Volatility

December 1, 2009

The Pious Lie

Filed under: Civil Disobedience, Land Reform, Mainstream Media — Tags: — Russ @ 9:39 am
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University of Arizona law professor Brent White recently published what may become one of the manifestoes of the debtor revolt. His paper, “Underwater and Not Walking Away: Shame, Fear, and the Social Management of the Housing Crisis” argues against the two main reasons people irretrievably sunk into mortgage debt fail to walk away: because they think it will permanently destroy their credit, and because they think its morally wrong.
 
The first of these, White argues, is basically false on a practical level, while the second involves a distorted view of morality, distorted by a massive anti-public propaganda campaign on the part of the MSM and government.
 
Here’s the paper’s abstract:
 

Abstract:
Despite reports that homeowners are increasingly “walking away” from their mortgages, most homeowners continue to make their payments even when they are significantly underwater. This article suggests that most homeowners choose not to strategically default as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government and other social control agents in order to encourage homeowners to follow social and moral norms related to the honoring of financial obligations – and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision. Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.

 
I haven’t yet had time to read the entire paper, but I’ll write more about it once I do. For now, I wanted to alert people to it and take the opportunity to offer a few basic thoughts on the subject of debt indoctrination.
 
The idea that any individual should feel morally committed to this system, to paying “debts” the system forced upon him, is both misguided and self-enslaving. It’s precisely what the gangsters want the people to think. That’s why this kind of social indoctrination exists.
 
But the facts are:
 
1. As everyone knows, the elites feel no such scruples or moral obligations. Every bank, every big corporation, feels it has an absolute right to be bailed out by taxpayer money, but that it does not incur any social obligations in return. It is entitled to continue with predatory, sociopathic, destructive behavior, both while it is a direct ward of the state and of course after it has gone through the charade of “paying back” a small portion of the public money it stole and continues to steal. (The TARP, which some of them “paid back” with such fanfare, is only a small portion of the ongoing loot conveyance.)
 
The government approves of this practice.
 
2. Meanwhile the system has been set up to encourage and for all intents and purposes require that the individual become a “consumer” and go into debt. The brainwashing starts in school and continues all our lives, as the corporate media is basically a shrieking advertising agency. That goes to the brainwashing which drives people into so-called “voluntary” consumer behavior.
 
3. More importantly, much of the debt load is not voluntary by any reasonable measure. The system is set up to be as high-maintenance as possible. It’s set up to require you to drive a car. It’s set up to require a college “education” which for most is little more than an astronomically expensive careerist hoop to jump through. It’s set up to drive housing and land prices out of reach other than through debt indenture. Since economic concentration pressures make it next to impossible to function as a low-overhead small business, the would-be entrepreneur is forced to go into debt to capitalize his business attempt.
 
All of this is intended to impose social control.
 
When we understand the dynamic we understand how the individual has been coerced into it, and how he is not morally responsible for these system debts.
 
(Of course I’m not talking about debts to friends, family, local business. But the big banks are not friends and they’re not citizens. They’ve done all they can to destroy America. We owe them nothing. Indeed, what’s immoral is to continue to support them wherever anyone has a choice.)
 
So these kinds of defaults are a form of civil disobedience, monkeywrenching, the real tea party. (I guess I should add the caveat that no doubt there have been many greedy, reckless borrowers who don’t really deserve to be called rebels if they default. So be it – I’m talking about the structural result. Eyes on the prize, always. The big banks are the enemy, everyone against them in any way an ally. Compared to the recklessness, selfishness, begging and free riding of the big banks and big creditors, who are themselves among the biggest debtors, individuals with their pennies of debt owe the system nothing and need feel no guilt over this.)
 
There’s an excellent piece by Michael Hudson from last February, Bubble Economy 2.0.
 
