Thursday, September 25, 2008

Working the Bilge

The Common Man's longstanding position on the war in Iraq is a blanket "you break it, you buy it" policy. As a nation, the UnitedStates chose to elect George Bush in 2000 (please, The Common Man doesn't want to hear about Florida, regardless of how valid your complaints may or may not be. Rutherford B. Hayes won the 1876 election in the House of Representatives by promising to end Reconstruction. John Kennedy won in 1960 (in part) because of rampant voter fraud.) and to reelect him in 2004. He (and his advisers), using the authority the American people gave him, invaded Iraq in 2003. Anything that President Bush did or ordered done, any failure by the Commander-in-Chief is shared, in part, by the populace that elected him (and that chooses to live in a political system that elected him. And so, in essence, the Iraq folly can be traced back directly to the American voters, and they need to bear responsibility for that.

So, while The Common Man doesn't like the war and how that war impeded and impedes the U.S.'s ability to fight in Afghanistan, the U.S. has a moral commitment to maintain a significant presence in Iraq until that nation is secure enough to stand on its own, and not crumble from attacks from within and without. The U.S. broke down the system that held the country together, it has an obligation to stay there until a new framework will hold (and will guarantee freedoms for its citizens). Whoever is elected president, The Common Man feels confident that a stark, unfiltered, and realistic assessment of the Iraq situation with generals on the ground in that country will be the deciding factor as to what the U.S. role is from here on out. The desire to protect America's international integrity and reputation in future foreign relations and international actions will trump any and all campaign promises. So while it's good to have a plan to offer potential solutions, it's important that the candidates be flexible to the reality of Iraq and mindful of the commitments the U.S has made, and the responsibilities it bears.

When The Common Man tries to apply the same principle to the recently proposed mortgage bailout, he has mixed feelings. The Common Man strongly believes that individual entities need to endure the consequences for their actions. When you bet on red, and the roulette wheel stops on black, you shouldn't get to get your chips back just because you bet your rent check. Institutions should not be rewarded for their irresponsibility.

The Common Man is also struck by how angry the situation makes him, and how, impulsively, he wants to see these Wall Street types suffer for the mess they made. It's part of a collective schadenfreude that The Common Man is starting to see among normal Americans who just want to punish the guilty and feel better again about their country and their prospects. As though the collapse of a major financial institution and the layoff of all of its employees will somehow make their lives better. The Common Man definitely sympathizes with that viewpoint.

But does that mean that the U.S. should simply let these companies fail? Not necessarily. Think about this crisis from a father's perspective. When your child misbehaves, and engages in risky behavior, parents will often let their child suffer the consequences of their actions, if those consequences are minor. The Common Man, for instance, will allow The Boy to climb up on a footstool, or swing on the big kid swings, or climb the ladder to his treehouse. If he falls, he will be scared, and may have a bruise. He'll cry because he's not even two years old yet. But he'll learn. And The Common Man is there to make sure that nothing too serious befalls him and to catch him if it looks like he's in real danger.

However, just because The Common Man wants his son to learn a lesson about taking care and being thoughtful about his actions, doesn't mean The Common Man wants The Boy to run into the street or to ride his little car down the stairs or stick a paper clip in the light socket. That kind of behavior carries with it unacceptable risk of permanent, life-altering damage. Sure, if he survives he has learned a valuable lesson, but c'mon...

Anyway, when you look at the current bailout of mortgage market, try to look at it from a father's perspective. Yes, you want these companies to learn a valuable lesson about their actions. And you want them to never do something this stupid and risky again. But you (presumably) don't want them to wind up permanently disfigured or dead if their role in the larger economy is such that the economy is better off with them in it.

In that light, several of the proposals in the bailout package being offered by the federal government make sense. CEOs who condoned (or who stood by while others condoned) this behavior should not get to profit from their resignations. The companies themselves should not escape in better shape than they were in before they started these irresponsible lending practices. They should have to bear some of the losses, and should have to pay for the privilege of being bailed out. U.S. taxpayers should be on the hook for as little of the bailout as possible, and the government should be allowed to benefit from any future profit from these companies until its investment is paid off.

In America, it's a cliche to say that the punishment should fit the crime. But having a strong and meaningful punishment that will deter future bad behavior (the real goal of fatherly discipline) does not require the deaths of American financial institutions. Instead, the U.S. government needs to implement policies that force companies like Bear Stearns and AIG and Lehman Brothers to reap consequences for their actions and take responsibility for what they've done, while providing them a way forward into a better, more socially and economically responsible means of doing business, while continuing to provide the proper oversight and guidance that any good father would give his child. And it sounds as though that's what Congress is trying to do. The Common Man hopes so.

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