Our Problem Is Immorality

[MountainDon]

Walter Williams, an economist, is one of my favorite columnists.

http://economics.gmu.edu/wew/index.html

Most of our nation's great problems, including our economic problems, have as their root decaying moral values. Whether we have the stomach to own up to it or not, we have become an immoral people left with little more than the pretense of morality. You say, "That's a pretty heavy charge, Williams. You'd better be prepared to back it up with evidence!" I'll try with a few questions for you to answer.

            Do you believe that it is moral and just for one person to be forcibly used to serve the purposes of another? And, if that person does not peaceably submit to being so used, do you believe that there should be the initiation of some kind of force against him? Neither question is complex and can be answered by either a yes or no. For me the answer is no to both questions but I bet that your average college professor, politician or minister would not give a simple yes or no response. They would be evasive and probably say that it all depends.

            In thinking about questions of morality, my initial premise is that I am my private property and you are your private property. That's simple. What's complex is what percentage of me belongs to someone else. If we accept the idea of self-ownership, then certain acts are readily revealed as moral or immoral. Acts such as rape and murder are immoral because they violate one's private property rights. Theft of the physical things that we own, such as cars, jewelry and money, also violates our ownership rights.

            The reason why your college professor, politician or minister cannot give a simple yes or no answer to the question of whether one person should be used to serve the purposes of another is because they are sly enough to know that either answer would be troublesome for their agenda. A yes answer would put them firmly in the position of supporting some of mankind's most horrible injustices such as slavery. After all, what is slavery but the forcible use of one person to serve the purposes of another? A no answer would put them on the spot as well because that would mean they would have to come out against taking the earnings of one American to give to another in the forms of farm and business handouts, Medicare, Medicaid, food stamps and thousands of similar programs that account for more than two-thirds of the federal budget. There is neither moral justification nor constitutional authority for what amounts to legalized theft. This is not an argument against paying taxes. We all have a moral obligation to pay our share of the constitutionally mandated and enumerated functions of the federal government.

            Unfortunately, there is no way out of our immoral quagmire. The reason is that now that the U.S. Congress has established the principle that one American has a right to live at the expense of another American, it no longer pays to be moral. People who choose to be moral and refuse congressional handouts will find themselves losers. They'll be paying higher and higher taxes to support increasing numbers of those paying lower and lower taxes. As it stands now, close to 50 percent of income earners have no federal income tax liability and as such, what do they care about rising income taxes? In other words, once legalized theft begins, it becomes too costly to remain moral and self-sufficient. You might as well join in the looting, including the current looting in the name of stimulating the economy.

            I am all too afraid that a historian, a hundred years from now, will footnote America as a historical curiosity where people once enjoyed private property rights and limited government but it all returned to mankind's normal state of affairs -- arbitrary abuse and control by the powerful elite.

[Homegrown Tomatoes]

Good article Mt. Don... thanks for posting.

[harry51]

America is great because she is good. If America ceases to be good, America will cease to be great.
Alexis de Tocqueville

Liberty cannot be established without morality, nor morality without faith.
Alexis de Tocqueville

The profound immorality displayed at every turn of the current economic crisis has been nothing less than shocking.

Regarding the mortgage implosion, lenders made loans to people who, by any historical or objective standard, were very nearly guaranteed to fail to repay. Those people often falsified the applications, sometimes with coaching from loan officers. The banks then sold the loans as fast as possible, knowing they were a time bomb.

The big Wall Street banks, brokerages, etc., who bought the loans wholesale "securitized" them, fully aware of the poor quality of many of the loans. Their plan was to retail the newly minted "securities", but the bubble burst before they could get the old maids out of their portfolios and into those of private individuals.

The politicians have now funneled billions of taxpayer dollars to their Wall Street cronies, and to add insult to injury, the Federal Reserve either has or may yet monetize the worst of the bad paper. According to a speech by Bernanke linked nearby recently by Muldoon, this would be done with "new money", meaning we all pay by way of inflation.

Clearly, immorality hurts us all. As the consequences of the immoral policies of our institutions continue to unfold, they confirm that de Tocqueville was correct. America's greatness and liberty will be nothing but relics of the past unless we readopt honesty and transparency as our first and essential policies in business, government, and our personal lives. The sad part is, there's no indication we will do so any time soon. Tragic, tragic greed and hubris.




