Thu 11 Dec 2008
This morning on KQED's Forum was an interesting discussion about the current financial crisis we're all in. The show's moderator brought up what I think is one of the most fasinating issues in this whole adventure: treading the line between responsibility and bailout. A lot of people have cried foul, for example, at the notion of spending huge sums to bail out banks and the auto industry when those companies have been so badly managed for so long that they've basically run themselves into the ground. I tend to agree with this outlook.
What made me angry, though, was listening to the commentator arguing against bailing out individuals who are in trouble with their personal finances (mortgages, etc.) using a personal responsibility argument like this: Hey, look, I'm responsible, I have a budget, I spend within my means, and I don't take on loans I can't afford. Why should people who were irresponsible get bailed out while I have to foot the bill?
Why? Because deciding to bail out people with bad mortgages is on totally different ground than deciding to bail out the auto industry. On the one hand we have sophisticated industries staffed with executives, lawyers, accountants, etc. who have had all the opportunity and agency in the world, and have chosen badly, irresponsibly, and run their companies into the ground. These are people who should have known better, who were greedy and imprudent, and now have their hand out because they've noticed that the door to the vault is wide open.
On the other hand we have consumers who've made bad decisions. But they have not made decisions on the same playing field as the corporations, and they've also not made them on the same playing field as your adverage upper-middle class KQED commentator. When lenders were giving out loans to anyone who asked, when media messages push imprudent credit practices, when individuals – as a result of personal choice, yes – but also as a result of a huge variety of socio-structural economic issues are less well equipped to evaluate their financial choices and make sound decisions, is it fair to hold them to the same standards as Ford, GM, Bear Stearns, etc.? Is it fair to hold them to the same standards as more privileged, educated individuals? I say: no. We do not live in a world where the playing field is flat and even, and everyone is equipped and informed equally and so we can just invoke a simple argument for personal responsibility. We need a bit more understanding there.
At the same time, personal responsibility is key. I don't know where the line is. But invoking a blanket personal responsibility argument, failing to take the nature of the world into account, is wrong, it's narrow-minded, and its ethnocentric.