It’s one of the best yet written on the crisis. The part that’s relevant to this discussion is how Hudson describes talking to a banker who had an epiphany:
 

The officials drawn from Wall Street who now control of the Treasury and Federal Reserve repeat the right-wing Big Lie: Poor “subprime families” have brought the system down, exploiting the rich by trying to ape their betters and live beyond their means. Taking out subprime loans and not revealing their actual ability to pay, the NINJA poor (no income, no job, no audit) signed up to obtain “liars’ loans” as no-documentation Alt-A loans are called in the financial junk-paper trade.

I learned the reality a few years ago in London, talking to a commercial banker. “We’ve had an intellectual breakthrough,” he said. “It’s changed our credit philosophy.”

“What is it?” I asked, imagining that he was about to come out with yet a new magical mathematics formula?

“The poor are honest,” he said, accompanying his words with his jaw dropping open as if to say, “Who would have guessed?”

The meaning was clear enough. The poor pay their debts as a matter of honor, even at great personal sacrifice and what today’s neoliberal Chicago School language would call uneconomic behavior. Unlike Donald Trump, they are less likely to walk away from their homes when market prices sink below the mortgage level. This sociological gullibility does not make economic sense, but reflects a group morality that has made them rich pickings for predatory lenders such as Countrywide, Wachovia and Citibank. So it’s not the “lying poor.” It’s the banksters’ fault after all!

 
From the point of view of the system, the poor are cowardly, stupid saps to submit to a practice and a morality which the elite never believed and would never practice, but which they do seek to promulgate among the masses.
 
It’s a modern version of the ancient pious lie.
 
Plato was the first Western philosopher to teach (though elites have always acted this way) that whatever morality the elites live by, they need to instill some version of what we call Judeo-Christian morality in the people, through religious and/or civic indoctrination.
 
Plato wrote in the Republic that although the ruling philosophers are themselves atheists, the regular people aren’t capable of living contentedly and morally by secular philosophy alone, so they’ll need to have religion lied into them from the top down, for their own good and the good of society. He called that the pious fraud.
 
Plato himself probably was sincere, but although our modern gutter “elites” are light years from Plato’s philosopher-kings, the principle is the same. In this case, the rich elites try to lie into the non-rich a morality – respect the government, respect and obey the law, pay your debts – that they themselves do not live by and never at any time intend to live by.
 
The issue at hand is debts. What I hope I’m starting to see is that people are realizing the system betrayed them, and they owe NOTHING to it.
 
What we really need is an organized movement to coordinate the two main tactics available for now:
 
1. Getting out of debt to the big banks, getting money out of the big banks, getting rid of those banks’ credit cards and so on.
 
2. Debtor revolt.
 
Whether people choose the path of paying off debt or defaulting should be a decision based only on the same factors the rich use in making the same decision – which of these is the more practical path.
 
But anyone who still feels “pious” toward an utterly impious system is simply a victim of the pious lie.
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3 Comments

  1. I have long been under the impression that Plato was a crypto-fascist, a sort of well spring of elitism. As I read your piece, I was put in mind of Victorianism, which was full of all sorts of claptrap moral proscriptions and prescriptions that the lower middle and middle classes invested heavily in, but that the upper classes, who publicly promulgated such mores, lustily sniggered at.

    Comment by Edwardo — December 1, 2009 @ 4:51 pm

  2. Yeah, Victorianism had a tremendous amount of enshrined hypocrisy.

    In his political ideas Plato was an elitist of merit. In his perfect world the best minds (as identified through a rigorous, communistic educational and testing process which would be the same for all citizens) would exercise benevolent despotism. (The pious lies would’ve been part of that despotism.) He also would’ve completely separated material wealth and political power. The political and military classes would’ve lived communistically.

    Of course, except for the lying it’s all utterly impossible in real life.

    Comment by Russ — December 2, 2009 @ 4:01 am

  3. […] Can't Work — Tags: strategic default — Russ @ 7:02 am   I’ve previously mentioned University of Arizona law professor Brent White’s report on strategic mortgage defaults. I […]

    Pingback by Analysis of Strategic Defaults (1 of 5) « Volatility — June 5, 2010 @ 2:34 pm


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