“Wouldn’t it be great to have a system that met people trying to do the right thing halfway?” ~ Mike Konczal, putting several bullets through my speculation that a foreclosure slowdown could result in moral hazard on the part of homeowners.
So I’ll just come right out and say it: I was wrong yesterday. I was being combative and got into an argument on a topic which A) I hadn’t put a ton of thought into and which B) I took a lousy position on. I let what I viewed as an unnecessary swipe at libertarians get in the way of my better judgment on the more important topic at hand, the issue of foreclosure fraud.
Now, I’ve self-described as a ‘reluctant libertarian’ and a ‘liberal-tarian’ and a Cameroonesque Tory and a heterdox conservative and a number of other things in my long (and aggravating to many) journey to figure out just exactly what it is I believe, but what I am most assuredly not is a card-carrying big “L” Libertarian. So when I come to the defense of libertarians I’m not out to defend the think tanks or magazines and certainly not the Libertarian Party, but rather the many thoughtful, nuanced libertarians I know and whose work I value, and who do not fit the stereotypes at all.
I’m not really anti-government so much as I am anti-power. I’m suspicious of all large institutions and the centralization of power within those institutions, whether we’re talking about government or corporate or labor or military power or whatever. Power is a threat, and I think it’s important to find ways to limit it in both the public and private spheres. And mistermix is absolutely correct that libertarians haven’t spent enough time on the foreclosure issue. All these tidbits of government abuse – no larger, compelling narrative to tie them into the real world.
But there are things about government that are truly frightening – such as its ability to invade and bomb the hell out of countries thousands of miles away, and then capture and torture its citizenry. (The military-industrial complex is one of the worst forms of crony-capitalism, after all, as Eisenhower warned us of long ago.) This doesn’t mean we should abolish government, and I’ve never said we should – but it does mean we should hold it accountable far more than we do these days.
We should also hold accountable the banks and other corporations which wield so much economic power – we should probably not be bailing them out, for instance, when they gamble away our money, pensions, investments, entire economy and so forth. We should also not let them use fraudulent paperwork to oust homeowners from their homes. People were right to say that questioning the moral hazard of homeowners was the wrong position to take on my part, and I agree. I was wrong.
The story of the fraudulent foreclosures is pretty extraordinary (yes, I’ve brushed up on the subject a bit more since yesterday) – this mad dash on the part of the banks to squeeze as many pennies out of as many people as they can before public outrage builds enough to halt their momentum. Hopefully more cases like the Massachusetts ruling will slow them down.
The reality is that banks can no longer meaningfully be called private enterprises, yet no one in the media will challenge this fiction. And pointing out in a more direct manner that banks should not be considered capitalist ventures would also penetrate the dubious defenses of their need for lavish pay. Why should government-backed businesses run hedge funds or engage in high risk trading, or for that matter, be permitted to offer lucrative products that are valuable because they allow customers to engage in questionable activities, like regulatory arbitrage or tax evasion? The sort of markets that serve a public purpose should be reasonably efficient and transparent, which implies low margins for intermediaries.
Of course, the banks can continue to invest as unwisely and with as opaque a process as they like because they are not legitimately private enterprises any more. They, unlike most Americans, have a blank check from the federal government to cushion their fall should they once again face systemic collapse. Corporate welfare makes truly functioning markets an impossible fiction. It is far more damaging to a free market economy than welfare for individuals in the form of healthcare, food stamps, and so forth. Corporate welfare protects companies against failure, making the whole point of markets moot, whereas safety-nets help average people pick themselves up when markets do fail, resulting in unemployment, or from devastating illness and other unforeseeable occurrences that individuals may not be properly equipped to deal with on their own. The former breaks the system while the latter ensures that the system doesn’t end in destitution or outright revolt.