always yell “socialism!” whenever Democrats intervene in the economy?
I suspect that’s what we’re seeing now. If a Democratic president were backing a $700B bail-out, I have to think that Republicans would be crying “Socialism!” But if a Republican president does the same, the bail-out’s natural enemies keep silent out of loyalty or ingroup bias. It’s a lot like the contemporary Republican reaction to Nixon’s price controls – if our boy is doing it, how bad can it be?
He is right that there’s much in-group bias. It’s always the other side that’s evil. But there’s much more to be said. I think a fascinating project would be to predict which actors will “break ideology” and just cheer for their team. It’s also interesting that there are “demagouges” (non-economists?) who oppose the Great Bailout, but they get buried. My hypothesis: behavioral links beyond voting with the GOP/Dem parties predicts who will “break ideology.” Ideology has no effect once you control for that. My view is that ideology, for most people, is pretty flexible. Few are consistent. Counter examples?