Columns For (and By) Idiots
David Brooks believes that individuals create the contexts in which they make economic decisions.
Well, no. He doesn’t actually believe that, at all. But by golly, he’s going to say it, anyway — just because it feels so good to say it, you know?
Our moral and economic system is based on individual responsibility. It’s based on the idea that people have to live with the consequences of their decisions. This makes them more careful deciders. This means that society tends toward justice — people get what they deserve as much as possible.
Over the last few months, we’ve made a hash of all that. The Bush and Obama administrations have compensated foolishness and irresponsibility. The financial bailouts reward bankers who took insane risks. The auto bailouts subsidize companies and unions that made self-indulgent decisions a few decades ago that drove their industry into the ground.
The stimulus package handed tens of billions of dollars to states that spent profligately during the prosperity years. The Obama housing plan will force people who bought sensible homes to subsidize the mortgages of people who bought houses they could not afford. It will almost certainly force people who were honest on their loan forms to subsidize people who were dishonest on theirs.
These injustices are stoking anger across the country, lustily expressed by Rick Santelli on CNBC Thursday morning. “The government is promoting bad behavior!” Santelli cried as Chicago traders cheered him on. “The president … should put up a Web site … to have people vote … to see if they want to subsidize losers’ mortgages!”
No, no, no, you’ve got it all wrong:
… That’s because government isn’t fundamentally in the Last Judgment business, making sure everybody serves penance for their sins. In times like these, government is fundamentally in the business of stabilizing the economic system as a whole.
… an economy has an economic culture. Out of billions of individual decisions, a common economic landscape emerges, which frames and influences the decisions everybody makes.
Right now, the economic landscape looks like that movie of the swaying Tacoma Narrows Bridge you might have seen in a high school science class. It started swinging in small ways and then the oscillations built on one another until the whole thing was freakishly alive and the pavement looked like liquid.
A few years ago, the global economic culture began swaying. The government enabled people to buy homes they couldn’t afford. The Fed provided easy money. The Chinese sloshed in oceans of capital. The giddy upward sway produced a crushing ride down.
These oscillations are the real moral hazard. Individual responsibility doesn’t mean much in an economy like this one. We all know people who have been laid off through no fault of their own. The responsible have been punished along with the profligate.
It makes sense for the government to intervene to try to reduce the oscillation. It makes sense for government to try to restore some communal order. And the sad reality is that in these circumstances government has to spend money on precisely those sectors that have been swinging most wildly — housing, finance, etc. It has to help stabilize people who have been idiots.
… The nation’s economy is not just the sum of its individuals. It is an interwoven context that we all share. To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.
Uhhh, no shit, Sherlock.
Let’s talk about the stuff Rick Santelli isn’t talking about:
… Since the bubble popped, the intimation has been that the government put a gun to the head of the banks to lend to poor people (just say the word, why don’t you) who then made bad decisions with their money, and now the responsible people have to bail them out.
Lost from this complaint is the plain fact of predatory lending, that lenders got cash rebates to put people in crappy, high-interest mortgages, that they hid terms of the agreement and denied disclosure, and that all of those hardworking folks are seeing their property values plummet as a result of millions of foreclosed homes glutting the market. To the tune of $6 trillion dollars in home value.
So, in other words, homeowners are responsible for their own individual economic decisions and for the banks’ economic decisions as well.