 

[pagan]

Morality is such a tricky issue, especially when talking about finance. Take, for instance, the investment banker. He or she has a moral obligation to do what is fiscally best for the bank and by extension its shareholders. Although what happened with the mortgage meltdown has obviously proven to be a result of fiscal irresponsibility by bankers and was clearly not in the long term financial best interest of the banks or the shareholders we must never forget that for the past twenty or so years that they've been performing their methods for "creating new wealth" these investment banks made hundreds of billions of dollars in profits.

[ScottA]

My question is if the government buys the paper do the banks no longer have a right to forclose on these over extended home owners? Should the governmnet forclose on these same people? Or should the government absorb the losses to keep people from being homeless?

What I see really happening is the banks getting bailed out and then forclosing on loans that effectivly been paid off by the taxpayers. This is wrong IMO.

Slavery slowly returns to america in disguise.

[desimulacra]

"Slavery slowly returns to america in disguise." 
Thanks very much for the link to this article!

[pagan]

I think you're on target, Scott, unfortunately nobody really even knows what the government will even be purchasing. The banks have packaged and repackaged these "mortgage backed securities" so many times that most of the time they cannot even produce the original mortgage signed by the borrower.

If the government does buy up all of this so called "toxic debt" and refinances at far lower rates or outright forgives the debt, then what does that mean for people who are current with their financial obligations yet are struggling? Why should some dipshit who bought far more house than he or she could afford get to have a new mortgage and pay less than rent? Why should they get to refinance at lower rates because they were foolish and bought in an obviously artificially inflated real estate market?

Just as the banks are being bailed out for irresponsibility, poor management, and outright fraud, so to are their alleged victims going to be bailed out for all of the same reasons.

Personally I believe the government should stay out of it and let them fail, banks and individuals. Where's the "free market?"

[ScottA]

I agree 100% pagancelt. I was just pointing out what's likely to happen.

[pagan]

There are so many things that are plain wrong with the bail outs it's inevitable that banks will exploit loopholes that they've had written into any future bail outs. And then members of congress will act surprised and indignant and the president will persuade everybody to remain calm, again.

Well, at least we agree, Scott.

[harry51]

I agree that all the bailouts are wrong for both moral and purely practical reasons. My point in using the mortgage crisis as an example is that most everybody involved is guilty of lying or some sort of swindling (or the intent to swindle later). It seems to me that the banks and brokerages also have a duty to be honest and forthcoming with their customers, be they mortgage borrowers or "security" purchasers, and that duty is not outweighed by their duty to their institution and its shareholders. If you sell someone a car with a known problem and fail to disclose it, you have swindled them. If you sell someone a security backed by worthless paper, you have swindled them. If you lie on a loan application, you swindled the lender by increasing his risk beyond what he would willingly assume. In any case, bad on you, and you deserve any negative consequences that may come your way as a result, IMO.

[pagan]

The problem with investment bankers, or at least the ones I worked with, is their ability to selectively apply morality. If you went to an investment banker with, say $100,000 to invest, the banker would put it in highly risky securities attempting to maximize the profits for the bank essentially putting the banks financial interests above yours. Now if you were born into great wealth and your family had been with the same bank for many years and your portfolio was worth, say $10,000,000, then your financial interests would be deemed virtually equal to the banks. I saw this many times where the bankers would go out and peddle essentially worthless paper to small investors, this included non-profits, while keeping the "good" paper for "preferred" clients.

[sjdehner]

Doesn't the Toa Te Ching say something to the effect that, Trying to make a person immoral you lay the ground work for vice. That a discussion even needs to take place is a very bad sign.

Thankfully, planting season is arriving soon.

Time to start those plants. Food from seeds? Now that's real fidelity for you. But of course it takes decent ground work.

S.

[pagan]

sjdehner,

Reminds me of the Billy Bragg song where the lyrics go

"I lost my job, my car and my house,
Because 3 thousand miles away
Some guy clicked a mouse

He didn't know me
He didn't care."

Something along those lines.

The point is, these guys never see the lives that are turned upside down and/or destroyed because of their actions. All they consider is the bottom line and how much money will be brought into the bank.

