The derivatives market has exploded in recent years, with investment banks selling billions of dollars worth of these investments to clients as a way to off-load or manage market risk. But Mr. Buffett argues that such highly complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system.
—BBC News, March 4, 2003
The full paradox of our recent financial turbulence hits you when you realize that at the very time China is becoming the home of capitalism for socialists, the United States has become the home of socialism for capitalists. Paradoxical indeed. Advocates of unregulated and unconstrained capitalism were expert at demonizing government because it regulates and constrains economic exploitation. Government is the problem. Get it off our backs. Let us alone.
But now that deregulated and unconstrained money and debt managers have worked the unregulated system to implode on itself, to whom do they turn? The government. The last thing the big money people wanted in September was to be left alone to their own devices. They wanted help, to the tune of 700 billion dollars, but not with much oversight or constraint—all to be managed by someone who thrived in the old broken system. We were told that it was not a bailout for Wall Street, but Main Street; and that is true, but only because Main Street has been hostage to Wall Street.
A second paradox is this: When, in the past, voices have been raised in favor of universal health care, of revamped infrastructure, of enhanced education or of raising the minimum wage, a chorus of alarmists have chanted, “Where will the money come from?” But give us a trillion-dollar war or a trillion-dollar bailout of a failed system and, presto, the money is there for the taking.
Politicians have won elections promising an unfettered free market and a reduction of taxes. We have all heard the mantra: “Who knows better how to spend the money in your pocket, the federal government or you? You, of course, except when Wall Street’s boondoggle and collapse requires 700 billion from their detested government. Provision will be made, not from the coffers of fat cats, but from your pockets and from your children and grandchildren. No wonder there was an initial rejection of the Wall Street bailout by the House of Representatives, Republican and Democratic alike. It just did not compute.
It was only appropriate that resistance to the bailout was bipartisan. For the failure was bipartisan as well. Despite the default rhetoric of ideological politicians and commentators blaming the other side, this mess was brought about by Democrats and Republicans alike. Presidents Ronald Reagan (“Government is the problem”) and Bill Clinton (“The era of big government is over”) were high priests of deregulation, and everyone from Barney Frank to John McCain were acolytes. Politicians of all stripes, including Barack Obama, were wooed by high-finance vested interests.
Now we are in the midst of a billion-dollar election. Money is king. And it is sedition to question the king. Thus we will hear little questioning of the disordered priorities of profit and reckless expansionism from our candidates. Joe Biden tried it when he suggested that the willingness of the rich to pay more taxes might be a question of patriotism. He was derided for saying so (another gaffe from that loudmouth, some chortled). But Biden was right.
There is such a thing as the common good, not only of a nation but also of a world. With respect to the world, concern for the common good suggests that we have a duty to preserve the planet God has given us and to attend to the sufferings of our brothers and sisters made in the image of God. If we think we are the only nation in the world that we should care about, we are a narcissistic nation. In the context of our nation, the common good requires that we look beyond our own self-interest, that we realize our own livelihood and flourishing depends upon the kindness and labors of others, and that our successes, especially our financial gains, should move us to contribute proportionately to the civic community. If we fail to see this, then we are not only a narcissistic nation. We are a nation of narcissists.
Biden was appealing to the common good, not narcissism, when he said that paying taxes was patriotic. He was deemed a fool only because we are foolish narcissists. We are an “exceptional” nation that can behave in ways that other nations cannot. And so we have a war with no end in sight. As individual citizens, we are becoming a populace of “exceptional” people who have a selective view of ethics: that moral imperatives and principles of justice apply to others but not to ourselves.
We have witnessed a desperate infusion of many hundreds of billions into businesses run by the very people who failed us. Let us hope that it somehow stabilizes our economy before we face our next calamity. But let us hope also that there are some wise ones among us who ask whether we could have gone about it in a way more fitting to the common good.
Could we have given mortgage assistance directly to those who are serious about their debts (as opposed to some Wall Street firms) and are working to pay them? Could we have insured pension funds for those who have labored all their lives to get a little nest egg? Well, maybe. But we might be laughed at to propose such a patriotic thing.
