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The Financial Crisis – Deficit of Decency

Here’s a view of the real financial crisis facing the country, and it can’t be solved by bailouts or regulations.

It’s not AIG, Lehman, Fannie Mae or Freddie Mac, or even Enron and MCI. It’s not the national debt, budget deficits or politician’s plans for staggering tax increases which will surely damage the already fragile economy. Make no mistake, all those are bad, but they’re only symptoms of the real disease, the cancer eating away at our society — that cancer is as Zell Miller said “A Deficit of Decency” — more specifically, a lack of ethics.

First off, don’t confuse morality with ethics; morality being just an idea of right and wrong, generally coming from some absolute source (many people mistake the concept of morality for “good” morals — i.e. don’t cheat on your wife, but murderers have morality as well, it’s just bad), while ethics is “my word is my bond”. It’s possible to act ethically, but not morally.

For example, few would disagree a crime syndicate performing shake-downs of an innocent business lacks morality (“Gee, that’s a nice business you have there, it would be a shame if something happened to it”); they’re acting immorally, however, the ethics surpass those of politicians and wall street — you can be sure they’ll do what they say and won’t change, if fact, you can count on it.

Ethics and morality aren’t the same, even though they share similarities.

Perhaps the confusion comes as younger people (30 or below) don’t remember a time when a handshake was enough to seal a deal (or a time when the Interweb thingy didn’t exist either, but we digress). Believe it or not, a time existed when your word was sufficient, and people (gasp) did what they promised. They many not have acted with good morals, but their ethics were unquestionable.

That was the prevailing attitude for many, many years. Most business circles were fairly small; you simply couldn’t get away with breaking your word. Perhaps not because people didn’t want to, but because the community simply didn’t tolerate it. Ethical behavior was demanded if you desired to stay in business.

But today, even if you have a contract, it’s who has the most lawyers and $$$ to fight. It’s not about holding up your promise, it’s about grabbing as much money as possible in the fastest way possible. Ethics is thrown under the bus, even as candidates promise “change”, but don’t want you to look behind the curtain to see it’s just business as usual and the ethics continue to disappear.

That’s the real problem in Washington — a lack of ethics. When double-talking politicians try to dodge real questions with slick-talking nuance instead of solutions, and then act differently when the teleprompter turns off, that’s a lack of ethics. The goal in politics becomes how to fool people with slick oratory, but then after election turn against the flowery rhetoric and act oppositely — in their own interests instead of serving the country.

Sacrificing for a greater good (or your country) has become a concept ridiculed and scorned. Just compare the campaigns — one says to act in your own self-interest (thus, vote for the guy promising the most handouts), while the other says country first. But that’s the political arena — the ethics problem infects all corners of society equally; as the Federal bailouts continue, every one actually increases the likelihood of more bailouts. Here’s why.

If you live in a hurricane area, and the floods ravage your house or destroy it but you don’t have insurance, the government pays you anyway. So why have insurance? Your house gets rebuilt no matter if you paid for insurance or not — each bailout increases incentive for homeowners in bad areas not to get insurance. After all, they’ll get paid anyway.

If you bought a ARM or sub-prime mortgage and got stuck with something you knew you couldn’t afford, once again, a bailout is coming your way. So why should others play by the rules and put 20% down? It doesn’t matter as financial ethics becomes discouraged, and the rewards go the people who deliberately skirted responsibility.

If AIG/Lehman/Fannie/Freddie used poor business practices in pursuit of profits, it doesn’t matter as — you guessed it — another bailout heads their way (and sometimes promotions to political campaigns for those involved). There’s even a phrase floating around — they’re “too big to fail”; what motivation do they thus have to act ethically instead of plundering the company leaving shareholders, employees (and taxpayers) left to clean up the mess while they jet off to their vacation homes?

And in elections, they guy who promises the most from the public trough gets the most support. Elections become not about serving the country (“ask not what your country can do for you, but what you can do for your country”), but who promises the most $$$ from the public treasury. It doesn’t take a rocket scientist to determine this pattern can’t continue.

Just take a look at who took the most lobbyist money in the recent Fannie/Freddie collapse, who was on the committee charged with oversight of Fannie and Freddie, and then where those executives ended up after plundering the companies, leaving taxpayers to foot the bill. Should we trust them with advising the president so they can do to the country what they did to Fannie Mae and Freddie Mac?

A democracy can’t exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy … [author unknown, though commonly attributed to Sir Alex Fraser Tytler in 1801]

Of course, who pays for all these bailouts for unethical behavior? The hard-working taxpayer playing by the rules — you know, ethically. They get the privilege of paying for everyone else’s ethical lapses.

The solution is a return to ethical behavior — and that can’t be legislated (in contrast, the only thing which can be legislated is morality — right and wrong. All laws are someones view of what’s right and wrong). But once those laws exist, there’s always people willing to employ legions of lawyers looking for a way to skirt both the spirit and letter of the law and plunder the company while passing the bill to others for their behavior. In other words, unethical.

Each bailout or rescue increases the incentive for unethical behavior — and that’s the real issue facing the country. As money flows from lobbyists to politicians, who then look the other way as companies are destroyed, is it any wonder failures are increasing? No amount of new regulation or financial bailouts will solve the problem. The real issue is where is personal responsibility?

It’s not the billions being spent right now which ultimately will ensure doom, it’s the degradation of ethics which will haunt the country for generations.

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