Bailout Culture Threatens Freedom
The consequences of the financial crisis are all around us: our friends who are unemployed, the “for sale” signs that sprout up like weeds in our neighborhood lawns and unlike weeds never seem to go away.
We think we have some idea of the costs of the financial crisis: the psychological anguish over job security, the declining retirement account, and the neighborhood buzz about falling property values.
There is yet another cost, one less obvious, one equally as threatening to our political system: the loss of civic virtue.
In a time of situational ethics and herd-oriented political opinions, the idea of civic virtue sounds not only irrelevant but anachronistic.
It isn’t. As Benjamin Franklin so insightfully noted, it takes a virtuous people to create a society based on freedom and liberty. Take away virtue, and freedom and liberty are not possible.
Civic virtue is inexorably linked to individual initiative and individual responsibility. Civic virtue means that we are responsible for our actions and their consequences.
No more. There is a new ethos in America. Look out for yourself, enhance your own short-term self interest, take irresponsible risks, and then expect everyone else to bail you out. We can now all be teenagers on a Saturday night with a bottle of whiskey in one hand, daddy’s car keys in the other, and our only concern need be whether we can remain sober long enough to get laid. We have developed the utmost threat to the republic; we have learned how to vote ourselves money and irresponsibility.
Not everyone wants it that way. CNBC correspondent Rick Santelli struck a responsive chord with people who still believe in hard work and individual initiative and who don’t want to be responsible for the puerile excesses of people who are milking the system. Santelli’s mail is running 98% in favor of his condemnation of President Obama’s multi-million dollar bailout of people who thought their homes were ATM machines absent declining balances.
“In a time of situational ethics…”
Perfect. That is the ultimate liberal moral code. The situation defines your ethics.
Freedom and Liberty were signed away when we allowed foriegners to control monetary policy. Congress alone is authorized to issue debt and manage the Nations money supply according to the US Constitution, yet nobody can explain why European Banks issue Credit lines for US Treasuries, and the American Taxpayer must pay restitution to foreign entities. The US banking system should be managed and operated by Congress, not European Banks.
As long as these chains are in place that suck dry the American Taxpayer, we will never have freedom and Liberty. We are beholden to a monetary system that rewards massive debt, even our tax system is based on remaining solidly in debt.
True Freedom and Liberty are based in the independance of one Nation from another. We won the revolutionary war only to become enslaved to the Bank of England.
“CNBC correspondent Rick Santelli struck a responsive chord with people who still believe in hard work and individual initiative and who don’t want to be responsible for the puerile excesses of people who are milking the system.”
You’re talking about homeowners here and not the Wall Street execs paying themselves millions even as their company fails??????
Someone needs to adjust their moral compass…
“Market forces” would resolve the current crisis through total financial collapse, population dislocations, widespread civil violence and mass die-offs.
It would, of course, be one hell of a lesson in “civic virtue” — especially, I imagine, for the bankers, corporatists and politicians who will be hanged in the streets by the people they deceived.
This article is nothing but pompous, dishonest tut-tutting by a clueless author who holds individuals accountable while excusing the systemic, institutionalized greed and irresponsible self-interest of AIG, Citigroup, Morgan Stanley, BofA and Rick Santelli’s Chicago trading buddies. Worse yet, it’s a fabulist’s reinvention of current events, expressly intended to somehow blame Chicago politics for America’s loss of moral sinew.
Obviously, Mr. Miller gets paid by the word. Otherwise, he could simply have written “I love felonious businessmen and I hate Obama.”
It would be well to remember that as a country at least for now under the Rule of Law, if a Wall Street or any other CEO has a contract that pays him any amount, it must be honored. One might argue that they are unethical, but isn’t that arbitrary ethics? Certainly a law could be made that requires a certain level of performance that will determine pay and benefits, but one must also consider that if circumstances beyond the control of the CEO (or anyone else) cause failure, then it goes to the courts and the lawyers win. Another thing to consider is that CEOs do not get to that level by merely being there. They are in competition all their lives, and few make it to the top. Placing restrictions on what they can earn opens the door to placing restrictions on what anyone else can be paid, it reduces the freedom of the individual and our choices. The failure of a company is not only the result of a CEO’s actions. More likely it is the result of the failures of many people at many levels…none of us are perfect. Much of the anger against CEOs (I am not one and have never been one) is mainly petty jealousy. It is the “unfair” claim that the socialists use when they don’t get their way – the situational ethics. When you hear someone saying that “no one should make that much money”, think “why not?” The alternative is to have the government dictate how much one is allowed to earn. That is called economic slavery, and that leads to personal slavery.
