The Fuzzy Borders of Responsibility

After I ranted about the anti-poor rhetoric of Rick Santelli, the blogger over at Scotch Neat said some nice things about me, and then respectfully disagreed with some of my points. In his words:

I understand the sentiment of not wanting to use tax dollars to bail out people who voluntarily put themselves in debt, who voluntarily bought a lifestyle beyond their means. Sure, the US government and US banks created a bad situation where it was possible to get a 0-down mortgage amortized over 40 years, but it’s up to each person to know whether or not that’s a good idea.

By taking only the government and the banks to task for this mess, it leaves the people who took those mortgages without complicity or culpability - which denies them the power that goes with responsibility and puts them outside of the locus of control in the situation. Every person has the choice to not take full “advantage” of more debt than they can handle-particularly if they are the ones who thought they absolutely needed the big house and the bigger screen tv, and hell, why not if the bank is gonna give them the money.

It’s true that, strictly speaking, the economic situation in the United States is more complicated than bad government policy and greedy banks. One does not have to look far to find individuals who invested unwisely, who bought into a market when it was high, expecting it to go higher. It does take two to make a bad loan happen. We even have a class of people who were previously riding high on the easy credit and high home-prices market: house flippers, who take run-down homes in up-and-coming neighbourhoods, renovate them and resell them at profit, have had their lifestyles glorified by numerous home and garden television shows, from Colin and Ryan’s Property Ladder on down. One wonders what A&E is going to run this year.

But to what extent is it an individual’s fault that a housing market is overstimulated? Relatives of my in-laws — sisters of Erin’s maternal grandmother, I believe — moved out to California soon after the Second World War. A couple of years ago, they retired, sold their homes and moved back to South Dakota, and people were shocked that they’d do that. What was there to do in South Dakota? But the old ladies had left homes they’d sold hundreds of thousands of dollars each. They’d bought almost exactly the same sized property in South Dakota for hundreds of thousands of dollars less, and had the rest of their retirement basically taken care of.

They’re the lucky ones; they don’t have to work anymore, but what about those who do? What can you do if the job market leads you to an area where rents and housing prices are insane, where you scrape together just enough to get yourself a bit of property to build your future on, but then you suddenly lose your job? Or what do you do when you still have your job, but because the values of all the homes around have collapsed, your mortgage now exceeds the value of your home, and your antsy bank decides to come calling? To call these people responsible for their misfortune — to call them losers as Rick Santelli does — even if it was accurate to do so, still strikes me as unbelievably cruel.

A few months ago, I watched a news segment which stated that as many as 750 homes were being foreclosed in California a day. I have a hard time believing that the army of speculators and flippers in the United States is so large that they even cover a quarter of those lives disrupted. This leaves behind thousands of average individuals who went to where the jobs were, and who overstretched themselves to buy what property they thought they could afford. Who may not have understood all of the conditions they were getting into when they picked the loans that they picked — or who may not have been properly briefed by the banks who sold them that loan.

And as the economic crisis deepens and layoffs continue, the individuals and families facing foreclosure are increasingly going to be those who simply wanted to put a roof over their heads that couldn’t be taken away at a landlord’s whim. And yet, as Rick Santelli and those like him fail to parse their vitriol on this crisis, these people are losers.

But if you view the economy as a game of survival of the fittest, then that’s what these people are. They made mistakes or they were unlucky, and now they have to pay the ultimate price. Let the vultures pick at their carcass through foreclosure and let’s move on.

Except that I like to believe that humans are better than animals, that we’ve stepped outside this game of survival of the fittest, and the strength of our species, or thus our economies is bolstered by the fact that we work together and help each other. And as more and more homeowners are stricken by the misfortune of finding themselves in a bitter market, with layoffs looming and creditors pressing, that we can reach out and lend a hand, so that more families get to keep that roof over their heads.

And yes, there is some self-interest here. Though I’m in no danger of being foreclosed upon, I’d like to keep it that way, and one way to do that is to help ensure that my neighbour’s house isn’t foreclosed upon, either. Whether the Santelli’s of the world admit it or not, I firmly believe that this approach will ultimately keep their roof over their heads in the end. They should be grateful, though I don’t expect they will be.

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