Greed in the Economy: It's the Morality, Sinner

Everyone has heard the famous phrase, attributed to James Carville, which supposedly won the presidential election of 1992 for Bill Clinton, "It's the economy, stupid!" It's still good advice, especially as the shocking collapse of the financial markets has turned the election campaign into a much more serious and somber discussion than lipstick on pigs.

But the issue is deeper than just the economy. I would now rephrase Carville and say, "It's the morality, sinner!" And I would direct it to the people who have been making the decisions about the direction of this economy from Wall Street to Washington. Here is the morality play:

Aggressive lending to potential home-buyers using subprime and adjustable rate mortgages led to "mortgage-backed securities" being sold to investors at high returns. As housing prices dropped and interest rates rose, homeowners got caught, fell behind on payments, and millions of foreclosures followed. That resulted in the mortgage-backed assets losing value with banks unable to sell the securities. So the subprime lenders began to fail. Asset declines then spread to investment banks. We have now seen the sale of Bear Stearns brokered by the government, and last week, the government took over Fannie Mae and Freddie Mac as mortgage defaults threatened them. Then Lehman Brothers fell into bankruptcy and Merrill Lynch was sold. Now another bail-out, AIG, the largest insurance company in the country --whose potential demise threatened the whole financial system even further.

During the height of the lending frenzy, many people got very rich, as they did during the previous technology bubble. Now with the collapse, experts say the most likely result will be further tightening of credit and lending standards for consumers and businesses. Home, retail, and business loans will become more expensive and harder to secure. And the consequences of that will spread to most of America.

In the accounts and interpretation of these events, a word is slowly entering the discussion and analysis -- greed. It's an old concept, and one with deep moral roots. Even venerable establishment economists like Robert Samuelson now say, "Greed and fear, which routinely govern financial markets, have seeded this global crisis ... short term rewards blinded them to the long term dangers."

The people on top of the American economy get rich whether they make good or bad decisions, while workers and consumers are the ones who suffer from all their bad ones. Prudent investment has been replaced with reckless financial gambling in what some have called a "casino economy." And the benefits accruing to top CEOs and financial managers, especially as compared to the declining wages of average workers, has become one of the greatest moral travesties of our time.

In the search for blame, some say greed and some say deregulation. Both are right. The financial collapse of Wall Street is the fiscal consequence of the economic philosophy that now governs America -- that markets are always good and government is always bad. But it is also the moral consequence of greed, where private profit prevails over the concept of the common good. The American economy is often rooted in unbridled materialism, a culture that continues to extol greed, a false standard of values that puts short-term profits over societal health, and a distorted calculus that measures human worth by personal income instead of character, integrity, and generosity.

Americans have a love-hate relationship with government and business. The climate seems to shift between an "anything goes" mentality and stricter government regulation. The excesses of the 1920s, leading to the Great Depression, were followed by the reforms of Franklin Roosevelt.

The entrepreneurial spirit and social innovation fostered by a market economy has benefited many and should not be overly encumbered by unnecessary or stifling regulations. But left to its own devices and human weakness (let's call it sin), the market too often disintegrates into greed and corruption, as the Wall Street financial collapse painfully reveals. Capitalism needs rules, or it easily becomes destructive. A healthy, balanced relationship between free enterprise, on the one hand, and public accountability and regulation, on the other, is morally and practically essential. Government should encourage innovation; but it must also limit greed.

The behavior of too many on Wall Street is a violation of biblical ethics; the teachings of Christianity, Judaism, and other faiths condemn the greed, selfishness, and cheating that have been revealed in corporate behavior over decades now and denounce their callous mistreatment of employees. Read your Bible.

The strongest critics of the Wall Street gamblers call it putting self-interest above the public interest; the Bible would call it a sin. I don't know about the church- or synagogue-going habits of the nation's top financial managers, but if they do attend services, I wonder if they ever hear a religious word about the practices of arranging huge personal bonuses and escape hatches while destroying the lives of people who work for them. We now need wisdom from the economists, prudence from the business community, and renewal courses on the common good from the nation's religious leaders. It's time for the pulpit to speak -- for the religious community to bring the Word of God to bear on the moral issues of the American economy. The Bible speaks of such things from beginning to end, so why not our pastors and preachers?

Jim Wallis is the author of The Great Awakening, Editor-in-Chief of Sojourners and blogs at www.godspolitics.com.

