B. Philosophical and Moral Concepts

B. Philosophical and Moral Concepts

This subsection discusses several philosophical concepts relevant to the resolution. Most Lincoln-Douglas debaters will largely be aware of these concepts in general.

These ideas refer to employing a cost-benefit analysis of a given action. In short, the greatest good for the greatest number should determine what is “just”. Although there are differences between the two concepts, many authors use these almost interchangeably. If the Affirmative can prove that more harm than good would come from not bailing out corporations, then bailouts would be just.

In a democratic society, the people vest the government with certain powers and authority. In return, the government has an obligation to protect the general welfare of the public. Under this resolution, this idea cuts both ways. For the Affirmative, the economic necessity of the 2008 financial bailout speaks to that general welfare. If the economy were to collapse, the public would suffer infinitely more than the usurpation of their tax dollars. For the Negative, bailouts break the social contract and signal a retreat from democracy. The question here pertains to the right of the government to use taxpayer funds to help corporations, not the effects it would have on the general welfare.

Thinkers such as Ralph Nader decry federal government action to bail out corporations. For Libertarians, the very idea of taxation is unjust. This mirrors the Negative side of the democracy and social contract debates. If the Negative wins that taxes themselves are unjust, then their use in corporate bailouts are likewise unjust.

This is an age-old debate that often reflects a dog chasing its tail, or the preverbal “chicken before the egg” paradox. However, many debaters have used these concepts quite effectively. The “sanctity” of life refers to the preservation of biological life itself—survival. Many argue that without life, all other values and ethics are irrelevant. The opposing side argues that a fixation with survival or maintaining biological life comes at the exclusion of attaining a life worth living. For example, if one is allowed to live a long life, is it a life worth living if they are incarcerated in prison?

C. Affirmative Strategy

This resolution asks the Affirmative to prove that corporate bailouts are “just”. In doing so, the Affirmative must first identify a means by which to determine what is just. Under this resolution, pragmatism guides this evaluation. In the sample case provided, the criteria chosen is consequentialism. Recalling that this refers to weighing the relative costs and benefits of bailouts, the Affirmative relies on defending the particular bailout (or bailouts in general) as more beneficial to the general welfare than taking no action.

