Though one might laud our (early 1930s through mid-1990s) American system of mortgage finance from many nominally distinct points of ideological view, I have long been struck by how well this system cohered, until recently, with the Catholic 'distributist' ideals of such as Chesterton and Belloc. Advocates of distributism, some MoJ readers will likely recall, cast their 'ism' as a sort of 'third way' between perceived capitalist excess on the one hand, and perceived communist excess on the other. The form of excess shared at those putatively opposite ends of what was actually a de facto circular 'spectrum' (the 'end-points' actually touched), of course, was the tendency for wealth and property distributions to skew over time in favor of oligopolistic or oligarchic elites -- that is, corporate or party elites -- who often came to control the instrumentalities of the state to their own advantage. The remedy, in the view of the distributists, was for a republic of small holders to employ the instrumentalities of the state to maintain itself and its character over time, essentially by ensuring that property not only remained privately owned, but also -- and quite essentially -- broadly owned. (The pre-imperial Roman republic did just that for centuries through its law of property. Bill Simon at Columbia has written wonderfully on this.)
Many Americans are aware that a vision much like that held by the distributists, in this case under the rubrics of 'Jeffersonian' or 'yeoman' republicanism, animated early colonial American reforms to the English common law of property (perhaps most notably the elimination of primogeniture), as well as the Lincolnian Homestead and Land Grant Acts (yes, there were multiple such enactments, clear into the 20th century). Fewer seem to be aware of the role played by the late Hoover and subsequent Roosevelt administrations in realizing the same broadly distributist ends. It is the latter two administrations that brought us, respectively, (a) the 1932-vintage Federal Home Loan Bank Board, as well as, in consequence, the savings and loan industry that the Board effectively regulated and enabled to thrive until deregulation during the Reagan years; (b) the 1934-vintage Federal Housing Administration, which invented mortgage default insurance and the 30-year, fixed-rate mortgage, upon which FHA insisted as a condition for extending default insurance, both of which rendered mortgage credit much less expensive; and (c) the 1938-vintage Fannie Mae, which invented and 'made' the secondary market for mortgages by purchasing, with mixed private and publicly supplied capital, now nationally standardized (yep, those 30-year, fixed-rate) mortgage instruments from home loan banks in need of liquity, which rendered loanable funds all the more inexpensively available to home-buyers.
The upshot? We moved from being a society in which fewer than 40% of American households owned their own homes circa 1928 (because loan-to-value ratios were typically well below 50%, down payments in consequence had to be huge, and mortgage debt had to be refinanced every two to three years) to one in which nearly 70% did by the late 1970s.
What went wrong? Long story, but suffice it to say that the destruction of the deregulated savings and loan industry opened a vacuum into which stepped a new industry of 'mortgage banks,' which were not banks at all and accordingly were not regulated as such, over the course of the 1990s. This new industry pioneered new mortgage products, which did not meet FHA standards, just in time to exploit a new tidal wave of cheap credit brought to you by (a) a Greenspan-led Fed on a bender, and (b) a cash-flush China and set of OPEC countries looking for places to park their (cheap, toxic) export- and petroleum-bought dollars. That of course brought us a classic credit-fueled, feedback-sustained asset-price bubble of the sort that makes many individual decisions which, ordinarily, would look irrational, look altogether rational, at least in the short-to-medium term. (Example: If the house that collateralizes a risky borrower's debt is rising in market value by 50% per annum, and has been doing so for a while, it looks rather less crazy to lend to that borrower than it otherwise would, since at worst you are left holding a rapidly appreciating asset; and if you don't extend the loan, someone else will.) These bubble conditions, I've argued elsewhere, are in the nature of collective action problems. Multiple acts of individual rationality aggregate into collectively wasteful, if not calamitous, outcomes. (Compare: arms races, consumer price hyperinflations, employee-lay-off-fueled recessionary spirals, 'prisoner's dilemmas,' & cet.)
Collective action problems require collective agents for their solution. That agent in this case should have been the Fed, whose statutory mandate is, precisely, to control the credit-money supply economy-wide with a view to maintaining price stability -- a form of stability that is of course the very antithesis of price bubbles and bursts. The Fed's greatest chairmen of the past -- Paul Volcker and, especially, William McChesney Martin -- would likely have been up to the task. (Martin is he who memorably said that the role of the Fed is to 'take away the punch bowl just as the party is getting good.') Alan Greenspan, who seems not to have understood the structure of the asset price bubble we went through -- and who said multiple times that private borrowers, private lenders, and secondary market makers like Lehman and Freddie alike would be 'crazy' to 'leave money on the table' by favoring boring FHA-approved 30-year fixed-rate mortgages over ever-refinanceable 'balloon' mortgages -- was not. Collective action problems also, of course, are such that one need not impute sinister motives or irrationality to any market participants to explain them. I accordingly think we distract ourselves when we look for demons among the investment banks, the secondary market makers, or at other nodes of our ramified financial-cum-mortgage markets. Doubtless there were sharp practices and lunacies aplenty -- there always are -- but the point is that they're not the culprits. Collective agents who do not believe in their own mandates are the closest we have to those.
