The Moral Subtext of the Bailout Debate
One of the difficulties Americans face in discussing the $700 billion financial bailout plan is our inability to recognize and speak about the moral dimension of the current crisis. It's not that the debate has avoided the dynamics of morality -- talk of greed, blame, fairness, and responsibility have been swirling around more pragmatic assessments of what might actually work to prevent economic collapse. Indeed, many have strong feelings that there is a fair and unfair -- a right and wrong -- way to approach the current crisis. Yet there lingers a characteristic reluctance to fully absorb the moral subtext of American economic policy.
The real significance of the bailout debate is that it lays bare the moral foundation of the conservative worldview about small government: that wealth is a sign of virtuous character, while financial mediocrity signals vice: laziness, sloth, an inability to set limits. Anything that interferes with the natural reward system for individual effort is, well, unnatural, and ought to be opposed.
When asked to explain why the government should intervene -- on a massive scale -- to prop up Wall Street giants reeling from excess and poor choices, but not to aid ordinary Americans struggling to pay their mortgage, afford health care, or access education, the free-market ideologues promoting the biggest government bailout in American history answer that in a crisis this enormous, ideology must gave way to pragmatism. "I hate the fact that we have to do it," said Treasury Secretary Henry Paulson of the government rescue before embarking on an all-out lobbying effort to get it done.
But if your ideology must be shelved when reality intrudes, what's the point of having that ideology? Ideology is a set of ideas about how the world does and should work -- jettisoning those ideas when it comes time to apply them, invoking pragmatism only during a real-world crisis, is like professing a belief in gravity only when it comes time to fly a plane.
Critics have cried "hypocrisy" at conservatives' willingness to throw a government lifeline to Wall Street while refusing to do the same for ordinary Americans. But calling free-market, pro-bailout conservatives "hypocrites" lets them off easy. In reality, there is a consistent worldview behind their position -- it's just not one most are willing to talk about: the reason government should aid the rich but not the poor is that the rich are presumed to use money more wisely -- after all, that's why they became rich in the first place.
This belief is the cornerstone of trickle-down economics: the theory is that tax breaks to those with money -- individuals and companies--are more important than tax breaks to those without, because the investment savvy of the rich will trickle down to benefit the rest of us. If a billionaire buys a yacht with his tax savings, he creates jobs for the boat builders, the crew, and at the harborside brasserie that serves up his club pate. In its best light, the theory envisions not lavish spending sprees, but thoughtful entrepreneurial investment in projects that grow the economy for everyone.
The problem is this: a tax cut that provides a million dollars to a single individual or a single dollar to a million individuals still pumps a million dollars into the economy. So what justifies giving so much of it to one rich guy instead of spreading it across a million regular people?
Only the conservative belief that the rich acquired their money by exercising greater virtue than the rest of us. While trickle-down economics theory can be used to mask a raw power grab, it is also a philosophy of moral superiority which many conservatives have come to truly believe. It credits the wealthy not only with financial savoir-faire, but with character excellence: the rich are not just financially wise, but morally good, because they use their resources in ways that promote, instead of harming, the general welfare.
With the meltdown of the Wall Street giants, it's time to admit that's just not so. Raw self-interest, high-risk behavior, old-fashioned greed, irresponsible choices -- these were the impulses of the fat cats who, taking advantage of unsound public policy, pushed our economy to the brink of disaster, imperiling the wellbeing of us all. The free market, while often an efficient allocator of goods and services, quite simply leaves too many people and too many social goods to their own devices.
Yet remarkably, conservatives still don't get it. George Will chose this moment to write in Newsweek that "to disrupt markets is to tamper with the unseen source of the harmony that is all around us." And a senior VP at the Financial Services Roundtable told the New York Times that his group supports the bailout but opposes constraints on executive pay. Apparently, "it is not appropriate for government to be setting the salaries of executives" but it is appropriate for government to be paying them.
Bailout defenders also insist the $700 billion is not a taxpayer loss but an outlay -- it's buying something of value, albeit unknown value. But of course all tax dollars go to pay for something; it's just that free market ideologues assume that public investments are inherently less worthy than private ones, a philosophy that bought us... a $700 billion public rescue.
John McCain, who was against the bailout before he was for it, said in March that he has "always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers."
At least McCain was able to offer a forthright expression of his assumptions about the moral foundation of the economic crisis. Whatever you think of the merits of the government rescue plan (and for the record, I do not oppose a bailout; I just want it to be fair, and for its ideological lessons to be clear), its moral underpinnings -- and thinly veiled class component that views the rich and poor as having grossly uneven desserts -- should be part of the conversation. Conservatives should get the chance to explain if they are hypocrites or just think they are holier than the rest of us.
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See Neil Grossman's Profile
Trickle Down Economics is a well-known concept. Not noticed is the concept of "Trickle Down Monetary Policy". This is the approach practised under the Greenspan Fed which promoted asset price appreciation as a monetary tool. In many ways, this is the major cause of the accumulation of wealth in fewer and fewer hands. It is also one of the predominant factors in the mess we are in. In addition, the Bailout package represents the same approach..