Yes, Ilikeike, and that would be you.
“Virtue can’t be created when you are exempt from the consequences of your economic decisions, and the government bails you out. A virtuous people are vital to the creation of a free society, and in turn a virtuous society is vital to the creation of a virtuous people.
The price of your virtue is your political freedom. There is no virtue in dependency and neither is there freedom or liberty in dependency.”
Bravo Sir! Bravo!
I’m “going John Gault” to whatever extent possible I’m dropping out of the economy. Spend the absolute minimum. Shift my investments so as to pay the least possible taxes. I am not going to support this government or its socialist agenda.
6. Mongoose:
Yes, Ilikeike, and that would be you.
Um, no, I don’t think so, Mongoose. I wish I didn’t have to explain this to you, but I will anyway…just so that we’re clear here on the moral angle.
Buying a house…not wrong.
Running your company into the ground and running off with the profits…wrong.
See? Simple.
Of course there is novirtue in dependency,there is socialism,and thats the goal.
So, ILikeIke, the demonstrable incompetence and theivery perpetrated by people we trusted with our money (CEOs of public companies) suggests to you that we should trust other people with our money (government hacks this time)? That is indeed “simple.” Simple minded.
And Rotwang, the free market will lead to “total financial collapse, population dislocations, widespread civil violence and mass die-offs”? Seriously! Do you hear how crazy you sound?
CEOs work for their shareholders, they are given contracts by the people that own the company that they work for. The share-holders (the owners of those companies) short-sighted demand for ever-increasing profits drove businesses to engage in ever-riskier decisions to maintain profits and thus shareholders.
The bubble burst, at the root of it all was Magical Thinking; The “house prices will just keep going up like this forver so let’s refinance and buy the SUV and big-screen TV” sort if mindset that ignored basic market forces and even basic logic.
It all boils down to a lack of seriousness and responsibility at all levels. I saw what was happening in sring ’08 and took my money and hid in Treasuries so I lost a lot less than the gamblers, as they say in Vegas; If you stay at the table too long you are bound to lose.
Freedom means just that; freedom to win, and freedom to lose. The mirror image of freedom is responsiblity for one’s actions, you live with the results of the decisions you make.
8. PAR:
“I’m dropping out of the economy. Spend the absolute minimum. Shift my investments so as to pay the least possible taxes. I am not going to support this government or its socialist agenda.”
~
I’m on par with ya, Par. When the PRODUCERS of this world ‘drop out’ and refuse to be BLED for their hard work we’ll see how ‘successful’ the ‘reparations’ er– ‘redistributions of wealth’ are. The rich will live frugally, the middle class will live well below their means and the poor will become all the poorer.
Miller says: “There is a new ethos in America. Look out for yourself, enhance your own short-term self interest, take irresponsible risks…”
Republican ideology in a nutshell.
“The government rewriting mortgage contracts constitutes a greater threat to the viability of the political system than letting real estate values find a natural price point in the market place.”
Very well said.
Liberals continue to attack the right for what they call fear mongering, while Obama is doing just that but with the economy. He is scaring the public into supporting an unbelievable expansion of government.
From: Nolan Nelson [mailto:nolan.nelson@comcast.net]
Sent: Sunday, February 01, 2009 10:55 PM
To: Senator_Mark_Udall@markudall.senate.gov
Subject: Engineering Power Perpetuating Misery
The American Recovery and Reinvestment Act following TARP combines for over $1.6 trillion of new spending. 647-pages of stealth legislation hugely expands government, while providing few measures CBO can label stimulus.