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Comments

[Chavez08]

Mr. Frog, meet Mr. Scorpion.....

[bdaved]

I remember the first time I heard that story. The way I heard it, the scorpion tells the frog "That's just the kind of s. o. b. I am." Do you remember Al Wilson's song "The Snake", written by Oscar Brown Jr.?

[Alterion]

Regulation is absolutely neccessary. Lets say I have $1000 and I gather 10 people for a hard days work. At the end of the day I take one worker aside and say, "I can give everyone $100 for their hard work, or I can give you the entire $1000."

Who wouldn't take it? Honestly, many people would have done the same thing that these wall street people did. Take the money for yourself, or be reasonable and generous? A handful of people might resist that choice, but most wouldn't. Absolute power corrupts absolutely. That's why we have laws.

Pubs like to heavily favor the rich and blindly trust them. Try what happened on wall street and apply it to main street:

Stealing from your local department store is now legal, because hey, no one will do it. See how silly it sounds?

[mbaty]

They are too busy talking about abortion and gay marriage to care about things like the economy.

[DavidBeckwith]

I suspect there are many folks on Wall Street who are gambling addicts and who are also, sadly, alcohol addicts -- both of which reflect egoistic predominance. With egoistic predominance comes a lack of concern for the common good, as the ego tends to prefer the pulley model, rather than the stewardship model, of which you yourself are an exemplar. It is the unfortunate insatiability of these drunken gambling addicts which, and those who spawn them, which has been a major contributor to the current malaise, and I suspect it will take sober stewards to return goodness and sanity to the financial stage.

Peace and a widening conception of prosperity,
David

[DavidBeckwith]

http://www.nytimes.com/2008/09/28/us/politics/28gambling-web.html?hp=&pagewanted=all

For McCain and Team, a Host of Ties to Gambling

"Senator John McCain was on a roll. In a room reserved for high-stakes gamblers at the Foxwoods Resort Casino in Connecticut, he tossed $100 chips around a hot craps table. When the marathon session ended around 2:30 a.m., the Arizona senator and his entourage emerged with thousands of dollars in winnings."
"A lifelong gambler, Mr. McCain takes risks, both on and off the craps table."

We do not need these folks anywhere near our money...
db

[plebeianswillrevolt]

Yeah, and what about making those thieves return that stolen loot. That's in the bible too.

[yappnmutt]

a lot of people made and moved a lot of money for a long time. you did too. now its over. no one messed up. everyone did. the value of your house is probably close to half its value in 2006 now if you lived in an urban coastal area of the US. the world did the same thing. so the whole pie has to be cut in half and feed more people. "they" are trying to slow the process. the most important news today was the statement made by a few central banks that they will flood the world with fiat currency to fix it. greenspan fixed it once. lets see if bernanke, paulson and their new friends can do it again. that's why gold has soared. that's why bond yields are in the 100ths. that's why the afternoon spike. the stick save.

a word on shorts. so far shorts have been right......in every case. longs make money, too. if there are no shares available to short then often nothing can stop a freefall in price anyway. the chinese markets are a good sample set and a good harbinger of the present circumstance. isn't that special?

[UnbiasView]

Greed or allowing poor and those with bad credit to get loans got us here?

George W. Bush Administration's Proposed Changes of 2003 for the Community Reinvestment Act

Representative Barney Frank(D-MA) claimed of the thrifts "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."

[bdaved]

This comment piqued my interest so I looked up more of UnbiasView's comments, and found this same comment, more or less, on three different posts. So I looked up Rep. Frank's September 16 blog post "Wall Street Journal Editorial Board Stifles Dissenting Opinion", in which he defends himself from the accusations in the Wall Street Journal editorial of September 9, which I would imagine is the source of UnbiasView's quotes. I also read the WSJ editorial myself, from a link in Rep. Frank's post. I don't know much about Rep. Frank's record, but I think reading both of those has given me a better chance at an unbiased view than reading the above comment did, although I won't pretend I don't have much more to learn about it. I will confess to retaining certain biases of my own, however, which lead me to ask of UnbiasView: What exactly do you believe motivated those responsible for "allowing poor and those with bad credit to get loans"? And you say "Financial rescues for poor people started tis whole mess..."? Are you saying it was those poor people's fault?