I agree with the article but do wonder what "fair bail out" means.
Any bailout that puts money into the financial institutions that created this situation is unfair.
This problem is a direct result of the Wall Street wizards who realized that you could bundle up loans and sell them, at a profit, to others. It got to be such a lucrative market that lenders were bending over backwards to book loans. They now had no risk because they could sell these loans. So a lender who used to exercise due diligence no longer had to do so. Don't have a job, you can still get that mortgage; you need a lower rate, no problem (we'll just make sure that the rate rises beyond your means in the near future) I'm sure we'll eventually find loans that were take out by people who were dead at the time of their loan.
When I can make money from your debt; not because you pay me the principal and interest, but because I can make money by selling the risk it's a no brainer - as long as you don't end up holding the bag of bad loans when the merry go round stops. This whole mess was nothing but a legal pyramid scheme and many of the promoters find themselves to be their own victims.
investor welfare : overvalued stock market :: social welfare : undervalued populace
both, immoral equivalent
Why is there so much disparity from economists about the worth
of doing this bail out? Why would anyone support speculation gone
bad with just more speculative gambling? We are gambling on a plan
that NO ONE can say will do what they expect it to. If it does not stabilize
credit and banking industry, where do they go then? Jobs are gone,
banks close, credit dries up, houses are foreclosed on by the millions
and we go to bread lines. How do we say ANY plan will save us?
Which banks and finance companies will get this money? Check all
the affiliated companies in JP Morgan Chase that just took on WaMu!
Let me interrupt the egocentric cyber one-upmanship that seems to be taking over the comments to this post by actually commenting on the post. Mr. Frank has articulated something I've sensed for some time. The belief system spoken of here -- that those with vast sums of wealth, regardless of how they acquired it, whether by honest means, less-than honest means, family connections or just plain dumb luck are some how morally superior beings -- has been swallowed whole by many on the right, even those of modest means and working-class backgrounds. This fallacy has become so institutionalized to the degree that even so much as questioning said belief system puts one at risk for being labeled communist, socialist or somehow less than human. That is the root of this particular evil, and this post correctly identifies it for what it is.
Exactly - that is why pointing out that Mccain has seven to ten houses and Obama only one is a losing premise upon which to base campaign ads. it only underscores that peculiarly American belief - that God has favored McCain because he is a good man.
With big money comes power. With power you get more big
money. What really rich person who has real power to wheel
and deal on Wall Street or in speculative markets, is going to
take time to bother about the clerk who wheels his mail to the
office every morning? Sorry, but you do have to be a shark to
play in the big leagues. Morality, what role does that play in this
type of enviroment?
There are no atheists in foxholes. There are no free marketeers in a near-depression.
The more money one has, the more attractive to the self as well as others one becomes. This warm feeling about the self is related directly to sexual attraction, like the extravigant waste a peacock displays as a sign of power and beauty. A peacock feels something very much like moral superiority as it struts about. Wealth=Moral Superiority=Sexual Attractiveness. Few things are as ugly and unsexy as poverty.
@Michale
No, I was not under the impression you listed the top five dems.
I was simply pointing out that your post ignores the reality of the situation.
Both parties and lobbyists for both parties have received substantial money from
F&F over the years. As even your link points out:
"two embattled mortgage buyers that for years have pursued a lobbying strategy to get lawmakers on their side. Both companies have poured money into lobbying and campaign contributions to federal candidates, parties and committees as a general tactic, but they've also directed those contributions strategica
Trying to blame only one party isn't going to help solve the issue. Which again, led to my second point:
You're barking up the wrong tree.
F&F are not the reasons behind this mess. So trying to pin either Dems or Repubs to the failure of those institutions becomes irrelevant at this point. You'd be better trying to learn the underlying causes of the financial crisis and steps we can take to prevent it from happening again.
@mklimo
Either by design or inadvertently, you are making my point for me..
My posts regarding all the payments to Democrats were in response to claims that this is all the fault of the Republican
The simple fact is, this is the fault of actions AND inactions by both Democrats AND Republicans. Anyone trying to lay this mess solely at the feet of one party or another is simply being guided by bigotry and not by the facts..
Michale...
Why are bankers against the bailout?
You mean the ones who have already profited by the bailout? Maybe it's because the remaining ones haven't gotten their chance to feed at the trough. They'' get their turn, believe me.
Because the big fish want to ast the little fish.I
If the government doesn't interfere they can buy dollars with pennies.
@ez14livin
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Even NOW enough Reps will continue to stand in the way of bi-partisan action.
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It's a bad bail out plan that does NOTHING to support the taxpayer..
Democrats and BUSH are for it..
McCain and the GOP are against it..
So, tell me...
Whose side are you on???
Bush's??? Or McCain's???
Michale...
McCain supports Bush.
You are in error..
McCain and the GOP are against this bail out plan..
Bush and the Democrats are for the bail out plan...
"These are the facts... And they are undisputed
-Kevin Bacon, A FEW GOOD MEN
Michale...
