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The Stench of Rotting Flesh September 23, 2008

Posted by Dwight and Lynn Furrow in Current Events, Dwight Furrow's Posts, Ethics, Political Philosophy.
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When I unwrap the fishwrap in the morning, the stench of rotting flesh is unmistakable. The decay of conservative “moral philosophy” is well advanced.

 

In the wake of the collapse of credit markets and the proposed 700 billion dollar taxpayer bailout of our banking system, many pundits have proclaimed the end of the era of massive deregulation, anti-government animus, and free-market fundamentalism begun in the Reagan administration. Maybe. But given the willingness on the part of the press and public to swallow any bromide with the word “freedom” in it, I’ll believe it when I see it.

 

But the larger question is whether we are nearing the demise of the twisted conservative “moral philosophy” that supports deregulation and anti-government animus. The current credit crisis and the proposed bailout being debated on Capitol Hill shine a light on its corpse.

 

The conservative war against evil has been selective in its judgment about government. For conservatives, government is competent and has legitimate authority when it is fighting wars, throwing people in jail, lecturing the poor about their sins, or feeding public money to global corporations. It is only incompetent and excessive when it turns to helping citizens live better lives.

 

The reason conservatives hate policies that help ordinary people is based on the concept of moral hazard. A moral hazard is an incentive for people to behave badly (or a disincentive to behave well). Conservatives believe that the government creates moral hazards when it develops programs that help ordinary people. Welfare and unemployment insurance encourages laziness, social security encourages carelessness about retirement planning, health insurance encourages unnecessary use of health resources, abortion and birth control encourage irresponsible sex, clean needle programs encourage drug addiction, consumer protection encourages consumer carelessness and lawsuits, and on and on. The entire conservative policy agenda can be understood as an attempt to avoid moral hazard. (The idea of moral hazard is an excessively simplistic view of human motivation, but I will save that discussion for another day.)

 

But these worries about moral hazard apply only to the poor or the unsuccessful. Conservatives are seldom concerned about moral hazards in the path of the wealthy and the powerful. They are so virtuous they don’t need regulation.

 

This double standard is obvious in the credit crisis. The mortgage finance industry created investment vehicles that sliced up mortgages and combined them to be sold multiple times in ways that enabled investors to realize enormous profit while taking on very little risk. And since they were taking on very little risk, no one had an incentive to make sure the underlying mortgages were sound. Meanwhile, conservatives steadily eviscerated regulations that would have provided oversight and transparency. In other words, our finance system has been operated as a giant ponzi scheme (imagine a chain letter festooned with dollars to be removed by each recipient) where the last one in, now apparently the taxpayer, is left holding the empty envelope. There are obvious, multiple moral hazards here in every transaction to which conservatives have been utterly indifferent.

 

The double standard is even more apparent in the bailout scheme. The proposal on the table is for the government to buy up all the bad mortgages (from healthy as well as failed banks) so banks can start lending money again. It is no surprise that no one is considering bailing out the people who are losing their homes, even though arguably that would be a less expensive way of stabilizing housing prices and increasing the value of assets held by investors. Why is that not being considered? Oh. It would create a moral hazard for ordinary people. If you bail them out today, the next time they buy a house they will be encouraged to get another mortgage they can’t afford. And in fact conservative pundits are trying to blame the whole thing on irresponsible homeowners and their liberal supporters instead of the people who created the moral hazard.

 

The “moral philosophy” behind this goes something like this. Everyone is competing for scarce resources and only strong, self-sufficient, highly motivated people will be successful. Therefore, material success is the measure of virtue. (Calvinism is still alive and well) The unsuccessful lack virtue and deserve their lot because their dependence on others is the result of their lack of discipline and will. And the virtuous should have authority over the weak since a strong will and capacity for self-sufficiency are necessary in combating evil. No moral hazard here. The virtuous don’t require oversight or regulation—they are a law unto themselves. (This, by the way, is why conservative ideology leads to fascism).

 

This is the belief system that stinks to high heaven, exposed as a self-deceptive tissue of lies by the collapse of credit markets. The captains of the financial industry and their enablers in government, largely but not exclusively Republicans, have a lot to answer for. Will they be held responsible? We will know in a few weeks.

 

The economist John Kenneth Galbraith famously said that “The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”

 

I doubt that even Galbraith could have imagined how deeply this collection of ideas has settled into the American psyche.

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Comments»

1. philagon - September 24, 2008

“Everyone is competing for scarce resources and only strong, self-sufficient, highly motivated people will be successful. Therefore, material success is the measure of virtue. (Calvinism is still alive and well)”
Wow, I didn’t know anyone still held to Weber’s version of capitalism as Christian neurosis, but I just found one.

“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”
Yes, every conservative prays, in his secret heart, to Ayn Rand in her stinking high heaven.

“…their enablers in government, largely but not exclusively Republicans, have a lot to answer for.”
Wow, I could almost have a good argument if both houses of congress were Democratic! Darn, too bad. And I could also make a good point if the previous 2 term president before Bush was a Democrat who failed to institute financial policies which Mr. Furrow says are so necessary. Darn again!

Characterizing conservatism as merely avoiding moral hazards= straw man

Characterizing the virtues of capitalism through the faulty lens of Weberian psychoanalysis= sloppy

Characterizing all conservatives as egoists= ignorant

2. Mark T. Market - February 27, 2009

Nassim Taleb spoke out in Davos about banks and the moral hazard of bailouts.

He and Nouriel Roubini were both interviewed at CNBC recently, but soundbite journalists are incapable of handling their views sadly.

Zimbabwe citizens know very well what kinds of horrors hyperinflation can bring, but this kind of phenomenon is considered remote from occuring elsewhere.

Glenn Beck’s hockey stick makes me think again.


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