Excellent responses friends (the checks are in the mail) to my most recent post. A couple things….
Kevin wrote in the comments:
“Moreover, I think you are misappropriating responsibility to the architects of good legislation, instead of the seedy mortgage brokers who exploited it.”
I am not sure what he means by “good” legislation, perhaps morally sound or perhaps structurally foolproof. Regardless, the fact that mortgage brokers could “exploit” it, I think would mean quite the opposite here (I hate the word exploit in general because of its vagueness) My post was not to absolve mortgage brokers of guilt either, but I do think the issue becomes if they are not breaking the law; (in some cases, the law was actually breaking them per Thomas Sowell; throw in minority and underprivileged quotas you’ve got bigger issues pressing the backs of these lenders) You actually wonder how much some of these brokers knew? Just like Wall Street-ers relied heavily on faulty ratings and fees incentivizing transaction volume, I think I could safely say some brokers made assumptions that everybody else was making, including buyers. There were definitely snakes out there, but I attribute it more to a stunning lack of due diligence on both sides. I bring this up because:
A) Its unremarkable, a lot of people screwed up and weren’t necessarily malicious in intent, in the sense I don’t think your average mortgage salesman anticipated he would trigger a massive financial crisis. Remember this was a popular product because it “worked” in a favorable interest rate environment and housing market etc.
B) I still think its unequivocally greedy and f’d up; and speaks to the infinite and insatiable desires of man
Government securing housing for those who couldn’t afford it, and actively encouraging it. Lenders seeing clients as transaction fees for their pockets. Buyers not understanding their inability to cover debt service. Hrmm. Its a macrocosm of Daddy encourages teenage Madison to get a no-limit high interest credit card and Payless Shoe Stores (where the hell do women shop?) suddenly thinks its rich! Notice this cycle perpetuates itself across nations, races and social class.
Regardless, the post is not one purely of political culpability, rather a moral/personal one. The operative quote here is from one of my favorite books, and a book everyone should read, The Karamazov Brothers (the way it really is titled sounds kinda just goofy):
“Each one of us is guilty before everybody for everything, and I am more guilty than anybody else.” Father Zosima
I treat human behavior as more or less exogenous and constant. Efforts to temper it, either through faith, institutions, norms, and culture usually fail. What we instead have is a means of organizing society around a given set of behavior preferences – namely sin. If greed is the primary driver of economic growth (Smith), then it is also the driver of crisis.
A really great point there and the topic of which I really want to hit. Thus the biggest problem I see in society is As a Christian who believes in personal redemption, I have to politely disagree. There are many reasons why.
1) Good rules don’t just restrict people they help them learn and process what is right – Take most children (microcosms of sin in my book). A kid might hit his brother to steal his toy. Now one could say he only stopped because of the fear that he was gonna get severely beaten by parents for being a deviant sociopath. Perhaps. But somewhere along the way I think conscience prevails and makes that action impermissible; it becomes unacceptable to him to see his brother needlessly go through pain just because he can’t get what he wants. The rule might be a good disincentive, but it also helps mold the child into understanding why he shouldn’t hit somebody he loves.
2) It’s depressing to consider our status merely subject to a series of exogenous variables – We certainly don’t behave this way. Only the sickest parents would treat their children as pawns in a social game, rather then children who can be nurtured to be responsible and loving beings, not just robots. People marry with the hopes that the covenant they undertake could help shape one another’s character and deepen their love for each other.I think by treating the human condition as immutable (sentiments that are echoed by fatalistic scientists, Amir? Neil?), we also take away a lot of the joy in life. Put it this way, if this were the final solution that was figured out by society, what really is the incentive for people (especially the lesser of us) to”live life to the fullest”?
3) Making rules is an incomplete and unsatisfying solution – as Kevin wrote before about legislation regardless of the rules, people will exploit them. More regulation is purely a palliative measure, I would argue this would only create incentives for people to rent seek with more lobbying/gov’t work instead of ripping off people on the private end. We can continue to insist on making better and better rules, or we could start looking at the supply side and look towards heart transformation. I find Neil’s argument useful because reality presents transformation as insanely difficult; as a Christian I would actually say impossible purely by the strength of our own convictions. Going back to Father Zosima and his thoughts:
“Love redeems and saves everything.”
This is the hope that I have in humanity. This financial crisis is painful, I know firsthand. I also know it was a lot more painful to others with more immediately dire circumstances. This is unmistakeably tragic, yet all we are doing is addressing the issue of pain, we change the doses, prescribe stronger medicine but are unwilling to address the disease itself. Humanity will never change if only presented with that option; its depressing to think we are only left to find ways to numb the pain. Call me naive or innocent, but I think humanity has a much higher upside, not merely confined to the same patterns of behavior ad infinitum.
I have every reason to suddenly pretend I hate the banking industry, I don’t though. This cycle of behavior is not unique to them. Crucifying the bankers is numbing the wound but leaving it open to infection again. What is the idea of love I think is most convicting? I look at the idea of the Cross: Christ dying, not for personal gain, but but what was a selfless act done for others. Yea I know, perhaps its goofy and silly, or even offensive to some, I’ll admit it tough to really get a grip on this idea sometimes myself. But I think this (the Cross) is the new cycle of behavior this world needs; the thing that makes transformation possible and what Zosima tells us can redeem all.