In addition Obama continues Bush’s government nationalization through bailout promises now exceeding $8.5 trillion. Over $300 billion has already gone to Bear Stearns, CitiCorp, BofA, Freddie Mac and Fannie Mae, AIG, etal. providing cover for prominent politicians and private executives who gamed the financial system, and continue to metastasize the remnants. Leaving these patricians and private sector allies in place, feeds addictions to power equivalent to chemical and pornography entrapments. These ever more fragile constructs defer final reckonings to devastate future generations.
Since spending cuts are not proposed, the $1.6 trillion plus must becomes money created by Federal Reserve. August M2 money supply was $7.687 trillion. $1.6 trillion multiplied by 10, because we have a fractional reserve banking system, means the dollar looses two thirds of its purchasing power.
That cynical assessment can be mitigated, provided the world continues to subsidize these schemes. Countries such as China and India, and the European Community would underwrite this hubris, because they operate equivalent or more audacious financial mechanisms. They also use U.S. consumerism for their economies like ants farm aphids.
Counterpoint analysis emphasizes China, India and Germany together, or the European Community alone now equals U.S. GDP. Such parity can motivate a country’s parochial fiscal decision, and provoke an international cascade to abandon dollar reserve currency status, much as France unraveled the Bretton Woods Agreement. The outcome would be catastrophic worldwide, because now the largest economy had joined ranks of central planning failures.
Abandoning free market principles to save the free market system highlights credulous economic pursuits. Whatever financial costs people pay now to adhere to principle pales before latter costs incurred, if markets are forced merely to postpone consequences. True solutions reaffirm inexorability for market forces to countermand private and government fiscal sorcery, and to incorporate risk within all economic activities.
Proper government involvement means Federal Reserve, in concert with Treasury and Justice, applies persuasion to private sector firms. Brutal persuasion, approaching torture as condemned by Geneva Conventions, enables private companies to discover programs for market clearing asset prices. They also form new companies absent flagging management and labor attributes.
Constitutional framers possessed the intelligence, pragmatism, and integrity to say this country would promote the general welfare. They rejected impetuous arrogance enabling declaration the Treasury Secretary would ensure protection of home values, college funds, retirement accounts, savings, executive severance packages, homeownership, lifetime employment, corporate wealth, political careers, and union benefits
Despite $8.5 trillion plus bailouts, and $1.6 trillion plus spending the “American Dream” eludes fulfillment by Treasury and Congressional manipulations, but is defined as follows:
“We, the People of the United States, in order to form a more perfect Union, establish Justice, ensure domestic Tranquility, provide for the common Defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our posterity, do ordain and establish this CONSTITUTION for the United States of America.”
Justice, tranquility, defense, and blessings of liberty are government mandates. Material prosperity requires individual initiative. Government’s job is promoting environments endowing personal initiatives. Otherwise government largesse requires trading personal freedom to bureaucrats and politicians, who grant deceitful security.
Taylor Caldwell synthesized Marcus Tullius Cicero to say, “A bureaucrat is the most despicable of men, though he is needed as vultures are needed, but one hardly admires vultures whom bureaucrats so strangely resemble. I have yet to meet a bureaucrat who was not petty, dull, almost witless, crafty or stupid, an oppressor or a thief, a holder of little authority in which he delights, as a boy delights in possessing a vicious dog. Who can trust such creatures?”
The same applies to 535 elected Congressional patricians, when nearly all were decayed and wretched. One patrician even became president, though infected by gifts and influence from those precipitating the mortgage crisis.
The same applies to those advocating their re-election while concealing the Faustian like bargain, where they duped the electorate into trading personal pursuit of happiness for vacuous socialist prophesies.
#4 — This article is nothing but pompous, dishonest tut-tutting by a clueless author…
Agreed.
There are 10 million hard working families who are now upside down in their mortgage payments, owing more for a house than it’s now worth.
These are responsible people with jobs.
These are people responsibly paying their bills.
The housing market downturn was *not* their doing.