Readers who would like more on the history of our mortgage finance programs, as well as additional distributist-friendly American social welfare programs, might enjoy a USC Law Rev piece titled A Jeffersonian Republic by Hamiltonian Means, written by an eccentric law professor, available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=926409
Readers who would like to read more about a set of new distributist-friendly proposals, themselves offered by an eccentric law professor, might enjoy a Cornell Law Rev piece titled What Kinds of Stock Ownership Plans Should There Be? Of ESOPs, Other SOPs, and 'Ownership Societies,' available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=931049
There is also a 'global' rendition of the previous piece in the U. Va. L. & Bus. Rev., titled Insource the Shareholding of Outsourced Employees: A Global Stock Ownership Plan, available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1108226
Finally, readers who would like to read more on the nature of asset price bubbles and bursts of the sort we have just been through might enjoy a piece called A Fixer-Upper for Finance, a draft of which is available here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1367278 . The final version of the piece has just gone to press for the Wash. U. L. Rev.
There are also some interesting posts at Dorf on Law concerned with these matters, e.g. these: http://www.dorfonlaw.org/2009/09/what-maynard-keynes-james-dean-and-now.html ; and http://www.dorfonlaw.org/2010/05/meanings-of-goldman-sachs.html .
All best and more soon,
Bob
MOJ-friend John O'Callaghan sends this reply to Michael Perry:
Michael, in the absence of your expressing and explaining a view on what I wrote, other than the rather ambiguous “clarifying analysis,” your additional questions that you put to me strike me as confusing and filled with all sorts of assumptions as to what people will clearly agree about, with the result that I am unclear about how to respond to them. Case in point, your first scenario suggests that you don’t know what KIND of act is involved. And yet your second scenario begins by implying that you do know enough about its kind to say that it isn’t of the KIND intentional killing. On the basis of what I have said, I would likely say of the first scenario that it is the premature expulsion of the fetus from the uterus. It is chosen rather than spontaneous. It is then a direct abortion. Given the condition of the fetus and what is possible for it, the choice to abort it so is a choice to kill it, despite the fact that the killing is drawn out. To use common language we are all familiar with, rather than being a partial birth abortion it is a full birth abortion by Cesarean section. For the question of what KIND of act it is, it does not matter that one cares gently for the person one has chosen to kill when the death is prolonged. Nor does the fact that the means one chose to perform the killing involved an otherwise licit medical procedure, Cesarean section, anymore than the fact that the serial killer may use an otherwise licit kind of medical procedure to kill someone by removing his heart. I would say that in that respect it violates the more general principle that stands behind #2275 of CCC: "One must hold as licit procedures carried out on the human embryo which respect the life and integrity of the embryo and do not involve disproportionate risks for it, but are directed toward its healing the improvement of its condition of health, or its individual survival.” But your second scenario suggests that you would disagree with all of this, which is why I am not surprised to be confused by the questions your raise within it about “innocence”.
The heart of what I wrote was a claim about how very different views on action, implicit or explicit, cause probably irreconcilable disagreement about how to think about particular cases. To come to agreement on the cases requires coming to agreement on the theory of action. Are we to assume that those differences of view on action are now settled in favor of my analysis? If so, why not put forward how you think those scenarios ought to be thought about?
In addition, if you will forgive the metaphor, your questions seem to me as if I in particular am in the dock being interrogated because I chose to engage Cathy argumentatively. I couldn’t have agreed more with what Cathy wrote rather eloquently in the first part of her discussion of the case in Phoenix about the sacredness of the context in which we are engaging this tragedy. Clearly I disagreed with what she then wrote in the second half about Anscombe and about intention. Still, I thought her remarks serious and important enough to engage argumentatively. I’m a philosopher—I argue. I don't hold myself out as having an oracular capacity to respond to hypotheticals coming out of nowhere (in the sense of not being seated within a larger argument) and in the absence of agreement on how to think about human action. So, it is not clear to me what I might add, for the reasons given above, to a general discussion of types of scenarios widely discussed in the literature, as opposed to something like Cathy's post, where she was arguing for a particular conclusion from premises that I could identify and engage.
Perhaps we would all be much better off with more Zen students on "Wall Street":
"America had Zen students in the past, has them in the present, and will have many of them in the future. They mingle easily with so-called worldlings. They play with children; respect kings and beggars; and handle gold and silver as pebbles and stones." --Nyogen Senzaki
No doubt BOTH political parties have been much too cozy with "Wall Street". But given Robby's criticism of Obama and the Democrats, I hope MOJ readers won't consider it amiss for me, in the spirit of "fair and balanced", to quote what Robby's (Nobel Laureate) colleague Paul Krugman had to say on May 24 (here):
"Follow the money — donations by corporate political action
committees.
