Friday, September 19, 2008

How did we get here?

I hear that question a lot these days in reference to the financial institutions' collapse.

I have a theory.

Does anyone remember when Bush campaigned back in 2000 how he said that this would be an era of accountability. People would be held accountable, he said.

The National Bank of America drafted a bill that made it more difficult for consumers to filed for bankruptcy. I agree that people should have to pay their debts and not over spend but unfortunately it isn't as simple as that.

Consider this analogy. Is it wrong for someone to steal shoes off of my porch? Yes, it is. Who's accountable? Both parties. If I keep leaving my shoes on the porch and they keep being stolen, then maybe I should stop leaving them on the porch.

So this new bill by congress was the equivalent of the cops cracking down harder on those who steal shoes from the porch.

The banks of America thought that if the consumer couldn't file for bankruptcy then there was no reason for them to stop cramming credit down the consumer's throat. Whether it's a subprime mortgage with adjustable rates or outlandish credit terms or a credit card with fees on top of fees and outlandish interest rates, the financial instutes of America thought they were safe. They thought they could continue to leave their shoes on the porch and that the penalties for stealing would be enough to stop the culprits.

So, Bush's interpretation of accountability was very limited. Or perhaps it was exact. People would be held accountable but the institutions that made really bad policies would not be.

Congress wonders where they went wrong. How about this message: "Hey guys, if you keep putting your shoes on the porch, and they continue to get stolen, we're not going to buy you new shoes".

8 comments:

SunWolf said...

And they weren't even leaving their shoes on the porch any more...they were dangling them in front of the thieves, almost thrusting them into the hands of the thieves...

Ad Hoc Committee for Property Rights said...

Just because you leave your shoes on the porch does not give anyone the right to take them. They are your shoes.

A friend once told me that while he was in the military he and another person walked into a room. A pair of sunglasses was laying on a table. The other person said that they could take them, because they didn't know who they belonged to. My friend responded, "We know they don't belong to us."

A Girl From Texas said...

If you leave your shoes out on the porch and they continue to be stolen, then you are also to blame.

You can scream foul play all you want but you have a responsibility to protect your own belongings.

Ad Hoc Committee for Property Rights said...

So if someone keeps breaking into your house and stealing your laptop, are you also to blame?

A Girl From Texas said...
This comment has been removed by the author.
A Girl From Texas said...

You're pushing the envelope and changing the analogy. You're analogy doesn't apply. Any police officer will tell you that crime is about opportunity. The opportunity to steal something off the porch is more tempting than breaking into a house.

It is up to us as individuals to reduce opportunities for theives. I'm not saying that stealing is ok. I'm saying that if you give a theif an opportunity, he'll take it.

I don't leave my laptop in my car. I don't park my bicycle outside without locking it up.

The financial institutions of America have encouraged people to go into debt. You see credit card companies on college campuses enticing 18 yr olds to signup for as many cards as they can. Mortgage lenders explaining to people that they really can afford a house beyond their means, until the ARM kicks in. And then, these same institutions scream foul when these people don't pay their bills.

They thought when the government made it more difficult to file for bankruptcy that they could continue their irresponsible practices and face less risk. So they didn't change their policies. Idiots.

I use the analogy that they tempted the "thieves" and CONTINUED to tempt the "thieves".

I use quotations around "thieves" because I know a lot of people who were in over their heads and the circumstances that led them there were pretty disgusting. They were good people and they were misled.

Ad Hoc Committee for Property Rights said...

Pushing the envelope, i.e., taking a principle to its logical extreme, shows us what the principle leads to.

My analogy does apply, because you claim that we are to blame if someone keeps stealing something from us. The principle underlying your position is that the victim shares in the guilt. If that is true, then it is always true. If there is an exception, then your principle is not true.

So if we tempt somebody we are to blame when they do wrong? What about personal responsibility? How am I or you responsible for the actions of another person?

I don't know what you "got" from Atlas, OPAR, etc., but it wasn't the message that was being conveyed.

FYI, I've had lunch with Peter Schwartz; dinner with Harry Binswanger, John Ridpath, Andrew Bernstein, Tara Smith, and several others I don't recall. I've interviewed Jean Moroney. I drove John Ridpath to College Station. I've had more meals with Yaron Brook than I can recall. I've heard most of Peikoff's taped lecture courses.

I've seen all of the above speak on more than one occasion, along with many other Objectivist intellectuals.

None of this is relevant, because it does nothing to establish the truth of anything I say. But since you wanted to point out how many books you've read and the fact that you met Peter Schwartz, I thought you might find it of interest.

A Girl From Texas said...

I don't think that your analogy is the logical extreme. My analogy is about providing a theif with opportunity and then continuing to do so. Locking up ones belongings is removing the opportunity.

The victim does sometimes share in the guilt, absolutely. If I decide to walk alone and unarmed down the streets of Johanesberg in the late hours of the night flaunting gold and diamonds, then I am providing an opportunity to be robbed. Are they wrong to steal? Absolutely. Could I have prevented it? Yes. We are required to use our heads and exercise sound judgement. If we choose to live our lives with our heads in the ground and bad things happen to us as a result, well, we are victims of our own stupidity.

My point is that if I leave my shoes on the porch and they are stolen once, shame on the person who stole them. If it happens again, maybe I need to think about bringing them inside. Yes, in this case I am contributing to my being a victim and need to assume responsibility to preven it from continuing to happen.

But the whole point of this analogy is that the financial institutions of america provided the temptation to over borrow and as Sunwolf pointed out, they pretty much dangled the booty in their face. Now they want Uncle Sam to see them as victims and restore them. I say they are NOT victims but that they share in the guilt.

Yes, sometimes, based on the circumstances,we share in the guilt.