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While our beloved Kula is moving, I'm filling in to give the Kula Krew a place to gather for Koffee, Kuddles, and Konversation.  In today's offering we continue yesterday's feature discussing President Obama's plan to reduce home foreclosures.  In particular, I'll dissect the conservative talking point that helping distressed homeowners risks the "moral hazard" of rewarding bad behavior.  To David Gergen, Chris Martenson, and their ilk, I have this to say:

This ain't Survivor: America.  Shooting the wounded is bad public policy.

Also, since it's Friday, your intrepid Kossologist has checked the stars, and your Kossascopes are ready for you.  Whether you're ready for them is ... another issue.

More below the fold....

Our "moral hazard."

Conservative econ-blogger Chris Martenson thinks it's immoral:

Moral hazard is written all over this one. I can easily envision millions of people arriving at the same conclusion: "I need to stop paying my mortgage right away so that I qualify for a handout!"

CNN analyst David Gergen thinks it's unfair:

What do you do about the couple that has been paying their mortgage ... and next door there's another couple that's been delinquent, that's been out spending money, going to Las Vegas, having a lot of fun time.  Is it fair to the first couple when the second couple gets bailed out?

The usual suspects, from George Bush's Comptroller General David Walker to House Minority Whip Eric Cantor, agree.  The same folks who couldn't throw enough money at Wall Street greed-mongers are now worried that Obama's plan may "reward bad choices" on Main Street.

You can expect to hear this argument a lot in the coming weeks, and it will doubtless come up again when Obama unveils other programs.  It's an all-time favorite conservative talking point.  So I'll pick it apart and show why it's an immoral and dangerous lie.  This ain't Survivor: America, and shooting the wounded is bad public policy.

This ain't Survivor: America.

When I first heard about the TV series Survivor back in 1999, I thought it might be a cool idea.  Put a bunch of people into a wilderness situation and give them challenges to meet.  See how they work together to solve those challenges.  At the end of the season, the player who has done the best wins a prize.  Meanwhile, the viewers have learned something about wilderness survival.  Great idea.

Then I saw how the show was really set up.  The idea was not for the people to work together to solve the challenges, and viewers would not learn anything about wilderness survival.  Instead, we'd be treated to the very worst human nature has to offer: a winner-take-all format where the weak, the unlucky, or the merely unpopular were excommunicated, and fortune rewarded the selfish, the petty, and the devious.  It was junior high school with adults, celebrated as a Must-See Television Event.

And it perfectly embodied the ethos of conservatism.

For all its blather about moral values, conservatism is fundamentally immoral.  Conservatives reject evolution but revere its most horrific misapplication: Social Darwinism.  In that worldview, only the strong should survive.  Helping the less fortunate encourages and rewards weakness.  Instead, society should "vote them off the island" and be done with them.  If someone's having trouble in a time of economic collapse, foreclose on their home.  If they can't find anywhere else to live - rents are often higher than mortgage payments - let them freeze and die under a bridge.  They failed life's test.  Get them out of the gene pool.  Survival of the fittest.

Of course homo sapiens sapiens is a herd species, so most of us don't think that way.  When a natural disaster strikes, we pour out what we can to those in need.  The impulse to work together and care for each other is in our DNA; indeed that's how Tree Ape became Plains Ape without us all being Pootie Poop.  So conservatism can't market its "survival of the fittest" mantra plainly.  They have to lie.

And their favorite lie is Blame The Victim.  A family facing foreclosure weren't merely hit by an economic crisis that's hurting a whole lot of people.  No, it's due to their own "bad behavior."  They must have "been delinquent ... out spending money, going to Las Vegas, having a lot of fun time."

How do we know this?  Well, somewhere in the same neighborhood, someone else isn't facing foreclosure.  Obviously the difference must lie in the choices they've made.  The family who are current on their bills must have made good choices.  And the family facing foreclosure must have made bad choices.  Reward the good, punish the bad.

That assumption gives Social Darwinism an illusion of morality.  It says we can't punish good choices and reward bad choices by forcing those who make the former to bail out those who make the latter.  It says we should vote them off the island instead.  In military terms, it says ...

Shoot the wounded.