Look, for example, at the campaign contributions of commercial banks —
traditionally Republican-leaning, but only mildly so. So far this year,
according to The Washington
Post, 63 percent of spending by banks’ corporate PACs has gone to
Republicans, up from 53 percent last year. Securities and investment
firms, traditionally Democratic-leaning, are now giving more money to
Republicans. And oil and gas companies, always Republican-leaning, have
gone all out, bestowing 76 percent of their largess on the G.O.P.
These are extraordinary numbers given the normal tendency of corporate
money to flow to the party in power. Corporate America, however, really,
truly hates the current administration. Wall Street, for example, is in 'a state of bitter, seething, hysterical fury' toward the president, writes
John Heilemann of New York magazine. What’s going on?
One answer is taxes — not so much on corporations themselves as on the
people who run them. The Obama administration plans to raise tax rates
on upper brackets back to Clinton-era levels. Furthermore, health reform
will in part be paid for with surtaxes on high-income individuals. All
this will amount to a significant financial hit to C.E.O.’s, investment
bankers and other masters of the universe."
Krugman goes on to say:
"So what President Obama and his party now face isn’t just, or even
mainly, an opposition grounded in right-wing populism. For grass-roots
anger is being channeled and exploited by corporate interests, which
will be the big winners if the G.O.P. does well in November.
If this sounds familiar, it should: it’s the same formula the right has
been using for a generation. Use identity politics to whip up the base;
then, when the election is over, give priority to the concerns of your
corporate donors. Run as the candidate of 'real Americans,' not those
soft-on-terror East coast liberals; then, once you’ve won, declare that
you have a mandate to privatize Social Security. It comes as no surprise
to learn that American Crossroads, a new organization whose goal is to
deploy large amounts of corporate cash on behalf of Republican
candidates, is the brainchild of none other than Karl Rove.
But won’t the grass-roots rebel at being used? Don’t count on it. Last
week Rand Paul, the Tea Party darling who is now the Republican nominee
for senator from Kentucky, declared that the president’s criticism of BP
over the disastrous oil spill in the gulf is 'un-American,' that 'sometimes accidents happen.' The mood on the right may be populist, but
it’s a kind of populism that’s remarkably sympathetic to big
corporations."
UPDATE: I'll be away for about a week. If in the interim there's anything to which to respond--in particular, John O'Callaghan's further, clarifying thoughts on the Phoenix abortion controversy--I'll respond next week.
The annual meeting/conference of University Faculty for Life (UFL) is this weekend (June 4-5, 2010) at Catholic U. Information about the conference is available on the UFL website. Here. The speakers include Hadley Arkes, Tom Cavanaugh, Richard Doerflinger, Jason Eberl, John Keown, Father James Schall S. J., Msgr. Robert Sokowloski, David Solomon, and Elizabeth Kirk. There are a few law professors on the program--Mark Rienzi (CUA), Lucia Silecchia (CUA), Richard Esenberg (Marquette), and Caroline Newcomb (Southwestern).
The conference has been organized by Frank Beckwith and Father Kurt Pritzl O. P. and supported by a generous grant from Our Sunday Visitor.
Richard M.
... in our weekend to and fro. I said: "[W]e both know that some special interests have the potential to do much
greater and longer lasting damage to the common good than other special
interests. The masters of the financial system, pursuing their own
short-term financial interests, have such potential. I shudder to think
about the truly devastating consequences, to the well-being of ordinary
families--of mothers, fathers, children--and others, of the kind of
massive economic dislocations that the masters of the financial system,
left to their own, venal devices, can precipitate."
This morning I read this in a letter by Harvard's Robert Putnam (of "Bowling Alone" fame): "[T]he adverse impact of economic adversity on the social fabric goes well
beyond the lost monetary income and endures much longer than joblessness
itself.... [T]he negative effect of joblessness on a worker’s participation in
social and community life lasts for decades, even after the worker has
found a job again.
The damage is particularly great if the joblessness hits earlier in a
worker’s career.... [T[]he real costs of
the current recession will last long after the G.D.P. resumes growing."
Monday, May 31, 2010
I am grateful to Michael P. for introducing the thread on the work of Elizabeth Anscombe and Professor Kaveny’s use of her work regarding the abortion issue and the Phoenix case. I am further grateful to other MoJ contributors who have engaged in this particular discussion.
Professor Kaveny has also offered some important insights by relying on the work of Germain Grisez. This necessitates on my part the need to point out that his, i.e., Grisez’s, method that Professor Kaveny relies on—asking the question “why?—must be raised for both humans, meaning the mother and the child, not just one, meaning the mother.
