Yes, greed is ever with us, at least until Washington transforms human nature. The wizards of Wall Street and London became ever more inventive in finding ways to sell mortgages and finance housing. Some of those peddling subprime loans were crooks, as were some of the borrowers who lied about their incomes. This is what happens in a credit bubble that becomes a societal mania.
But Washington is as deeply implicated in this meltdown as anyone on Wall Street or at Countrywide Financial. Going back decades, but especially in the past 15 or so years, our politicians have promoted housing and easy credit with a variety of subsidies and policies that helped to create and feed the mania. Let us take the roll of political cause and financial effect:
– The Federal Reserve. The original sin of this crisis was easy money. For too long this decade, especially from 2003 to 2005, the Fed held interest rates below the level of expected inflation, thus creating a vast subsidy for debt that both households and financial firms exploited. The housing bubble was a result, along with its financial counterparts, the subprime loan and the mortgage SIV.
Fed Chairmen Alan Greenspan and Ben Bernanke prefer to blame “a global savings glut” that began when the Cold War ended. But Communism was dead for more than a decade before the housing mania took off. The savings glut was in large part a creation of the Fed, which flooded the world with too many dollars that often found their way back into housing markets in the U.S., the U.K. and elsewhere.
Greed won’t end. However, taxes are Greed’s disincentive. Which is why the greedy universally oppose taxes, which are the right dues to live in a country that offers fair opportunities to all.
If taxes are the “right dues, etc.” then what about the people who don’t pay taxes? A huge portion of America’s citizens don’t pay income tax.
What about the small businessmen and women who use a Subchapter S structure? Are you saying that all of them are greedy? That they should pay more “dues”? Do that, and the prime mover of the US economy will be strangled.
Kendall, can we please return to church-related discussion? I can see politics on other websites.
Taxes may disincentive “greed”. However they also disincentivise “work”.
High taxes are the friend of “sloth” (also one of the 7 deadly sins, though one of the ones loved by liberals).
http://www.ntu.org/main/page.php?PageID=6
As it is, the top 5% of Americans (those who make more than 153,542) pay 60% of Federal income taxes.
Those who make more than 32,000 pay 97% of Federal income taxes.
If you double the tax rate on the top 5%, folks who can afford it wiill simply work less hard, or transfer to a job with fewer hours and less money. Thus they will have more free time, and only slightly less money. The only folks who will not choose this outcome are those already burdened with heavy college debt to get into the “top 5%”. They will realize what saps they were, and fewer will make the mistake of taking on debt to earn college degrees or professional degrees, knowing that the debt will remain, and the earnings will be confiscated leaving them worse off then their partying friends who did not do so.
Revenues have increased with lower taxes. The “rich” pay more taxes now, then they did when tax rates were 70%. Revenues will almost certainly decrease as tax rates rise once more (as I expect they will).
Kendall:
I greatly appreciate these posts. I’ve been reading your blog for several years now, and I’ve always appreciated the eclectic quality it has, especially in the economic field. Using what you have posted, I was able to preach what I think was a quality sermon on Sunday on stewardship, in light of what this crisis reveals about our culture read through the lens of Exodus 16.
When I read these articles I am trying to understand the world in which I live, and I’m trying read the crisis “morally” or “spiritually.” For instance, the all too normal tendency to look to government to provide at the expense of freedom (at least we had food in Egypt…) is nothing new! This leads me to think seriously not just about who I will vote for, but also, what kind of father and leader am I? One who panders or one provides stewardship opportunities?
In this crisis, its so easy to point fingers at fat-cat Wall Streeters, and its so easy to say its all just “greed.” But what does the greed look like? How has it been written into our laws? How has it become “normal” to believers? How does our thinking need to be transformed? What are some habits we need to cultivate as believers?
I’m not trying to become an economist. I’m just trying to read life as we’re really living it “spiritually.”
I’d follow Clueless’s excellent post by pointing out that the government also imposes inflation, the most regressive tax of all. Government and its dependents benefit mightily from this enormous and continual transfer of wealth from downstream dollar holders. Thus we have not only sloth but theft as well. Surely this is likewise motivated by greed?