And yet the imbecile writer wants us to believe that this is all about personal responsibility, as if buying a home were wrong and the buyers knew it going in. What utter horsepuckey. Apparently the proper “conservative” response to these unlucky yet still hardworking Americans can be boiled down to a simple “sucks to be you, losers.”
Is this now what the “conservative” movement is reduced to?
As a social liberal and a fiscal conservative, the banks, businesses, and government fouled up, and they all fed off of each other. Furthermore, people have the highest debt in many decades even during times of growth, and with all parts of the organism failing, the outcome is just plain bad. The perfect storm if you will.
Our economy deserves what’s coming to us. We bought things we couldn’t afford and we threw money around like it literally grew on trees. Those that try to blame Obama are blaming the way the firefighters try to handle the inferno…Obama didn’t make this happen. In fact, the Democrats didn’t make this happen. Additionally, the Republicans didn’t either. EVERYONE is to blame. The guy who bought the house he couldn’t afford did. The guy who bought that car he couldn’t afford did. That tax cut that we had no money to pay for did. As did the wars we couldn’t fund, the entitlements, the pork, the bridge to nowhere, the subsidies to farmers and churches, the wide-eyed ignoring of the housing bubble, the (sorry to say it) lack of regulation on bad banks who refused to regulate themselves, and all the rest.
This is what makes me sick. Everyone on here blaming Bush or Obama (or their supporters). Most of us are to blame and most of us are guilty of overextending ourselves.
The solution, more than any one group spending, is confidence. Once confidence returns, the fear subsides, and people start acting rationally again…that is what we need to work towards…but how do we make the confidence real and not just simply hope?
I’m not pointing fingers at YOU, but at us. Everyone here should be working on the grass-roots solution to the problem and not wasting time pointing fingers. Whatever the solution is (and whether I agree with what we all come up with or not), we all need to support it. Things need to change, and many of us need to turn the spotlight on ourselves (myself included).
Jack
“11. TL:
So, ILikeIke, the demonstrable incompetence and theivery perpetrated by people we trusted with our money (CEOs of public companies) suggests to you that we should trust other people with our money (government hacks this time)? That is indeed “simple.” Simple minded.”
You misunderstand me. No where did I endorse trusting anyone with other people’s money, thieving CEOs or incompetent politicians. What I am commenting on is this fake populism that demonizes homeowners and lionizes Wall Street lackeys like Santelli.
Exhibit A from Delia who wrote: “When the PRODUCERS of this world ‘drop out’ and refuse to be BLED for their hard work we’ll see how ’successful’ the ‘reparations’ er– ‘redistributions of wealth’ are.”
Delia, Delia, Delia. If the “producers” of this world “drop out,” then they will no longer be producers! They’ll be…unproductive leeches hoarding their wealth, and yeah…that’s just what the world needs now.
Seriously, Delia…Atlas Shrugged was a novel – fiction, fantasy, fake, not real – and a badly written one at that. If you wanted to base your life on a book, pick a different book.
Like the one that says:
“Watch out! Be on your guard against all kinds of greed; a man’s life does not consist in the abundance of his possessions.” – Luke 12:15
“It is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.” Matthew 19:24
“Do not testify against your neighbor without cause, or use your lips to deceive.” Proverbs 24:28
Whether you believe or not (and I don’t) there can be no denying that there is more wisdom in a single bible verse than in the hundreds of pages in any of Ayn Rand’s polemics.
G. Alston: This is simply not true. There were many who took out 100% loans, with payments that would be difficult for them to meet in the best of times. There were people who purchased homes speculatively. There were people who used the growing equity in their homes like ATM machines.
These people foolishly expected the good times to continue – for the housing values to continue their nearly unprecedented climb.
These are people who made bad decisions and bad bets. When did the US Taxpayer indemnify people against foolishness and speculation?
Remember, the economy started to falter, including job losses, after the mortgage market began to fail. After the foolish adjustable mortgages with their ‘teaser’ rates began to reset.
Yes, some good people also got caught up in this trouble – but, as the article points out, there is hazard in re-writing mortgage and bailing people out of their bad choices.
If you insulate people from the consequences of high risk – you get more risky decisions from people – and that will be bad for all of us.
