If Jason will forgive me (and I hope he will) for revisiting “epistemic closure”—granted, a stupid and pretentious term—a few remarks on Jonathan Chait’s article in the current issue of The New Republic, which is high-grade malarkey printed on high-grade paper.
Chait has decided to make Frank Luntz the new Karl Rove, the Machiavellian doublespeak blackbelt attempting to twist reality in ways unfriendly to Democrats. He cites Luntz’s recent denunciation of the Dodd financial-reform bill as a “bailout bill” for evidence. Now, there is some pretty good debate on to what extent and in what form the Dodd bill will enable bailouts for various kinds of corporate creditors. My read: It will do a whole lot to protect banks and other firms that make bad debt investments — that’s the whole point of the loan guarantees and liquidity facilities included in the legislation. You don’t have to worry about making guarantees of exotic financial instruments or pumping billions of dollars of liquidity into particular sectors of the financial system if all you’re doing is greasing the skids for an orderly move into bankruptcy. You know who agrees with me on that? Goldman Sachs and Citi, both of which are backing the Dodd bill. You think Goldman Sachs — Goldman Freakin’ Sachs — is backing legislation that is bad for its bottom line or diminishes its political position? You want a side order of faerie dust with that unicorn burger?
But here’s the epistemic closure. Chait argues that the Democrats’ bill cannot be a big wet kiss for Wall Street because … it simply can’t. That. Cannot. Be. Is there evidence for this proposition? Chait offers a real tour-de-force of independent analysis: “A brief survey of older news stories provides a satisfactory refutation ….” Chait’s words: “brief survey of older news stories.” Chait also writes this gem: “Before Luntz’s memo, nobody had thought to question the basic fact that Wall Street considered the Democratic regulatory reform an intrusion rather than a subsidy. … It was more of an assumption universally embedded in the coverage of the events, rather than a point anybody bothered to specifically establish.” Chait should read Media Blog more often if he thinks that having a Democrat-friendly “assumption universally embedded in the coverage of the events” is an unusual development. Jeez, the New York Times and the WSJ news pages say so — assume so – it must be thus!
You know what? There are ways to get information besides magnifying the assumptions of Times reporters. Maybe read somebody you disagree with. Or, you know, the bill.
So let’s specifically establish the point: There’s lots of stuff in the Dodd bill that is only necessary to enable backdoor bailouts, Goldman is backing the bill, Citi is backing the bill. I don’t know where Chait’s head is universally embedded, but I have an informed guess.