Conservative political and social commentary
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First they came for the communists,
but I was not a communist, so I did not speak out. Then they came for the socialists
and the trade unionists, but I was neither, so I did not speak out. Then they
came for the Jews, but I was not a Jew, so I did not speak out. And when they
came for me, there was no one left to speak out for me.
– Pastor Martin Niemoeller.
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|It's Not Just Wall Street or the Banks, It's Us - Monday, March 09, 2009
It’s Not Just Wall Street or the Banks, It’s Us
David C. Stolinsky, MD
As the economy unravels, everyone is asking, “How could this happen? Who is to blame?” Google lists 5,140,000 hits for “financial scandal,” not a hopeful sign. Obvious culprits include confidence men like Bernard Madoff and R. Allen Stanford. But there are too few accused criminals to absorb all the blame.
Next come the merely greedy and incompetent:
· Bankers who acted as though making bad loans had no consequences.
· Mortgage brokers who advertised on radio and TV that they offered low-interest loans to people with poor credit − with little or no money down.
· Quasi-governmental agencies like Fannie Mae and Freddie Mac, which pushed home loans on people who were unlikely to be able to make the payments.
· Politicians like Barney Frank, who pressured lenders to make shaky loans in order to look like a friend of the little guy, while in reality he was doing the little guy terrible harm.
· Rating agencies, which rated mortgage-backed “securities” as safe investments for banks and pension funds.
· Federal regulators, who acted more like lapdogs than watchdogs.
But we have forgotten that any system − whether capitalism, socialism, or the combination of the two we are trying now − depends on people to run it. It depends on us.
In theory, socialism means that there are no very rich or very poor, and no one lacks the essentials of food, clothing, shelter or health care. In practice, socialism tends to degenerate into stagnation, because the nonproductive are rewarded while the productive are penalized. Production and distribution of everything is controlled by an oppressive bureaucracy. Health care is rationed. People become infantilized by a nanny state, which they depend on to take care of their parents, their children and eventually themselves.
Unrestrained by ethical principles, the pursuit of equality leads to gray uniformity, intrusive regulation − and eventually to the Gulag.
In theory, free enterprise allows people to achieve their potential. Inventiveness and productivity are rewarded, and laziness is penalized. In practice, capitalism tends to degenerate into greed and mountainous debt. Businesses are ingested by remote conglomerates. Doctors withhold needed tests or treatments on the orders of HMOs. Industrialists sell military technology to potential enemies.
A few enjoy excellent private schools, while the rest make do with public schools that are ineffective and often dangerous. Executives loot their own companies and exit in golden parachutes, while workers lose their pensions and join the unemployed. Most people are more afraid of the tax collector than of the police, which shows where the government’s real priorities lie.
Unrestrained by ethical principles, the pursuit of profit leads to lawlessness − and eventually to the jungle.
But we outsmarted ourselves. We combined the worst aspects of socialism and capitalism. We established quasi-governmental agencies like Fannie Mae and Freddie Mac, which implicitly guaranteed loans. Then we pressured banks to make loans to people who were unlikely to be able to repay them. We cloaked political pandering in the mantle of “helping the poor and minorities.” Then we bundled the bad loans with good ones, and sold them as “securities” − as if the paper represented something real.
We removed the risk of making bad business decisions. We privatized the profit and socialized the risk. Then we were shocked − shocked! − when the house of cards collapsed. Like Captain Renault in “Casablanca,” we pretended we didn’t know there was gambling going on here.
Missing in all this is any consideration of what kinds of individuals are involved. Almost any system would work tolerably well if it were run by individuals who had been educated in the basics and exemplified hard work and honesty. Such individuals were common in the early days of both socialism and free enterprise, but they were the products of neither socialism nor free enterprise. They were the result of religion and family structure that had remained stable for centuries.
Both socialism and free enterprise were the ungrateful beneficiaries of generations of hardworking, God-fearing people. Now the bequest of generations has been squandered. We are running into trouble, but we don’t know why. We refuse to recognize that economic systems of whatever type are like automobile engines: They provide power but do not determine the direction of travel.
We refuse to recognize that effective workers need a work ethic, and that religion is its primary source. We cannot grasp that good citizens need a good education, which requires teachers to teach real subjects rather than politically correct pap that leaves students lacking basic reading and arithmetic skills, much less a sense of right and wrong.
The problem is us:
· We used credit cards not as cushions for unexpected expenses, but to live beyond our means for as long as we could.
· We saw houses not as family homes, but as speculations to “flip” for a quick profit.
· We bought $800,000 houses that we couldn’t possibly pay for on a bus driver’s salary, then blamed the lender and asked President Obama to bail us out.
· We saw ourselves not as responsible adults, but as teenagers on an allowance that we spent as we pleased. Then we expected mom and dad (the government) to take care us when things went wrong.
· We saw our position as CEO not as a commitment to keep the company healthy, but as an opportunity to enrich ourselves and then exit before the roof fell in.
· We saw our job as investment raters not as a responsibility to banks and pension funds, but merely as a job.
· We tried to solve the problem of mountainous debt by incurring even more debt, rather than by the “old-fashioned” method of spending less and saving more.
Rule-breaking spread like an infectious disease. “Thou shalt not covet,” “Thou shalt not steal” and “Thou shalt not bear false witness” had no influence on us. Person A falsified his mortgage application, B approved it without verifying, C sold the bad loan to a pension fund, and D rated it as a sound investment.
We felt entitled to more than we earned. But we couldn’t get away with it. Both socialists and capitalists have been living on their inheritance, and it is running out.
Ethical, self-controlled citizens are helpful to any nation, but they are indispensable to a free nation. Only responsible adults can handle freedom. Spoiled brats who steal each others’ toys need a strict nanny − or a nanny state. Unrestrained by ethical principles, the pursuit of freedom leads to chaos − and eventually to tyranny, when people no longer tolerate chaos. If you doubt this, consider the massive increase in regulation being enacted in response to the current economic mess.
Whatever economic or political system we adopt, we depend on conscientious, productive citizens with a sense of community. We have tinkered endlessly with these systems, but we have neglected the religious and family structures that formerly produced these citizens.
We can blame the Wall Street shills who told us that the bull market would last forever.
We can blame the bungling bankers who played with our savings as if it were Monopoly money.
We can blame the home buyers who should have known they could not make the payments.
We can blame the tricksters who transformed shaky mortgages into “securities.”
We can blame the incompetent or corrupt raters who told banks and pension funds that these “securities” were in fact secure.
We can even blame manipulators who may have triggered an economic crisis just weeks before the election to make sure their man won. $550 billion was withdrawn electronically in two hours from money market funds. Was this just a coincidence?*
And we can blame the charlatans who now are using the economic mess as the excuse to socialize America.
But if we are seeking people to blame, we must also look in the mirror.
*Note: Rep. Paul Kanjorski, Chairman of the Capital Markets Subcommittee, stated on CSPAN that the $550 billion electronic run on money market funds occurred on a Thursday “about September 15.” However, Thursday that week in 2008 was September 11. Was this just another coincidence?
Is Kanjorski delusional? Then why hasn’t the Democratic leadership removed him as chairman of this important subcommittee? Or is he telling the truth? Can half a trillion dollars be withdrawn in two hours without collusion? Then why aren’t we demanding an investigation? Do we care? Or have we become sheep, waiting to be fleeced?
Dr. Stolinsky writes on political and social issues. He can be contacted at firstname.lastname@example.org.