Did you say 700 billion dollars?

From John Hood at the Corner:

Two friends and co-conspirators of mine, Duke University professor Mike Munger and N.C. State professor Mike Walden, debate the Paulson Plan in the pages of The Charlotte Observer

today. It's a good, spirited exchange that illustrates well the nature of the disagreement among economists of the free-market persuasion (by which I mean, well, actual economists).

The pro:

The patient is on the operating table, clinging to life. Doctors have a choice – do they do everything they can to save the life, or do they discuss what put the patient at death's door? Of course, the answer is obvious. They first try to save the life, and then later, when the patient has recovered, they talk about lifestyle and other changes to prevent a recurrence. Although somewhat melodramatic, the analogy describes why the federal government's bailout of the financial system has been necessary.

The con:

The point is that you can't take money away from taxpayers who earned it, give it to the financiers who squandered it, and call that a good policy. There is no danger of another Depression, which was caused by a deflationary monetary policy. We are facing a temporary credit crunch, and it will sort itself out if we leave it alone. Things aren't so bad that a panicked bunch of politicians can't make it much, much worse.

As Marie-Antoinette did not say but I do: "Let the gamblers eat cake!"