"laestadian, apostolic, gay, lgbtq, ex-oalc, ex-llc, llc, oalc, bunner" LEARNING TO LIVE FREE: Two Responses to Greed-American Style

Tuesday, September 23, 2008

Two Responses to Greed-American Style

Evangelist Jim Wallis is mad as heck:

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.

Economist Paul Krugman has a few reactions to the proposed bailout:

. . . if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.

That’s what happened in the savings and loan crisis: the feds took over ownership of the bad banks, not just their bad assets. It’s also what happened with Fannie and Freddie. (And by the way, that rescue has done what it was supposed to. Mortgage interest rates have come down sharply since the federal takeover.)

But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.

I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.

But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.


  1. Here is the "Text of the Draft Proposal for Bailout Plan" http://www.nytimes.com/2008/09/21/business/21draftcnd.html?_r=1&oref=slogin
    (wish I could figure out the HTML to post links).

    Anyway, here's an excerpt:

    Sec. 8. Review.
    Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.


  2. The bailout and greed and government policy and other things.

    It has been public policy for decades in the US to encourage home ownership and this has served us well. We do this with a wide variety of laws in the tax and lending arenas. Fannie Mae and Freddy Mac and the 1040 are examples of this. More particularly the last two administrations have been actively involved in trying to expand this policy to include more and more people in the lower socio-economic scale. By backing these lending organizations, millions of loans have been packaged and sold with implicit, if not explicit public backing… all condoned by both political parties in an effort to expand this policy. There has been a reluctance to reign in these organizations for several reasons… it has been felt that to curb their practices would slow down opportunity and in addition FM&FM, being partially private, have poured campaign and lobbying money to candidates from both parties.

    Now the issue of greed… The public has been greedy in the expansion of a policy to those who couldn’t pay their loans without government backing… we could say greedy in their collective compassion. The politicians have been greedy in their willingness to take money from the very agencies that they were duty bound to regulate. The companies have been greedy in their willingness to drop standards to write more loans knowing that the public was willing to back them. Individual borrowers have been greedy because they signed on to loans without a care about their ability to pay in the future.

    This bailout is made necessary because we are bailing ourselves out of foolish public policy in that a reasonable goal… expanding home ownership… has been extended beyond the threshold of prudence. A classic case of too much government.

  3. As for the issue of greed, greed is a human attribute that is widespread. We all have some of it, and it's in the eye of the beholder. Greed is not a problem in itself, at least from a societal perspective. Because greed exists, it is necessary to have mechanisms to channel and control it. These mechanisms are what has been lacking. That almost sums up the entire moral problem, such as it is. This is not rocket science.
    But, moving forward toward action in the moral sphere, there are a couple of questions that can be asked. One is: whose suffering should be alleviated? I think this is the correct question and should guide us in devising a practical solution to the problems we face. The second question is: Who should be punished? I have read a good number of blog posts in the last few days from people who think this situation is primarily the fault of the people who got into mortgages they didn't understand and shouldn't have signed up for, and these bloggers are angry at these misguided people. This anger is an error. Perhaps these people were foolish; certainly they look that way in hindsight. I am intimately familiar with the temptation to say that everybody is corrupt or that everybody except this group or that group is corrupt. But having said that, except where crimes have been committed, it doesn't get you anywhere. So let's think of solutions that will benefit us as a whole. I don't much fancy writing a blank check on behalf of my children to Hank Paulson for $700 billion to do with as he likes.

  4. Norah, now Paulsen is saying (despite the clear passage in his proposal that you quoted above) that he was for oversight all along. This has to win the prize for Bald-Faced B.S.

    As Rep. McDermott said yesterday, Paulsen is throwing himself a pass that in four months, he can catch himself, an extremely wealthy man.


  5. It seems as though this 'blank check' will open up all this money without clear definition of how it will be spent. That does a couple of things - it allows any business to come forward for a government bailout, even businesses that should fail, and including businesses who are not even in trouble yet. It allows these corporations to fulfill their contracts to the CEO's who are earning millions in bonuses even though their companies are going bankrupt. It allows the government to seize control of business like has never been done before in the US.

    Hopefully the pressure for oversight is working. Maybe scare tactics are being used to get people to agree to a quick solution?

    There's a lot I don't understand, but will keep watching!

  6. You and me both, Norah.

    Readers, you may have noticed I opened up comments to everyone again. However, I am asking you to choose and use a pen-name (see note in Welcome section in sidebar). Anonymous posts are likely to be deleted.

  7. Still following this and wondering what's the right path. Ron Paul, Newt Gingrich, and Rush Limbaugh are among the people on the right who are against this. Here's a link to Ron Paul's website, which has some good reading: http://www.campaignforliberty.com/.

  8. Good morning, all. Is there a link somewhere to the other blog by the person who left the oalc as well?

    And is oldapsotoliclutheran.com gone for good :(

    Thanks for any assistance.

  9. The blog is still there


  10. Here is a article from New York Times from many years ago. They predicted this financial crises years ago. Some of the predictions by the experts are spot on.