In doing so, I fail to see where the Kaveny appropriation from Anscombe asks this question on behalf of the child’s interest while it is raised on behalf of the mother’s interest. This is an incomplete appropriation of Anscombe and of Grisez. Having said this, I’ll use the methodology that Professor Kaveny proposes in the context of a person dealing with, let us say, cancer. Then we might understand more about the nuances that Professor Kaveny attempts to present.
So, let me posit a first case. Here, patient Alpha has lung cancer. Alpha’s doctors notify the patient that the cancer has not metastasized to adjacent organs or tissue. This is good. But, the doctors recommend removal of the lungs, both of which are affected by the cancer. Their gaze is focused on the lung cancer. Following the line of consideration offered by Kaveny, the surgeons performing surgery on Alpha have asked: “what are they doing and why are they doing this?” In response to what they are doing, they are intending to remove the cancer-infected organs, i.e., the lungs, in order to remove cancer from Alpha’s body. Why? Well, the answer is obvious: to remove the cancer that threatens Alpha’s life. After all, “an intentional act is a purposeful act.” Moreover, the doctors will supplement their response with the sage position that “[w]e do not...intend every consequence caused by our action—even if we foresee that they will occur.” Taking NyQuil, which a doctor recommends for a cold or the flu will give a patient a “buzz” but will also help, here: the intended act, to relieve the symptoms of the cold or flu. Relief rather than buzz is intended.
So, back to Alpha. The doctors intend to remove the lungs that are infected with the cancer. Why? To remove the cancer and prevent it from spreading. Fine. But according to the plan proposed by Professor Kaveny, the doctors do not intend every consequence of their action even though they foresee that they will occur. Only the intended act, i.e., the removal of infected tissue, the lungs, is intended. The fact that Alpha will die since Alpha no longer has lungs—a foreseen consequence—is immaterial to the Kaveny analysis since this result is not intended.
Let us take a second case. Patient Omega has lymphatic cancer. Omega is informed by Omega’s doctors that a plasmapheresis is needed. Why? The infected plasma must be eliminated because of its infiltration by cancerous cells. The doctors remove all of Omega’s blood. They extract all the offending plasma, which is discarded, and they return the platelets to Omega. The doctors’ intention, once again, is to remove the offending tissue, the plasma. They know that a consequence of their action will be the death of Omega, since Omega needs plasma as well as platelets, but their intention remains pure—to eliminate the cancer-bearing tissue. This is their intention, nothing more, nothing less.
So now I must return to the Phoenix case. I submit that there is something that is fundamentally missing from the Kaveny appropriation of Anscombe and Grisez reasoning here. The acts that are proposed by both Alpha’s and Omega’s doctors are intentional and purposeful. They know what they are doing, but do they really understand why? I suggest that they do not because they do not look beyond the limited purpose they pursue because, in spite of the known and foreseeable consequences of inevitable death, they proceed with killing their patients even though that is not their objective. They need to look beyond the limited purpose and ask: are they saving human life or not?
In the context of the Phoenix case in which this thread originated, are the doctors and their hospital asking the question: are they saving human lives? Apparently only one of the two involved. The questions “what” and “why?” must be comprehensively rather than narrowly asked here. The procedure contemplated must cover all patients involved and affected by the procedures, not just one. If doctors should be able to understand that the functions of lungs are important to Alpha and that the presence of plasma is important to Omega even though removal is their only purpose, the procedures and their accompanying intentions conflict with the broader purpose of saving their patients’ lives, should other doctors, let’s say in Phoenix, be able to extend the same inquiry to the two human patients involved in the Phoenix case? Professor Kaveny’s suggestion that “In a situation where both mother and baby otherwise would die, ... one could make a strong case that it is fair to go ahead with the procedure” is missing some essential consideration of the questions: what is being done?, and why is it being done? Her answer to these vital, yes vital, questions, is lacking. She concludes by stating: “In a situation where both mother and baby otherwise would die, ... one could make a strong case that it is fair to go ahead with the procedure.” This may well be the case if one considers only the welfare of the mother. But what if we also consider the welfare of the child?
If I may draw from Shakespeare, an abortion by any other name would be the same: an abortion. Why do I suggest this?
The reasoning employed by Professor Kaveny is applied to only one of the patient’s interests, not both. Sadly, it is not applied to the interests of the child in the same way that it is applied to the mother. Both of their lives are truly important; both are at stake. When viewed from the perspective of the child, the surgical separation procedure is not an unintended side effect; rather, it is something that should not be done.
The unborn child is Alpha and Omega.
But, what if one were to consider the separation of the mother from the child, and the child becomes the primary concern? When the tables are turned—but the Kaveny analysis is still employed—would the result of Kaveny’s reasoning process and its acceptance be the same?
RJA sj
