Thursday, March 5, 2009


“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,” said Timothy F. Geithner, the Treasury secretary, quoted here.

One of the under-analyzed words relating to the current economic problems is 'imperative.' It is being said that certain economic actions are 'imperative,' like continually saving AIG, and others are not, as when Lehman was allowed to fail. For a while it seemed reversing the housing downturn was not imperative, now we hear it is. How did this decision come about? Where did this notion of the imperative come from?

I have little doubt that, in a general sense, some parts of our economy are more important than other parts. My question is in the details. Do we have a good theoretical framework for actually knowing what is imperative and what is not? And imperative to what? To whom? For example, the government beliefs that led them to let Lehman fail, as of today, look dubious, according to, in any case, the very 'systemic risk' test the government is supposedly using to make its decisions. In other words, in hindsight, saving Lehman looks like it had been imperative, by the government's own approach, but the government let it fail anway. Are we making other similar mistakes?

I guess what I want to ask is: Who are the economists who have studied the concept of 'the imperative'? What knowledge is Sec. Geithner relying on?

Or let me put it this way: Where in all the theories of capitalism is there given such central importance to the notion of the imperative? I see the concept in functionalist sociology like that of Parsons and Habermas. But where else? You can't tell me the Secretary is reading Parsons, or Habermas. Maybe he should be. Who are the economists working on a theoretical conception of the imperative? Who does Geithner talk to and about, and who and what does he read, that is, when he's not making asinine tv on CNBC?

My hunch is that today's officials have no theoretical framework. They go case by case.

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