"Whose side are you on??? Bush's??? Or McCain's???"
That's kind of like asking which eye I'd like to get poked with a sharp stick. The right one? Or the left one?
Are McCain and the GOP simply "against it" or have they offered an alternative?
**********
**********
TONIGHT PRESENTATION IS :
**********
Starring:
G.W. Bush
Paluson
Benaki
Your State Repersentatives
**********
Who will present the Republican Economic Plan we worked out a year ago and be called a true leader by all the Right Wing Media ~!
Shhhh the show is about to begin
@DuPageDem
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Short-term memory loss? See above, mocking global warming. The good folks of the Gulf Coast might disagree with you.
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Global Warming SHOULD be mocked...
It's a scientific fact that the Planet has been cooling for the past 10 years. Farmer's Almanac, which has a LOT better track record than ANY models to date, has stated this cooling trend will continue for at least another decade..
So, please explain to me how there can be Human Caused Global Warming when the planet is cooling???
But, regardless, you seem to indicate by my unwillingness to be a lemming and bask in the eternal ({cough} con) of the Gore'acle that I have "amply demonstrated" that I will believe "anything.
So, do you???
Or were you just talking out yer arse???
Finally, what does living on the Gulf Coast have to do with anything?? Or are you putting forth the theory that Human Caused Global Warming (Yet The Planet Is Cooling) will cause more intense hurricanes
Michale...
Well, Michale,
When in doubt about theories, it is a good idea to try verifying the scientific conclusion with your own experience. As a naturalist, I have been blessed with intimate acquaintance with a large piece of land for many decades. And there is no question that there are signs of a warming trend in that habitat. Birds and animals have moved in that were further south in range years ago. The springs have tended to come earlier and earlier, and the winters are milder and milder than during my childhood. I also lived a while in an arctic community and the changes in the ice pack in recent years have been rapid and stunning. Now the foundations of the houses there are failing in the melting permafrost. Ice cellars--permanent cold storage--used for centuries by the local Inupiat (eskimo) are no longer keeping the meat frozen--it is thawing during the summer. Maybe you have some good explanations for why I have observed these changes.
Easy...
The Earth's climate is cyclic... This is an established fact...
Up until about 10-12 years ago, the Earth WAS in a warming stage... This is an established fact..
The last 10-12 years, the Earth has been cooling.. This is an established fact..
The Earth's climate has been cyclic for billions of years. The idea that mankind could, in the last 30-40 years totally frack up what has been going on for billions of years is utterly ridiculous
Barring all that, ask yourself one question..
The people who are screaming the loudest about Human Caused Global Warming (Yet The Planet Is Cooling)..
Of course they don't...
So, I have to ask... Why do you listen to them???
On another note, it's not really fair to Mr Frank to tie up his commentary with this unrelated discussion
If you would like to continue this discussion (as I would), please feel free to "meet" me over here:
http://www
That would be a more appropriate venue for our discussion
Michale...
I guess that's why the ice caps are melting, because the planet is cooling. Got it.
@COPerez
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You do know that there is scientific consensus - among those in the field - that global warming is human-caus
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Yes, and there once was a "scientific consensus" that the Earth was flat..
We all know how THAT panned out, eh??
Further, the term "scientific consensus" is an oxymoron as science (REAL science) is never, ever done by "consensus
Consensus is a political construct, NOT a scientific one...
"But, I am sure you already knew all that.. That's what I like about you. Your attention to detail..."
Jim Carrey, ACE VENTURA
Michale...
No, there was not a "scientific" consensus that the Earth was flat--it was a cultural consensus, hundreds of years ago, and even then there were cultures that knew the earth was round.
Two things..
We may mock and ridicule what passed for "scientific" hundreds of years ago. Just as future generations will likely mock and ridicule what WE consider to be "scientifi
Secondly, it would simply be IMPOSSIBLE for ANY culture hundreds of years ago to "know" that the Earth was round.. That is akin to saying that scientists today "know" the internal makeup of a black hole. It's simply NOT possible..
But "KNOWING"???
Simply not possible..
Michale...
@mklimo
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1. You seem to be ignoring the Republicans that received money from those two institutions during that same period, of which there were many.
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You are under the impression that I listed The Top 5 DEMOCRATS.
You are in error..
The listing was for the Top 5 RECIPIENTS of Campaign Donations from Mae & Mac, both DEM and GOP...
The Democrats hold the top 5 positions of that bipartisan list...
The FULL list of 25 can be seen here:
http://www
As you will note, 17 of the 25 listed are Democrats.
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2. You seem to be implying that Fannie and Freddie are the reasons why this current financial crisis is happening, which they are not.
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I lack the economic expertise to refute your assertion. From what I have read, the Mae & Mac debacle figure prominently in the current crisis.
But if you claim otherwise, I respect that...
Michale...
Does anyone remember which comedian it was that explained "trickle down" for what it was... the Rich "pe eing" and waiting for it to trickle down on the heads of everyone else?
Sounds like George Carlin, r.i.p.
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