[bdaved]

People who for personal gain do things that are bad for this country's future are unpatriotic. As unpatriotic as can be. Yet they will wave flags, and talk about the beauty of how the American system works while damaging not just their present day fellow citizens but all who may follow. I believe that just because you have the wherewithal to buy something doesn't mean you should always get to have it. To squander a nation's resources for short term gain is like making war on your own country.

[pbley68]

The Gordon Gekko's have had their say and have had their day, greed isn't good.

[maveman]

the faith based business people on wall street and financial institutions around the country are into greed,greed and greed--nothing else can explain their willingness to sacrifice their clients while they proclaim the moral life they lead--all in the name of Bush and his belief of saving his own fortunes by allowing business to do anything they want inside and outside of the law---

[jeffinseattle]

Jim, I agree with your concept of greed, but you should not be pointing your
finger at the Nation. As a former Evangelical, it's the Church who has propragated
this idea of greed more than any other institution, and has ushered in/ and has
been complicit with the Republican Party. Our national zeitgeist is a direct
result of the marriage of Church and State, i.e. Rick Warren's prominent role
in having Obama and McCain at his Saddleback Church to ask for the Church's
blessing. There is no separation of Church and State, and that's what's fueled
the problems we are now faced with. The anti-intellectualism in our Nation
is direct result of the Church's influence. The Church rejects new ideas, therefore
the stagnation/malaise of our country.

[acidwave]

part 2-
Years passed by and the yuppies in their BMW's appeared,the takeover wars of the 80's where the sum of a company's parts
were more valueable than the company itself, the company was taken over and the parts sold off without concern for the needs
of the employees."Greed is Good" was the takeover mantra.Alan Greenspan was an Ayn Rand disciple.
Here is the sin.Before Ayn Rand, the chirstian equivalent to the greek hubris(taking more than ones share;that which upsets
the balance in the community), was a guilty conscience.There was something in man's conscienceness that would alert a man
when he was out of balance-greedy or overly self concerned."That which you have done to the least of these, you have done
unto me".Ayn Rand removed the guilt from not caring about the poor and needy and making your economic goals the major
concerns in life, re-enforced by mantras like "the virtues of selfishness" and "greed is good".
For a christian concerned about your soul especially in these last days as proclaimed by so many of your christian leaders, it seems
to me that the lack of concern about our poor, and the gulf between the rich and the poor in this country and how you vote will
be judged in your final moment.I wish not to shock you dear christians but your greed and selfishness and lust to make war will
not be your keys to heaven.

[FreedomBeforeDemocracy]

All Ayn Rand did is point out "bad" greed. Those whose greed had nothing to do with what they gave, but everything to do with what they took. The producers of the world have greed that lead to them producing what people desire. The politicians, who often have armies at their disposal, have greed that lead to them taking from producers and consumers alike. Without consent.

[acidwave]

Here is the "Laying the ax at the root " of your greed/spiritual economic crisis.
First of all it is a spiritual dilemma that none of our religious leaders in this predominantly chirstian nation are aware of,
and is so significant it could cost you your place in heaven.The Christ said "Iam the Truth The Way and The Life and if
you abide not in me you will not enter the kingdom of heaven".
This story began in 1965, I was in art school seeking truth and understanding, reading Hesse's "Steppanwolf" and "Sidhartha"
and a supporter in the cultural and civil rights movements of the times.My roomate was a different story, he let me know that he had found his bibles in the books by Ayn Rand.He specifically read to me her economic philosophy
concerning meeting one's economic goals.Along the way you will come across those poor and needy people begging your
help and even if you allowed this distraction from your goals and helped this person out of their problem,ten more poor and
needy people would take their place to distract you from your economic goals.He expounded Rand's economic principles
like the "virtues of selfishness" and "greed is good" as having liberated his soul and provided a roadmap for his economic
future.His liberation and total acceptance of Ayn Rand's economic philosophy troubled me and eventhough I sensed something
was very wrong I was unable to verbalize it.

[BannedInBoston]

Radix malorum est cupiditas -- Greed is the root of all evil.

[LeonBNJ]

We need to change our tax laws at all levels to curb some of the greed. Have high tax rates for short term gain from property, stock and commodities 'flippers'. We also need to raise taxes on those that benefited most from the real estate boom and help those within reason on the wrong side of it.
We also need a deep moral change in this country, something beyond and not exclusive to religion or faith. We must stop glorifying being rich without responsibility. We all must look at our own lifestyles and end excesses beyond a families' income and not save anything.