These liquidity crises crop up every now and then; they are part of the natural economic cycle. HOwever, just because they are "natural" doesn't mean we shouldn't do anything about them; see Katrina, Hurricane as an example why not.

As for the businesses that go under, hey, they lost. But when the businesses' failure threatens the liquidity of the American and global markets, then the government does have a role. In this case, the Fed has taken a measured stance to allow some failures (Thornburg, Bear, other monoline insurers) but to step up to the plate to keep the big gun in place. It now seems unlikely the Fed is going to allow all of Citigroup, Washington Mutual, Merrill et al. go under.

For a fascinating read about a similar crisis, I recommend "When Genius Failed" by Roger Lowenstein, about the Fed-organized bailout of Long Term Capital Management, a hedge fund whose highly leveraged trades threatened to bring the global markets to their knees. It's also a reminder of just how ephemeral the global economy is; everything is traded "on the margin." If a company has 10 million shares, and the last trade involves buying 100 shares at 1 dollar higher than the previous amount now all 10 million shares are "worth" $1 more than they previously were. Not to mention how currencies themselves are little more than indicators of confidence in the underlying economy/nation; a currency has no value on its own, and that value can disappear overnight. Bush has taken the long-term perspective, merely watching the American dollar decline in value bit-by-bit month-by-month, safe in the knowledge that it can keep losing half its value and never reach zero.

Does Mamet--who writes that "free-market understanding of the world meshes more perfectly with my experience than that idealistic vision I called liberalism"--not realize that the free-market understanding he holds so dear is inextricable from liberalism? Liberalism dates back to the 16th-17th century, part of what we now consider the Enlightenment. One of the hallmarks of liberal Enlightenment thought is the free-market, an economic system with limited government involvement. Liberalism in the strict sense is based on the belief in the freedom--the LIBERty--of the individual. So, basically, Mamet needs to do his homework before he starts tackling these subjects, throwing around terms he clearly doesn't quite grasp because he's decrying the notion (liberalism) that he'd really like to support.

Of course, it's not really his fault, since our terminology has generally become confused. Liberal and conservative do not denote opposite ends of the political spectrum; arguably they stand at quasi-opposing points of a segment of that spectrum. They are clearly different from one another but they're not "opposites" and are, I think, more similar than most people want to believe. So for someone like me liberalism is a dirty word because it doesn't quite achieve the radicalism that Mamet seems to see in it. For Mamet, it's more radical than, arguably, it is. I've lost my train of thought...

As to your question, should the government bail out floundering corporations? Who knows. I'd like to say no, f**k 'em. In truth, the government should just regulate the hell out of them.

Re: Schuyler's reply.

I would say it is your understanding of "liberalism" that is confused, Schuyler. While it is true that the original meaning of liberalism entailed advocacy of political AND economic freedom, in today's world that definition has been turned on its head. The liberalism of today represents an unabashedly statist position, its central advocacy centered around the defense and advancement of varying degrees of socialism, and as such is the antithesis of liberty, economic or political. Its central tenets gravitate around the conviction that there is not one aspect of human life, public or private, where the state cannot legitimately intervene and/or become involved. All in the name of "for the good of society" of course.

I believe it is you Schuyler, not Mamet, who needs to get his head out of the sand.

As for you, Jim, your attempted defense of government intervention in the economy is not convincing. Of course, the bedrock of a legal system enforced by a government is a necessity for any large-scale economic system to function, insofar as the government acts only to the extent of enforcing contracts and providing protection from the initiation of force or fraud.

The fact that a system of government allows an economic system to function and consequently thrive does not entitle said government to the unearned (in this case I'm referring to political, not material, spoils).
"[A]bundant capital, wealthy consumer market, reliable infrastructure, advanced technology, skilled workers, etc." are all the result economic, not political, activity. Does the fact that the government enables these economic fruits to ripen entitle it to mettle in the affairs of businesses beyond its mandate to protect society from force or fraud? Unequivocally, no. Your examples of overseeing bookkeeping practices and pollution paint an incomplete picture of just how far our government's sense of entitlement has grown in its supposed efforts to protect the "public interest".

Shielding Bear Stearns from the consequences of its actions, while supposedly guarding against short-term losses, will go on to cost everyone a hell of a lot more in the precedent it sets.

Actually, Radovan, your - and the American [media] - understanding of 'liberalism' is wrong. Just because some Newspeak adherents took the word and refashioned it to mean 'socialist' or 'dreamer' does not mean this is the actual meaning of the philosophy behind it.

Liberalism, as it is still understood, for instance, in Old Europe, is exactly what Schuyler wrote, an ideology focussing on individual freedom, hence a free-market society. None of the thinkers originating this, i.e. Adam Smith, David Ricardo, ever wrote that no rules should be imposed, quite to the contrary. Adam Smith for instance was all for rules precluding monopolies to form.

And this is mostly what liberals in Europe are still believing in. Don't get me wrong, the word is sometimes used as a cuss here, too, but with its original meaning left intact as that is seen as a morally bankrupt ideology. That is, socialist and conservatives use 'liberal' against real liberals; not like some self-proclaimed conservatives* in the US using it to denote anybody who is not them [the ones using the word as a cuss].

*A lot of those proclaiming themselves conservatives obviously aren't. a point in desperate need to be be discussed more often.

It can be argued that neither of our manifest notions of liberalism or conservatism represents anything approaching Adam Smith or the Enlightenment thinkers.

Take national defense. Even if we accept that our engagement in Iraq is purely and appropriately a function of the state, how do we explain KBR/Halliburton from a classic free market point-of-view? We can’t. A consistent exercise in free markets would require Iraq’s economic infrastructure to develop of its own volition. Common sense would seem to render this implausible, especially when we consider the interdependent link between economic and political stability in the region. As such, the U.S. government seeks to short circuit the free market evolution by using its “visible” hand to guide economic moving parts from one corner of the world to another. And all of this happens under the careful watch of a conservative administration.