Liberals always want to talk about feelings – never the realities of life.
#20 Lily – I know you’ll come up with other examples, but I can come up with plenty of Conservatives/Republicans who denied the housing bubble far too long. Do we let them go too, or do we hold them accountable?
Everyone is to blame…lets not let the Right off the hook too soon!
Jack
#20 — blah blah blah “personal responsibility” blah blah blah
What part of “housing values are declining” are you having trouble understanding?
If the housing prices continue to decline by as much as another 5%, the number of hardworking people WHO ARE AS OF RIGHT NOW PAYING THEIR BILLS AND BEING RESPONSIBLE will almost double the original 10 million to 20 million ‘at risk’ homes: they too will be upside down. It won’t pay them to stay. They’d be better off handing the keys to the banks.
How do you intend to spin your “personal responsibility” argument at that point? By then it would be able to generate enough scrotal torsion alone to sterilise an elephant.
Liberals always want to talk about feelings – never the realities of life.
If you think I’m a liberal then you have serious cognition difficulties. You seemingly can’t grasp the idea that non-ideological thinking can even exist.
#20
After careful consideration I’m convinced you won’t/can’t get it. Storytime.
Jack and Jill save for years. They have $20,000. They want a home of their own.
They buy a modest ranch house for $100,000 and put their $20,000 on it as the down payment. That means they have a mortgage of $80,000.
Months go by. Jack and Jill are happy and paying their mortgage.
Housing values plummet. Their house is now worth $60,000.
Their mortgage is bigger than their house value. (The big number is the mortgage. The little number is the house value.)
Jack and Jill’s credit score goes down the tubes.
Jack and Jill can’t get a loan. They may not be able to buy a car. They may not have credit on their cards any more (if they have any.)
You: It’s their fault. They’re irresponsible.
Me: WTF?
19. ILikeIke,
The less money us “producers” give to the OBAMANATION the BETTER.
Halt the economy in its tracks.
I’m going shotgun.
See ya.
Also G Alston hints at another point that should anyone ashamed of using the “I don’t want to pay for my neighbors’ mistakes” argument.
If they foreclose…you will anyway. In lower property values.
Fact: No one lives in their own private utopia of self-reliance and discipline. We live in an interconnected society where the actions of our neighbors affect our own fortunes.
We can deny it…or deal with it. I recommend we do the latter.
Abe, I agree with you 100%. Check out my post from Monday, March 2.
You can also take my pop culture quiz from yesterday, which I posted because I was so depressed by the news of the day that I needed a break . . .
http://woldyworld.blogspot.com/2009/03/moral-hazard.html
Forgot to put the address . . .
This essay is clear, lucid, and compelling–to those who understand the issues of civic virtue, a virtuous people, and property rights. Too many do not, and if you limit yourself to those who do you risk preaching to the choir.
In his essay Our World-Historical Gamble Lee Harris makes a case that may be as compelling, but that requires a lengthier exposition because there are fewer familiar elements. He carries it off with one of the most important essays of the last two decades.
I strongly encourage Mr. Miller to do the same, spending some time on such questions as how we reward or punish the civic virtue that we need to keep our civilization alive. Such an extended essay could be a major contribution to our current, vital debate.
#14 Steve P shows why people Professor Miller is absolutely right. Civic virtue is dead when you misrepresent someone’s language the way he does.
Steve, the quote has the main idea at the end, which you left off: “…and then expect everyone else to bail you out.” That’s what the article is about, personal responsibility as the basis of civic virtue.
Given what you’ve demonstrated by your use of the quote in this context, I take it you’re aware of the logical conclusion. The difference between conservatives and progressives is that when an irresponsible risk goes bad, a Republican takes responsibility and bears the consequences, while a Democrat demands to be bailed out. Naturally this will have to be done by confiscating wealth from the productive.
G Alston, your story is simple, understandable, and accurate in many cases. It’s also not the point Professor Miller was addressing in his essay. Nor does it address the point conservatives are, or at least should be, making about the problematical aspects of giving government the power to rewrite mortgage contracts.