1. Is it a fundamental problem when a
corporation becomes so big that its failure threatens to bring down the
national economy? Could it be that scale matters? Can institutions
become so large that their potential harm outweighs their actual (or
occasional) good? If yes, then are there measures that could help ensure
that economic power is decentralized and therefore less dangerous?
2. The bailout was ostensibly
necessary to protect our “American way of life.” That such a reason
was offered without justification indicates that our way of life is an
axiom that must be assumed but never questioned. But is it too much to
consider, if only for a moment, that perhaps our way of life is
precisely the problem? Of course, a way of life is a complex thing, but
insofar as the “American way of life” consists in living beyond our
means, it is unsustainable. To the extent that consumer credit is at an
all-time high and personal savings is at an all-time low, the
“American way of life” is irresponsible.
3. Public debt mirrors private debt.
Both publicly and privately, we have become a nation that demands
immediate gratification. Is such a national disposition healthy?
Psychologists tell us that adults are capable of delaying their
gratification. If so, then publicly and privately we are, according to
this measurement, behaving like a nation of children.
4. The best part of the American
tradition is characterized by a can-do attitude and a willingness
to face the consequences of our decisions. Consider, then, the fact that
in many states home loans are, by law, non-recourse. This means that if
a borrower cannot afford to make the payment, he can simply walk away
from the deal. The property returns to the lender, and its value may or
may not cover the outstanding debt. In essence, the bank runs the risk
and the borrower runs away. If such laws were eliminated, borrowers
would take care not to borrow more than they can afford. Does the fact
that it is legal to walk away from a home mortgage make doing so morally
right? Is a system based on no-risk credit and legal irresponsibility
5. In our private
lives, we expect that our “standard of living” will be higher
than that of our parents, and our children will enjoy a higher standard
than us. But is that expectation warranted? Do we need a higher standard
of living than our parents? Exactly how high is high enough? When
will we be able to say “my standard of living is just fine”? When a
society finds itself animated by a fundamental desire for more stuff,
the analogy to the nursery is hard to miss.
6. We are told that the catalyst for
the current economic troubles is the housing market. Consider the
following: in the 1950’s the average house had one bathroom and was
something under one-thousand square feet. Today, the market standard is
one bathroom for every bedroom and the average square
footage has more than doubled. Ironically, the size of families
declined precipitously during those same decades so that the average
square footage per person has risen dramatically. How big is big enough?
Would the current crisis be as acute if the houses we bought were more
7. For years, Republicans championed
tax reduction while Democrats emphasized government programs. Both sides
won the debate. Today, the presidential candidates from both parties
argue about whose plan will reduce taxes the most. At the same time,
both candidates promise far more government programs than they can
afford. The American
people want both lower taxes and increased government
spending. We want it all now and we want to defer the payment
until later (preferably after we are safely dead). How’s that for family
8. Many of us have parents or
grandparents who lived through the great
depression (and a few among us remember it). My grandmother
raised a family during those lean years and the frugal habits she
acquired by necessity stayed with her the rest of her life. She saved
and mended and lived well within her means. She was grateful to have a
margin between her income and her expenses and thought it was wise to
live modestly. What would our grandmothers say to us now as we struggle
to maintain our “American way of life”?
9. Lord Acton’s hoary saying is
pertinent: “power tends to corrupt.” If so, then we should make
efforts to decentralize power. Such a sensibility is behind the separation
of powers written into the fabric of the U.S.
Constitution. We should be concerned, then, when big corporations
get into bed with big
government. The off-spring will be ugly and, we can rest assured,
it will be big. This bailout represents a stunning consolidation of
corporate and government power. Of course, we are promised that the
government will regulate the corporations, but the conflict of interest
is glaring. Could it be that the problem is not de-regulation but
regulations that favor big corporations over small businesses?
10. In Greek drama hubris plays a key
role. This is the fatal pride that brings down even the greatest of men.
Is hubris at the heart of this crisis? Hubris
is the failure to acknowledge limits. It is the failure to live within
the bounds proper to human beings. Ultimately, it is a failure of
virtue. When we delay payments rather than our gratification, we reveal
our ill-formed character. When our demands for more things are limited
only by our insatiable imaginations, vice is running the show. When our
leaders tell us that they can solve any crisis if only we grant them
more power, hubris has taken center stage.