By the way, my wife and I looked at buying a house in Belfast back around 1994 or 1995. We were just up there last summer and had lunch down by the water. Nice little town, it's been cleaned up a lot since 1994.

[glenn kangiser]

I was thinking about this on my way to work today.   I also have never been able to see how the stock market could possibly work without what happened happening.  As muldoon recommends - I have always and will always invest in myself and my own company.  I have a bunch of halfway decent old equiment and tools so I can work all of the way through my retirement. 

As I see the financial meltdown, looking back, it looks like it was well planned for a long time.  Hindsight = 20/20 eh?

[muldoon]

I cannot find a real credit for this, but alledgedly it was from chicago tribune circa 1934.   some real history if it's true.   also quite a startling cartoon for it's time.  it has been popping up on some sites I watch, I dont know if its real or not - it certainly applies to today. 

[muldoon]

one more thing, I'm making plans to be in San Antonio on April 15th for the protest / tea party at the Alamo.  anyone have any suggestions for signs? 

[glenn kangiser]

Looks like history repeats itself.  They did not forget how to do it.

Today as I was driving a sign said, Californians --- let's get on with better banking.  Chase. (or close to that).

I was thinking a sign with a gallows - such as the hangman game - would be cool.  13 wraps on a noose isn't there?

[pagan]

sjdehner,

We bought twenty acres in central Vermont with an old hunting cabin. It needed a lot of work, but was very well built. We've weatherized and insulated it and have been living without running water or electricity for three years. We just got a solar electric system last October, which is nice. We use a composting toilet, Humanure Handbook, and bring our water from a spring. This summer we're going to build a solar batch water heater and hook it up to the wood cook stove for winter hot water.

As far as living simply, I agree with you, and "Your Money or Your Life" is a lot of help. Living simply also allows you to need to earn less money, so although you might not go along with investing all of your money so you don't need to work, you can certainly get more free time by having to earn far less.

[pagan]

I hear what you're saying, and agree. We still have a lot of snow on the ground, but it's melting fast. A few more weeks and it should all be gone.

[MountainDon]

One of the reasons I'm not big on investing, aside from the fact that I'm not a strong believer in unearned income....

I read this post just before we left for the mountains and never had time to add my two cents.

The current mess out financial system is a result of greed, there's no argument about that. We, as in the world, are in sad shape. However, I don't have a personal problem with unearned income as in income paid as dividends or interest from investing in a company.

The way I see it, the willingness of people to invest money in the stock market, bonds and the like makes it possible for many companies to exist and make products we use everyday. Not all companies are owned by someone with enough of their own money to start up a factory. I'm thinking more about things like my home furnace, cooking range, refrigerator and the gasoline I put in my vehicles, not iPhones, designer clothing, or Rolex watches. True, not all companies are publicly traded, but many are. There is a risk in the stock market, always has been and always will; that should be understood.

There are mutual funds that specialize in "good conscience" industries for those who want to be more green or more socially conscious.

Another form of passive income is where we pull some of our income from. That is rental housing. We get monthly payments from people who live in condos that we own. They pay us rent, we provide a place for them to call home. I haven't earned that money in a direct sense, but I see nothing wrong with that. We fulfill a genuine need. The same can be said of those manufacturers of the goods mentioned in the paragraph above.

There's nothing wrong with doing good work, producing a product yourself and selling it to others for cash. I used to do that running my own small playground equipment firm. Not everything is only black or white; there are planty of shades of gray.

[Sassy]

US Recovery Is Far Off, Banks Are 'Basically Insolvent': Soros
Topics:George Soros | Western Europe | Eastern Europe | Economic Data | Economy (Global) | Economy (U.S.)
By: Reuters | 06 Apr 2009 | 04:49 PM ET
The U.S. economy is in for a "lasting slowdown" and could face a Japan-style period of relatively low growth coupled with high inflation, billionaire investor George Soros said on Monday.

Soros, speaking to Reuters Financial Television, also warned that rescuing U.S. banks could turn them into "zombies" that draw the lifeblood of the economy, prolonging the economic slowdown.

George Soros
AP

"I don't expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown," Soros said, adding that in 2010 there might be "something" in terms of U.S. growth.
http://www.cnbc.com/id/30069223