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The problem is that we not only continue to reinforce irresponsible behavior, but we are now starting to encourage it. Rewarding undesirable behavior (buying more house than you can afford and walking away when it becomes inconvenient) and penalizing positive behavior (saving and living within your means) negatively incentivizes exactly what we, as taxpayers, would like to avoid. Unless, of course, the goal is to increase taxes, then we're tracking.
The bailout has just taught the XYZ generations that doing whatever you want is kewl, manipulating the system is way kewler and the government will bail you out BT if you mess up. So if you want it, go for it! Work it! Instant gratification rocks!
Try teaching kids that actions have consequences now. It's hard to even type it and keep a straight face.
Isn't that the role of parent's to teach their kids personal responsibility, frugality, and living within ones means? This reminds me of the oompa loompas in Charlie and the Chocolate Factory when Baranca falls down the garbage shoot as a "Bad" egg... who's to blame? "...the Mother and the Father".
Maybe it's "free" enterprise and capitalism that has lead us astray. If we didn't have tv and advertising in every angle, then maybe we wouldn't have bought as much... maybe if credit card companies didn't shove credit card applications onto college students... and high school students?? we wouldn't have a society obsessed with credit. Maybe if we had better role models, had more time for family (instead of dual income becoming the standard), etc. things would be different. Maybe if wealth was distributed more equally we wouldn't have to have dual incomes??
It's the problem of Capitalism for Progress vs. Capitalism for Greed/Exploitation. Seems like capitalism for greed is far easier than capitalism for human progress/ethics. Like bhcompy noted there are only a handful of companies that walked the straight path and had a long term view, while the majority went for the quick buck. Who/what should be the "guiding" star or does it require total anniliation to rebuild/ return to progress?
So, let's take the argument to the other extreme... No government regulations on any market. Do you guys think that's the best way for markets to be ran? A free for all? I'm sure the top 1% of society would love that to happen. We can have kings, emperors, serfs and lords, militias all over again. Those with the most "Might" will be "Right".
In a truly free market, no one would get bailed out... and capital can flow every which way it pleases. I would suspect that there would be even more highly turbulent economic business cycles.
-chuck22b
Take away the safety net and people are going to be a lot more careful walking the tightrope.
We have become a nation of enablers. If bankruptcies were extremely difficult to obtain and debtors were on the hook for the rest of their lives, unless their lenders agreed to forgive them, then people would think twice about risky financial decisions. A loan is between the two parties that entered into it. Loan forgiveness used to carry tax consequences. Consider it a gift tax. Maybe it would make people put a little bit of thought into taking on debt... and a little more thought into strolling away from it.
We're kidding ourselves if we think we have a true free market or even a democracy these days. The current administration has almost no support and fewer and fewer people agree with the decisions their elected officials are making, purportedly on their behalf. Every poll you read shows that most Americans disagree with this war and very few approve of the bailout or this bill. Yet we remain in Iraq indefinitely and the bailout bill passed easily. The voice of the people might be heard, but it isn't heeded. We might as well have a Queen. At least, she doesn't pretend to listen or care what the serfs want.
Take away the safety net and people are going to be a lot more careful walking the tightrope.
We have become a nation of enablers. If bankruptcies were extremely difficult to obtain and debtors were on the hook for the rest of their lives, unless their lenders agreed to forgive them, then people would think twice about risky financial decisions. A loan is between the two parties that entered into it. Loan forgiveness used to carry tax consequences. Consider it a gift tax. Maybe it would make people put a little bit of thought into taking on debt... and a little more thought into strolling away from it.
These things sounds like you want more regulation, not less. If the government isn't the "enforcer", than enterprise would have to enforce themselves... I can see corporate bounty hunters and strong men for companies... if government wasn't around to perform enforcement.
I agree, we don't have a totally "free" market. Back in the feudal days we might of... nor do we have a totally true democracy... but, it's better than what's available elsewhere.
Isn't that the role of parent's to teach their kids personal responsibility, frugality, and living within ones means? This reminds me of the oompa loompas in Charlie and the Chocolate Factory when Baranca falls down the garbage shoot as a "Bad" egg... who's to blame? "...the Mother and the Father".
Maybe it's "free" enterprise and capitalism that has lead us astray. If we didn't have tv and advertising in every angle, then maybe we wouldn't have bought as much... maybe if credit card companies didn't shove credit card applications onto college students... and high school students?? we wouldn't have a society obsessed with credit. Maybe if we had better role models, had more time for family (instead of dual income becoming the standard), etc. things would be different. Maybe if wealth was distributed more equally we wouldn't have to have dual incomes??
It's the problem of Capitalism for Progress vs. Capitalism for Greed/Exploitation. Seems like capitalism for greed is far easier than capitalism for human progress/ethics. Like bhcompy noted there are only a handful of companies that walked the straight path and had a long term view, while the majority went for the quick buck. Who/what should be the "guiding" star or does it require total anniliation to rebuild/ return to progress?
-chuck22b
You make a lot of good points. The only thing I really disagree with is that wealth should be distributed equally. If you work for it and earn it, then it's yours. Why should you share the fruits of your labor with someone who chooses not to labor? I think we have a social responsibility to help those who truly need it. I don't think we have any responsibility to enable those who are lazy or take on incredible amounts of debt they have little hope of repaying to buy McMansions and matching Mercedes. But what I think doesn't matter. I have no control over how my tax dollars are spent.
Which is why I'm looking into an early retirement in Mexico. My neighbors are 50% American.