In the context of the 2008 financial bailout, the Affirmative argues that allowing these institutions to fail would wreak havoc on the U.S. economy. This can happen in several ways. First, the interconnectedness of our financial system would guarantee that all sectors of the economy are affected. We saw this during the summer with high gas prices driving up the costs of food. If this were to happen, businesses across the nation would be forced to cut employment across the board. Ledyard king of the Detroit Free Press explained,
Q: What if nothing is done? A: Federal Reserve Chairman Ben Bernanke says that would spell grave danger. Businesses unable to get credit would close. Unemployment would rise. Additional homes would fall into foreclosure. Consumer spending would shrink, hurting the service and manufacturing industries. And the stock market would plummet, shrinking the value of stock portfolios and 401(k) retirement accounts.²¹
In turn, the average citizen would lose the income necessary to provide the basic necessities for their family. In effect, it would constitute a wholesale attack on the economy that devastates the taxpayer. The fact that employment rates are tied to credit losses and consumer spending denotes a house of cards scenario.
Secondly, a collapse of the banking industry would foster a credit liquidation cycle. That means cash-starved businesses would sell off their assets to compensate for losses. Moreover, it is important to remember that these are credit-based institutions. The availability of loans, such as subprime mortgages, depends on perceptions of available credit. A “credit crunch” happens when there is a sudden reduction in the availability of that credit. Because markets are so interconnected, loan defaults become widespread. The more assets that are sold escalate the perception of a credit deficit. Mortimer Zuckerman of US News & World Report explains how the credit liquidation cycle can drag down the economy,
The failure of one firm can send ripple effects through the whole system, but the market and regulators have limited experience in how to handle such a crisis…This crunch is much more serious than in 1987, when the crash was confined to the equity markets and over within a few weeks. This one has greater scope to harm the real economy: Without credit, business dries up. Lower economic growth in turn makes things worse in the financial markets. It is affecting not only housing but autos, credit cards, commercial mortgages, commercial and industrial activities, and the leveraged buyout loan markets.²²
Moreover, it is not just the U.S. economy that is interconnected, but the entire global economy. Unlike the Great Depression of the 1930s, which involved a credit liquidation cycle, the U.S. economy is intimately tied to the global economy.
Ed Lazear, chair (sic) of the Council of Economic Advisers, said that the idea of decoupling would only be realistic if the US's share of the world economy had fallen and if international trade flows dried up. But, he said, the giant US economy still accounts for 30% of the world total and trade flows have increased in recent years. "It is difficult to argue that the rest of the world is less connected to the US and not more connected," Lazear said at a conference of the Organisation for Economic Cooperation and Development in Paris.²³
With the U.S. economy accounting for 30% of the world economy, a collapse would be devastating for all peoples. The Affirmative could argue that bailouts extend beyond government obligation to taxpayers to address the needs of the entire globe. We must remember that the United States enjoys a privileged position in the international arena in terms of wealth and physical health. The same cannot be said of innocent nations in the “Third World” (a problematic term to say the least) who happened to be trading partners with the United States.
This brings us to an important element in winning a consequentialism debate on the Affirmative. What are the impacts (costs) to a U.S. and global economic collapse? Many historians and commentators might point to a lack of funds preventing things like addressing poverty, education, homelessness, and protecting the environment. While these things happened during the Great Depression, that cannot compare to the horrors of world war. Walter Russell Mead, Henry A. Kissinger Senior Fellow for U.S. Foreign Policy at the Council on Foreign Relations offers a detailed description of what the world might be like in the midst of an economic collapse in the United States,
The United States and the world are facing what could grow into the greatest threat to world peace in 60 years…How can this be? Think about the mother of all global meltdowns: the Great Depression that started in 1929. U.S. stocks began to collapse in October, staged a rally, then the market headed south big time. At the bottom, the Dow Jones industrial average had lost 90% of its value. Wages plummeted, thousands of banks and brokerages went bankrupt, millions of people lost their jobs. There were similar horror stories worldwide. But the biggest impact of the Depression on the United States—and on world history—wasn’t money. It was blood: World War II, to be exact. The Depression brought Adolf Hitler to power in Germany, undermined the ability of moderates to oppose Joseph Stalin’s power in Russia, and convinced the Japanese military that the country had no choice but to build an Asian empire, even if that meant war with the United States and Britain. That’s the thing about depressions. They aren’t just bad for your 401(k). Let the world economy crash far enough, and the rules change. We stop playing “The Price is Right” and start up a new round of “Saving Private Ryan.”²⁴
Allusions to a great movie aside, Mead’s description of economic collapse leading to the events that precipitate war holds true in today’s economic climate. If the Affirmative can prove that the bailout was essential to preventing such a collapse, then you could rightly say that the bailout prevented a massive war. The difference between WWII and a next round of global warfare is the intensity of weaponry. Just as a nuclear weapon ended WWII, it would do the same in WWIII—only Hiroshima and Nagasaki would become metaphors for the entire planet. Nuclear, chemical and biological weapons make the situation all the more dire.
Given the disastrous toll of a U.S. economic collapse, the best approach to the Affirmative would involve a strong knowledge of economics and the absolute necessity of preventing a banking collapse (or auto industry, etc.). Regardless of what lofty ideals the Negative defends, this is how the world actually works. You can personalize this to the judge by explaining how a credit crunch or banking collapse affects their lives. How did the bailout affect their home mortgage or employment? To sum this up, it’s time to embrace pragmatism, not idealism.
Three additional tactics can help in making your case. First, choose a particular bailout. Literature on bailouts in general is heavily slanted in favor of the Negative. Therefore, choosing one specific bailout as your example might allow you to maneuver out of their criticism of bailouts. For example, if the Affirmative chooses to speak about the auto industry bailout, Negative criticisms of the banking industry bailout will not specifically apply. However, you should remember that “bailouts” is plural in the resolution. A smart Negative could argue Topicality, that the Affirmative must defend multiple bailouts, not just the most favorable ones.
The second option addresses this last point. There have been several successful bailouts in our history. These can be used to defend bailouts in general, or to buffer your one example. A combination of defending the 2001 airline bailout and the impending auto bailout can overcome the relative drawbacks of a Wall Street bailout. Moreover, displaying a strong understanding of history reflects an educated perspective. This can easily be on display in cross-examination and your speeches.
Finally, one could point to our democratic allies overseas. Britain, France, Spain and more are no strangers to corporate bailouts. To some, this is seen as a normal facet of a functioning economy, even in a democracy.
The United States is acting in step with Europe, where governments often take a more interventionist stance in economies and the financial systems are in the hands of a comparatively small number of banks. Britain took the lead last week, declaring its intention to take equity stakes in banks to steady them. In the last two days, France, Italy and Spain have announced rescue packages for their banks that include state shareholdings. The government’s plan is an exceptional step, but not an unprecedented one.²⁵
If other functioning democracies, such as Britain and France, regularly intervene to prevent economic downturns, then there is no reason U.S. bailouts should undermine democracy or be deemed unjust in the eyes of the public. The important thing to remember is that the average American is recklessly unaware of how the economy works. Most cannot see past paying next months rent and bills, much less the complex interworkings of credit liquidity, economic interconnectedness, and the financial system in general.

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