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Friday, September 26, 2008

Let's make it explicitly about blame

In the previous post, Josh asked what was wrong with equilibrium, and Matt pointed out that people don't have to buy homes, they need a place to live. If you look at the post below, you will notice a couple of things about the normalized cost of rent. First, it did not spike like the home costs from 1980 to 2006. Furthermore, it seemed to track very closely with the shape of the wage curve. Suggesting that the necessity, the thing really tied to demand, moved with wages.

So, people encouraged by government policies and initiatives from lenders bought homes they could not afford. First the people, then the lenders, got into big trouble.

Who should we take care of? Who is more culpable? While working for the Arizona Supreme Court we considered cases applying lemon laws to leased cars. The decisions assume that the one who signed the lease knew what he or she was doing, and should bear the consequences of his or her actions.

I analyze this crisis from the perspective of power. Who has the power in these cases? The borrower nominally is empowered to say 'no'. But I suggest, it is the lenders and their allies in government who hold the real power to push on the system.

Okay, let me have it.

Thursday, September 25, 2008

Is this a cause?

There is something attractive about the idea that the current crisis is caused by everyone being greedy. Everyone is to blame. I'm someone who carries more than my share of consumer debt, and I'm probably not alone. Many of us feel guilty about how much we eat out. Stuff like that. So it fits. But consider these two graphs.

It might be hard to see, but from 1980 until the present, the cost of owning a home has gone up 42%. In the same period, the average wage has increased 5%. If housing cost is increasing so much faster than wages, does that create a problem of running out of buyers? A problem that was "solved" by inventing new mortgages and requiring less credit worthiness. Had we focused on making sure wages kept up with the cost of necessities, would we be in better shape? (Note: both graph are corrected for inflation.)

Sophistacated Response

Consider the various responses to being wronged: revenge, retribution, reconciliation. I submit that revenge is the least sophisticated response. It serves to satiate our most base desires. It is not likely to be a long term solution, because there is no reason to believe it will not solicit a counter-counter attack from our foe. Retribution is better. Retribution as I use it implies a legal response. Rather than killing everyone in the family of the man who poked out your eye, just poke out his eye. If it is part of a broader system, the deterrent effect would be greater. It is a response that starts in your head. Reconciliation is best. Reconciliation satisfies our emotions, and by creating a mutual understand deters future bad acts. Everyone is made whole, instead of everyone being put in the same position.

Eye-for-an-eye seems to be step toward love your enemy. I wonder if one can generalize cultural responses to challenges with first base emotional response; second rule-based response; third spiritual response? Of course, I'm one to see things as spiritual, that is of a different kind that intellectual or emotional. One may well see the third phase as addressing both emotional and intellectual needs; or a mature emotional response, perhaps.

Tuesday, September 23, 2008

Seems like this might be helpful, but . . .

In the book of Jonah, Jonah eventually gives up and takes God's message to the people of Nineveh. Then God, like a jerk, forgives the people of Nineveh when they repent. This bothers Jonah as expressed in the final chapter of the book:

1 But Jonah was greatly displeased and became angry. 2 He prayed to the LORD, "O LORD, is this not what I said when I was still at home? That is why I was so quick to flee to Tarshish. I knew that you are a gracious and compassionate God, slow to anger and abounding in love, a God who relents from sending calamity. 3 Now, O LORD, take away my life, for it is better for me to die than to live."

4 But the LORD replied, "Have you any right to be angry?"

5 Jonah went out and sat down at a place east of the city. There he made himself a shelter, sat in its shade and waited to see what would happen to the city. 6 Then the LORD God provided a vine and made it grow up over Jonah to give shade for his head to ease his discomfort, and Jonah was very happy about the vine. 7 But at dawn the next day God provided a worm, which chewed the vine so that it withered. 8 When the sun rose, God provided a scorching east wind, and the sun blazed on Jonah's head so that he grew faint. He wanted to die, and said, "It would be better for me to die than to live."

9 But God said to Jonah, "Do you have a right to be angry about the vine?"
"I do," he said. "I am angry enough to die."

10 But the LORD said, "You have been concerned about this vine, though you did not tend it or make it grow. It sprang up overnight and died overnight. 11 But Nineveh has more than a hundred and twenty thousand people who cannot tell their right hand from their left, and many cattle as well. Should I not be concerned about that great city?"
So, I've been thinking of Jonah lately. Specifically, I've felt irritated by things going on around me, even though I have a suspicion that I'm the cause of many of the things bothering me. But, some of it is clearly not my fault. ["Clearly" is a legal term for "what I'm about to say may or may not be true, but I really wish that it was true."]

Sometimes it is helpful to read a passage of scripture that seems to parallel my life experience. Here, I could be the one shaking my fist at God because coming home late from work my video game (which I didn't buy, or ask for, or even receive on my birthday, but from a random act of kindness from my brother) didn't work. But then, I'd be left with the response, "Where do you get off?" Interestingly enough, the same response Job gets.

Doesn't feel helpful. Of course, that doesn't mean it isn't helpful.