Sowing and Reaping on Wall Street

The campaign took a sudden turn back to reality yesterday. For weeks we were treated to discussions of who was, and was not a celebrity, lipstick on pigs, bridges to nowhere and the such. Yesterday, with the Lehman Brothers’ bankruptcy, bargain basement sale of Merrill Lynch, and the collapse of the Dow by more than 500 points, the economy roared back to center stage like Hurricane Ike through Texas. The economic turmoil, like the destruction in Galveston, was all the more gripping because everyone appeared powerless over the forces unleashed. The economy, like the weather, is a non-predictable phenomenon, or so we have been led to believe.

What we also witnessed yesterday was the poverty of contemporary liberalism. Democratic operatives took to the cable news shows to say that the crisis had shifted the focus from cultural issues to a real issue, the economy, as if economic matters had no affect on shaping the culture, or the culture on shaping the economy, and as if economic issues were more "real" than cultural issues. Somewhere in Minnesota, the Rev. Msgr. John A Ryan was turning over in his grave.

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Msgr. Ryan was a professor of moral theology at the Catholic University of America and head of the Social Action Department at the U.S. Bishops’ Conference. In 1919, he drafted the Bishops’ statement on social reconstruction in the wake of World War I and the document recommended many of the programs that we would associate with the New Deal more than twelve years later: Social Security, unemployment insurance, government employment programs, child labor laws. Indeed, Ryan became an enthusiastic supporter of and collaborator with Franklin Delano Roosevelt: In 1936, Ryan gave a nationwide radio address explicitly urging Roosevelt’s re-election that was paid for by the Democratic National Committee, showing how differently the role of religion in politics was at that time.

The New Deal was a response to the crisis of industrial capitalism that Ryan saw as early as 1919 but that the nation only recognized after the onset of the Great Depression. The events of this week have been compared to the Great Depression, and they are undoubtedly severe, but they are being viewed through a different ideological lens. Then, our system of government and social organization, a small "d" democratic politics and a capitalist economy, was challenged by both fascism and communism. The New Deal was enacted as a way to strengthen our system in its moment of crisis without abandoning the political and economic freedoms that we enjoyed.

But, Roosevelt and FRyan recognized that they had to save capitalism from itself. Ryan referred to the 1920s as a time of "industrial paganism" and denounced the "dictatorship" that had descended over large parts of the nation’s economy. Dom Virgil Michel, the Benedictine liturgist was equally withering in his critique of contemporary capitalism: "Capitalism degrades men to mere economic factors, to be bargained for at lowest possible market prices…workers are still treated as individuals, but not as persons, and therein lies the moral vice of capitalism." It still lies therein.

After the fall of the Berlin Wall, the anticipated triumph of democratic capitalism as the only way of organizing society was almost a given. A famous book was entitled "The End of History" because it argued there was nothing left to argue about. Alas, human history has a way of defeating such lofty prognostications. Russia has returned to its autocratic ways, resembling not so much its communism heyday as its czarist past. And, now, Wall Street is in disarray and looking to what was only yesterday considered the "intrusive government regulators" for a lifeline to save itself.

It may be expecting too much of a political campaign to shape a fundamental debate on the silly ways we Americans have spoken about the economy in recent years. There has been an unarguable rule that competition is always and everywhere the best approach to a problem, not merely of the distribution of goods and services, but in education for the young and social insurance for the aged. Liberals have denounced policies that favor the rich, but they have been reluctant to advocate government regulation of the economy. John McCain and Sarah Palin have promised to "get government out of the way" and that appeals to our sense of rugged individualism.

Yesterday, on Wall Street, the great leaders of our economy were desperate for government to get in the way. Regulation ceased being a bad word. The economy, unlike a hurricane, is a human creation and can be ordered as such. Pity it took a catastrophe for such simple truisms to be given their moment in the sun.

Michael Sean Winters

 

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9 years 10 months ago
I am retired surplus lines insurance broker. I worked for AIG about 30 years ago. I had a greedy reaction to the news that AIG is failing. Whether they fail or not, insurance premiums will probably increase because insurance capacity will probably decrease. This means commissions for some brokers will increase since commissions are a percentage of premium. It is might be a good time to be surplus lines insurance brokers. Among other things the doctrine of original sin teaches that human desire can lead to behavior that abuses others for money. I am tempted.
9 years 10 months ago
Too bad that the United States wasn’t as concerned about its mortgage systems as it has been about its immigrants. Today the United States is going through probably the worse financial crisis it is has had since 1929. This crisis was not caused by an act of nature. Those who caused it were rational human beings devoted to maximizing their profits. This crisis didn’t arise from debt or even bad debt. It is arose from *speculation* in debt. Very simply the original lenders knowingly created bad loans for the sole purpose of creating debt that could be sold for a profit. If AIG fails, the consequences are enormous!
9 years 10 months ago
Mr Miller, Thank you for providing a perspective that is hard to get from the financial pundits: that this is a crisis of greed. But as much as we can and should talk about the greed of speculative lenders, we can't let the consumer off the hook either. Yes, bad loans were sold as attractive debt, but many more people grabbed those loans than ever would have before. I realize that for some of them it may have resulted from desperation and the need to subsist in a country where wages are lagging far behind the cost of living. But some of the stories that are coming out of this mess sound like people who were truly living beyond their means. I'm not trying to blame the victim, but I am suggesting that the victims may not be entirely blameless. We are living in a America that thinks it has no limits and that includes some of our citizens who have jumped into a consumerist culture head first.

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