There are plenty of domestic examples as well; to name but a few: the imposition of steel tariffs in 2002, corn subsidies, pension fund bailouts, the Energy Act of 2005. All of these represent free market meddling and all of them have been championed by self-identified conservatives.

One final point: if liberalism (in the actual; not the theoretical) seeks “the defense and advancement of varying degrees of socialism”, how is it that democratically controlled executive and legislative branches push through the most significant free trade agreement of our time? Moreover, why would a liberal President advocate a decidedly non-Socialist welfare reform bill at the height of his popularity?

Yes, we could engage in test tube arguments; pitting Keynesian and Friedman-esque philosophies, but both of these are rather detached from on-the-street liberalism and conservatism. If the current actual can’t be married to the current ideological, therefore, what do we, outside of academic circles, have left of our labels?

It can be argued that neither of our manifest notions of liberalism or conservatism represents anything approaching Adam Smith or the Enlightenment thinkers.

Take national defense. Even if we accept that our engagement in Iraq is purely and appropriately a function of the state, how do we explain KBR/Halliburton from a classic free market point-of-view? We can’t. A consistent exercise in free markets would require Iraq’s economic infrastructure to develop of its own volition. Common sense would seem to render this implausible, especially when we consider the interdependent link between economic and political stability in the region. As such, the U.S. government seeks to short circuit the free market evolution by using its “visible” hand to guide economic moving parts from one corner of the world to another. And all of this happens under the careful watch of a conservative administration.

There are plenty of domestic examples as well; to name but a few: the imposition of steel tariffs in 2002, corn subsidies, pension fund bailouts, the Energy Act of 2005. All of these represent free market meddling and all of them have been championed by self-identified conservatives.

One final point: if liberalism (in the actual; not the theoretical) seeks “the defense and advancement of varying degrees of socialism”, how is it that democratically controlled executive and legislative branches push through the most significant free trade agreement of our time? Moreover, why would a liberal President advocate a decidedly non-Socialist welfare reform bill at the height of his popularity?

Yes, we could engage in test tube arguments; pitting Keynesian and Friedman-esque philosophies, but both of these are rather detached from on-the-street liberalism and conservatism. If the current actual can’t be married to the current ideological, therefore, what do we, outside of academic circles, have left of our labels?

Re: Dierk's response

Dear Dierk,

I was not disputing the original meaning of liberalism. I acknowledge and fully support its actual meaning and all the concepts the word is supposed to represent. What I was referring to in my original post is the word as it is understood today in North America (I'm guessing you're from Europe) and how the original meaning has been thoroughly corrupted. In fact, when someone refers to liberalism in its original sense, it's usually referred to as "classical liberalism", as it is widely understood that the original concept really has nothing to do with what today's liberalism stands for.

Since this is primarily a movie blog I would like to point out that the terms "Science Fiction", "Horror" and "Romantic Comedy" also mean something very different in today's economy. "Classical Romantic Comedy" featured Cary Grant and Carole Lombard rather than Matthew McShirtless and Lay-Joe. So, y'know, like, times change.

Radovan wrote:
"[Liberalism's] central tenets gravitate around the conviction that there is not one aspect of human life, public or private, where the state cannot legitimately intervene and/or become involved. All in the name of 'for the good of society' of course."

And how is this different from the conservative point of view in 21st century America? It's all about the power of the state, right?

Otherwise, great straw man.

Dear MattA

Good point about conservatism, which further illustrates just how muddled our modern political labels are. Historically, conservatism has stood for limited government, lower taxes, less regulation, etc. The track record of the current administration has been a giant leap in the opposite direction, so much so that even the Democrats should be green with envy.

One important difference between liberalism and conservatism to keep in mind is that the former has been promoted and defended on ideological grounds, while the latter has always been the darling of pragmatists. If only more people would stop and evaluate the ideology behind modern-day liberalism, our current hodgepodge of political terms would be a lot less indistinct.

All: As I said in my first post about Mamet's "brain-dead liberal" article, I'm trying to figure out the differences between the "liberal" and "conservative" views of the role of government on this issue. (I like Radovan's framing of the issue in terms of idealism vs. pragmantism, very similar to the view that conservatives tend to favor reaching a result, whereas liberals emphasize the process as the only means of lending validity to any result.)

From a front-page story in today's New York Times:

But while their philosophies might seem starkly different, in reality both parties have come to the conclusion that major government involvement is needed to rescue the financial and housing markets.

The ideological clashes are less about whether the government should intervene in the economy, and more about whom it should try to rescue.

"Democrats are more likely to propose protecting individuals, and Republicans are more likely to propose protecting markets," said William A. Niskanen, chairman of the Cato Institute, a libertarian research group in Washington that champions smaller government.

Despite differing approaches, Democrats and Republicans may end up in a similar place because it will be difficult to protect individuals without protecting the markets, and the markets will remain fragile if individuals suffer huge declines in their personal wealth.

It always amazes me when I hear really intelligent people decide to label them selves on the side of Liberalism Or Conservatism. For me, Chris Rock put it best ( & I'm paraphrasing here): " When you decide to choose one side over the other, then you'll always have made up your mind before hearing the a specific issue."

The points you make in your article show this. While a conservative viewpoint make sense to particular points of the issue, in others points, the liberal idea seems to function best.

I think that global society has really evolved right now to the point where in order to meet on the current situations, a bit more free-thinking is really gonna be required on both sides. And more so to those who hold a penchant more towards the intellectual & creative side of thinking, as opposed to the thinking of policy-makers ( oh come on.... we all know the two are rarely ever combined...:o)! ).