Wounded soldiers are a drain on military effectiveness.  Not only are they unable to perform their mission, but they usually require rescue and evacuation, then care and feeding.  The rescue and evacuation often puts other troops in danger.  And their care and feeding requires manpower and resources that might otherwise be available for combat missions.  If cold logic prevailed, it would be better to shoot the wounded where they fall, rather than risk others to rescue and evacuate them, and divert manpower and resources caring for and feeding them.

Yet almost no army shoots its wounded.  Why not?

Moral issues aside, it's a simple calculus of morale.  Commanders need soldiers to take risks, to brave enemy fire to seize a position or endure enemy fire to hold one.  Men who know they'll be shot by their own at the first sign of incapacity won't take those risks.  They'll get as far away from the danger as possible, find a safe place, and hunker down.  They'd be stupid not to.

So armies care for their wounded.  Soldiers often take incredible risks to rescue a fallen comrade, in part out of the bonds of friendship that form in units, and in part because they know (or hope) that others would do the same for them.  And because they know (or hope) others would take risks to rescue them, and that they'll be cared for if they do get hurt, they're more willing to brave enemy fire to perform the mission.  Even if you'd rarely hear a soldier articulate it directly, he'll take risks for others because he knows they'll be there for him if he gets hurt.

Profit is the safety net for capital.  Those with capital take risks by investing in new ideas, or by lending money to a business that is short on cash but needs to make payroll and maintain inventory.  Maybe the new idea won't sell.  Maybe the business that is short on cash won't make it to the next big contract or high sales season.  When that happens, the investor loses.  But the profits on the successful investments are the safety net, and if the investor has judged the risk:reward ratios well and doesn't get too unlucky, the hits not only make up for the misses but yield a net gain.

Social responsibility is the safety net for labor.

We hear a lot about the risks taken by capitalists, but not much about the risks taken by ordinary Americans who work.  But they take risks too, and their risks are usually much greater in proportion to their means.

The ordinary worker takes a risk by putting in the time and money to get an education or learn a trade.  That's time the person could have spent doing something else that paid more, but the worker invests that time and money on the expectation that it will pay off in a higher income later, and doing so benefits society because that worker can offer more useful labor to society.

The ordinary worker takes a risk by buying a home, even if the home is well within his/her income at the time of purchase.  The down payment is money the worker could have spent on something else, and there is rarely any guarantee that his/her income will stay as it is now.  But the worker takes that risk, and doing so benefits the seller, or the builder.

The ordinary worker takes a risk by buying a refrigerator, or a washer or dryer, or a car, or some other durable good.  Again, that's money that could have been spent elsewhere or, more often, borrowed for some other purpose.  And there's no guarantee it won't be a lemon, or again that the worker's income won't drop off.  But the worker takes that risk, and that benefits the seller, and the manufacturer.

But unlike the capitalist who can often afford several misses if only a few high-payoff investments hit, the ordinary worker can't afford many misses at all.  Even a frugal and responsible median income family is rarely more than one or two bad events away from financial ruin.  That's not because they're irresponsible or make bad choices.  It's because they don't have enough resources to take many losses and stay afloat.

Everyone gets wounded.

Bad events hit everyone.  We get sick or injured, and given our nation's inadequate health care system, a serious illness or injury is all but certain to cost a lot of money out-of-pocket.  We take a job that turns out not to be a good fit, or is a good fit but the company has to close.  A lightning strike fries the washer or dryer or refrigerator.  A driver with no insurance hits our car.  Bad events hit all of us.

And our chaotic universe being what it is, they tend to hit in bunches.  That's not superstition; it's mathematics.  If you flip a coin ten times and gets heads-tails-heads-tails-heads-tails-heads-tails-etc., that's a fluke.  It's more likely that you'll get at least one series of two or more heads (or tails) than that you'll get alternating results.  And it's the same with flipping the coin of life.  Bad events hit in bunches, not because the universe is out to get you - though it certainly feels that way during a bunch of bad events - but simply because that's how random events spill out.

But unlike tossing a coin, the circumstances of our lives do "remember" whether the last outcome was good or bad.  One bad event drains some of the resources with which we might recover from the next.  It's a classic Markov Chain, and it can get very ugly ... very quickly.