You make a lot of good points. The only thing I really disagree with is that wealth should be distributed equally. If you work for it and earn it, then it's yours. Why should you share the fruits of your labor with someone who chooses not to labor? I think we have a social responsibility to help those who truly need it. I don't think we have any responsibility to enable those who are lazy or take on incredible amounts of debt they have little hope of repaying to buy McMansions and matching Mercedes. But what I think doesn't matter. I have no control over how my tax dollars are spent.
Which is why I'm looking into an early retirement in Mexico. My neighbors are 50% American.
I don't think wealth should be distributed equally, but the proportions are currently way off. Upper management and CEOs in some companies make 100x+ more than the peons and probably have way more money than is required for living. Meanwhile, the peons have to have dual incomes to make things work out.
I totally agree that there has to be a "wealth" incentive (capitalism) for people to be proactive and get off their butts, but, at some point wealth incentives don't really do as much (mazlow's hierarchy of needs, being a CEO, etc. with the "Prestige" factor should be a good incentive for those "A" personalities). So, the excess in CEO compensation can be more better utilized by spreading it across an organization.
Don't give up on your country... your voice is still tallied amongst the votes. It's just that the majority wins in a democracy... and the majority at the time of the start of the war agreed that we should go into the war, the majority chose our current Administration... and hopefully the majority will choose the right future administration.
I think the President is the CEO of America Corp. With a good CEO, we can still progress in the right direction. We've just been kind of lost with no direction lately.
Maybe it's "free" enterprise and capitalism that has lead us astray. If we didn't have tv and advertising in every angle, then maybe we wouldn't have bought as much... maybe if credit card companies didn't shove credit card applications onto college students... and high school students?? we wouldn't have a society obsessed with credit. Maybe if we had better role models, had more time for family (instead of dual income becoming the standard), etc. things would be different. Maybe if wealth was distributed more equally we wouldn't have to have dual incomes??
-chuck22b
Even better than blame the banks, blame the media! If they didn't make that burger look so juicy on TV, or that car look so fun and hip to drive, I wouldn't have taken on so much debt and be bankrupt.
It is about personal responsibility. Companies have a goal, to sell you items to make a profit. It doesn't mean that anyone needs to buy those items, no one forced someone to take on debt.
I think the government should be there to provide basic education and protection for consumers. But of course short term "solutions" win elections, regardless of if they work... long term plans that fix the mess take longer than a political term. Same for CEOs in industry, companies wanted to see the bottom line increase by selling more Option ARMs and other products that boosted "revenue" and expanded volume... not the long term risks these products might produce.
Maybe the government could include financial literacy into basic public education. We are spending how many millions to advertise the switch from analog TV to digital (can't let consumers miss out on TV!) but we can not fund programs to teach kids to prepare for reality.
Maybe the government could include financial literacy into basic public education. We are spending how many millions to advertise the switch from analog TV to digital (can't let consumers miss out on TV!) but we can not fund programs to teach kids to prepare for reality.
But.... what if.... , government acts on behalf of the capitalist system (influenced by corporations). What incentives are there for government officials to give early financial literacy lessons when their "sponsors" don't benefit from it?
Therefore, likewise... it's the responsibility of the Parents to teach/instill these values to their children. But, of course, they both have to work. So, these lessons are taught... by... guess?... television (mickey, minnie, sponge bob, MTV, Ryan Seacrest, et al. - commercialism at its' best)
When did we have a free market in the last few decades? It is government regulation that supports mega-corporations, not the free market. A free market encourages smaller, more competitive companies. Government should exist only to protect INDIVIDUAL freedoms and let others do their business. If an investment fails, let it fail. But regulation is why we are in this mess right now.
I don't think you can point the finger at one thing. On one hand you had government actively do away with certain laws to ease oversight on the financial markets. Then you have the lowering of interest rates by the fed. Then you had companies coming up with "create" ways to get home owners into homes. Then you had a ignorant and self indulgent consumer who wanted more, more more.
I don't think you can point the finger at one thing. On one hand you had government actively do away with certain laws to ease oversight on the financial markets. Then you have the lowering of interest rates by the fed. Then you had companies coming up with "create" ways to get home owners into homes. Then you had a ignorant and self indulgent consumer who wanted more, more more.
Your right that things snow balled into the mess it did. What the UCI people wanted to do is to figure out when and how it started. It looks like the main culprit is government dropping rates, reducing regulation, Fannie and Freddie not increasing loan limits and letting "Free" enterprise run its' course.
Since the government dropped rates (basically to spur economic growth from the double whammy of Tech Bubble and 9/11), then Fannie and Freddie should have raised their loan limits. If Fannie and Freddie took on the brunt of the loans (like it traditional did) then investors would of had Mortgages packaged by Fannie and Freddie (which have stricter/regulated loan standards). Instead, since their was a financing void, and investors wanted higher returns, free enterprise invented "kooky" lending and financing through "new" and risk-free debt obligations. If their wasn't any "kooky" loans available, consumers wouldn't have been able to get in a house anyways - no matter what they desired (like today - I'm sure lots of people still want homes... but they can't get a loan anymore).
So in short, free markets will find ways to exploit the system to get maximum returns in the short term (ie, profiteering and greed) to the detriment of the long term.
-chuck22b
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, government acts on behalf of the capitalist system (influenced by corporations). What incentives are there for government officials to give early financial literacy lessons when their "sponsors" don't benefit from it?
