Apologies for the week-long hiatus. I was on a trip in Switzerland (about which more in a bit) and trying amidst a heavy schedule to pay attention to developments back at home. Seems like the central news is the emerging debate over a GM/automaker bailout. I’m far from expert in these matters and still puzzling through the details, but Felix Salmon’s comments on the false dichotomy of bailout v bankruptcy seem sensible.

But there’s a broader point to make here: we’re in totally uncharted waters right now. We’ve witnessed the intellectual collapse of the old neo-liberal orthodoxy, and yet its advocates retain tremendous real-world political, intellectual and elite influence. The public’s attitudes towards state intervention have grown generally more friendly, but figuring out where the public is ideologically is a very tricky business. And on top of this we have this rolling crisis, which demands, or seems to demand consistent intervention, ideology be damned.

In this environment, we’re seeing a lot of very ad-hoc policy-making, a case by case government intervention. I’m not sure what the massive wholistic alternative to this is, but it seems to be that we’ve now got a mismatch between the capacities of our deeply stripped down, subcontracted federal government, and the requirements of the moment. Amidst all the talk of the Bush Administration’s penchant for increasing the size of the state, the measure invoked is the size of the federal budget as a percentage of GDP, which has indeed grown. But starting in the early Clinton years, the federal civilian workforce has shrunk [PDF]. Contractors make up the gap.

So here’s the issue. We’re now in a situation where we are asking more and more of the federal government, managing $700 billion in bailout money, most obviously, and we don’t necessarily have a government staffed up enough to handle what it needs to do.