Henry and Barb.

Henry and Barb (not their real names) used to be my neighbors.  Henry spent 20 years in the military.  He'd been frugal during that time, and between the money he'd saved and his V.A. loan, he'd built his dream home when he retired.  It wasn't a McMansion.  He built it for about $90,000.  And because he was still working - he worked for the county, counseling troubled kids - and Barb had a good job as an E.R. nurse, they were able to pay it off.

Then Barb got a small cut on the top of her foot one night at work.  It looked like only a scratch, and she was busy with patients who had far more than mere scratches, so she let it go until her shift ended.  The thought of a drug-resistant, flesh-eating staphylococcus bacteria didn't enter her mind.  But the bacteria, surprisingly common in hospitals, did enter the cut.

By the next day, her foot was a swollen, angry, red mass of pain.  Her health insurance company said it was a job-related injury so worker's comp should cover it.  Worker's comp said maybe it happened at work and maybe it didn't, because she hadn't reported the injury or had treatment immediately.  Back and forth they dickered.  And the bills piled up.

Henry decided to do the responsible thing.  Rather than let the doctors wait to get paid and watch his credit rating plummet, he refinanced his home to pay off the bills.  And because either Barb's health insurance or worker's comp should eventually cover it, he took a short-term mortgage at a lower rate, with a balloon payment.  He'd pay it off when one or the other coverage came through.

Barb finally healed, minus a chunk of her foot.  She couldn't work as a nurse anymore, but she took a part-time retail job.  She couldn't stand for an entire shift, and the pay wasn't great, but at least she was back to work.  Until she came home from her shift and found Henry sitting in his easy chair, one arm hanging off the side, one side of his face limp.

It was a mild stroke, but it was still a stroke.  Now Henry couldn't work, at least not for a few weeks.  And Barb could only work part-time.  And worker's comp and the insurance company were still arguing.  And the balloon payment came due.

Their house - the dream home they'd built with Henry's savings from 20 years in the military and a V.A. loan, and had paid off - has been vacant for months now.

This ain't Survivor: America.

I'm sure Martenson and Gergen could pore over Henry's and Barb's lives and find some excuse to say they'd brought it all on themselves.  It's a comfortable lie to tell - that Blame The Victim lie - because it excuses them from having to give a damn about anyone but themselves.

But this is not a game show where we can vote the less fortunate off the island and be done with them.  The only bad choice Henry and Barb made was that neither was born into enough wealth that they could absorb the kinds of bad events that happen to everyone.  Like most of us, they were always just one run of bad events away from ruin.

Like most of us, Henry and Barb chose the wrong parents.  And we must definitely punish that, or risk "moral hazard."

There's a reason they call it "fortune," from the Latin fortuna.  It doesn't mean "skill" or "brilliance."  It means "luck."


On a lighter note, for some at least, let's see what our stars predict for the weekend:

Pisces - It's the first day of your sun cycle.  Let's hope your sun doesn't have PMS.

Aries - Your keyword is "I am."  And you are.  Oh, are you ever.

Taurus - Far be it from me to nag, but we're still waiting.  And don't pretend you forgot.

Gemini - Something wonderful will happen this weekend.  But it will happen to someone else.  Don't be jealous.

Cancer - This would be a good weekend to hang around with a Gemini.  But please share.

Leo - Beware of killer asteroids, viral plagues, and volcanic eruptions.  Also beware of TV disaster documentaries.

Virgo - Laughing in general is good for your health.  Laughing at Scorpios isn't.

Libra - You're due for a run of good luck.  It's a shame you can't even afford a lottery ticket.

Scorpio - Yes, actually it is funny.  Oh not to you, but ... we think it's hysterical.

Sagittarius - You will meet a tall, dark, attractive stranger.  The key word is "stranger," as in, "more than strange."

Capricorn - Please stop complaining.  It wasn't our fault.  Well, not all of it, anyway.

Aquarius - Something new and exciting will happen.  Note that a chainsaw-wielding lunatic at your door would be "new and exciting."


Happy Friday!

Originally posted to NCrissieB on Fri Feb 20, 2009 at 03:28 AM PST.

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