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Wednesday, April 15, 2009

Greed Reconsidered

Two threads of thought that might at first blush appear to be unlikely bedfellows converged in my mind yesterday as I scanned the latest news and commentary on the economy. And their convergence drove me to take a look at the current crisis from a more overtly moral perspective than I had previously.

The first thread came from President Obama’s remarks at Georgetown University, in which he made the most direct and wide-ranging moral pronouncements about the crisis that I have heard from him to date (although it’s quite possible that he has done so before and I just missed it). He said that the current recession “was caused by a perfect storm of irresponsibility and poor decision-making that stretched from Wall Street to Washington to Main Street.”

Those are strong words, and they reflect a courage that, in my opinion, is one of the markers of a true leader: the courage to tell people — especially people who have the power to determine one’s continued status as a leader — things they may not want to hear.

By openly pointing to Main Street’s share of the blame, rather than foisting it all on easily demonized targets like overcompensated AIG executives, the President is telling the very rank-and-file voters who elected him that they share in accountability for the crisis. That takes courage, and if anyone can cite an example of a President showing that kind of courage in recent memory, I would certainly like to hear about it.

President Obama went on to recount the widely-reported story of how the crisis all started in the housing market, with people from all levels of the financial food chain — from the everyday homebuyer fudging income figures to take out a so-called “liar’s loan,” all the way up to the investment bankers that bought the securitized mortgages — succumbing to the temptations of easy credit and easy profit.

One could argue that greed, per se, wasn’t necessarily the motivation at all levels of the food chain. For example, one might say that, for homeowners, wishful thinking rather than greed was the driver — wishful thinking that there really was legitimate underlying value behind the run-up in housing prices. Or gullibility in believing all the financial pundits who told us that the housing bubble wasn’t a bubble, and that the increasing prices were driven by a true scarcity in real estate markets.

But after thinking it through, I concluded that to deny the role of greed, even in these scenarios, is to misunderstand and underestimate what greed really is. In everyday life, greed is more subtle than we may consciously realize. It’s not as blatant as the melodramatic, wicked-grin and hands-rubbing-together image that the word greed can evoke. Greed in everyday life isn’t Gordon Gecko greed. Rather, it’s the more subtle lure of gain without pain, the part of us that’s always on the lookout for that one get-rich-quick scheme that might really work, the part of us that might really want to believe that there could be a way, after all, to earn huge profits stuffing envelopes in our spare time.

The second thread of thought came from an article by Al Mohler of the Southern Baptist Theological Seminary, republished yesterday by ChristianityToday magazine: “A Christian View of the Economic Crisis: Is the Economy Really Driven by Greed?

Mohler prefaces his comments with the qualification that the profit motive driving economic markets is not, in and of itself, a greed-driven motive. Rather, he writes that greed enters the picture “when individuals and groups … seek an unrealistic gain at the expense of others and then use illegitimate means to get what they want.” Among the manifestations of this scenario are the motivations that drive investors, in the midst of an emerging bubble, “to take irrational risks.” And that, of course, is what the current financial crisis is all about.

The comments from both Obama and Mohler are sobering and suggest that many of us who might initially have thought of ourselves as innocent victims rather than causative agents of the crisis might be due for a little soul searching, such as middle-class homeowners who experienced, from the housing bubble, a windfall that is now being counterbalanced by recession-driven losses elsewhere. Markets are collective entities, and their behavior, in the aggregate, can seem impersonal. But we must never forget that they are, ultimately, driven by the decisions and actions of individuals.

As Mohler writes, more individuals, from more walks of life, are participating in investment markets today than at any other time in history. That means more of us should probably take some time out for a period of self-examination of our own accountability for what has happened.
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