Philosophy Killed Capitalism, Not a Conspiracy

Q: In your article, ‘Economics Doesn’t Explain the Housing Market Collapse,’ I think you are being a little naive in thinking the housing collapse was caused by a sense of entitlement. This was calculated economic warfare against the middle class, an enormous transfer of wealth to the politically connected banking elites.

And it was a bubble intentionally pumped up to forestall the economic collapse after the 2001 Internet stock crash, to hide the fact that if you take away government workers, prison inmates, paper pushers for financial services, and the retired, hardly anyone actually has a productive job in the USA.

Any arguments the politicians gave about giving out unearned houses is a smokescreen.

A: You’re missing the point. The question isn’t what motivated government control freaks to manipulate the economy. The question is how they got away with it in what was once, for the most part, a democratic republic.

The entitlement mentality refers to people who want something for nothing. People unable and unwilling to create valuable things for themselves — such as saving and buying a house — look to the government to do this for them. They do this because they’re told they’re ‘entitled,’ and they believe it.

Maybe a President or a Federal Reserve Chairman is motivated by a desire to declare economic war on the middle class. This may or may not be true. But even if it is true, the policy has to be sold to members of the middle class. A President doesn’t tell the American people, ‘I seek to declare war on the middle class. That means you. Submit while I do so.’

That’s not how it works in the United States, nor would it in any society with a history of democracy and consumerism. In the United States, the President says: ‘You deserve a house. It’s part of the American dream. If you can pay for your own, fine. But if you can’t, well that’s what I’m here for. I’m here to make sure that you get the house you want and deserve.’ He does so in one of two ways. Either he provides direct subsidies through tax dollars, which is generally not the way it’s done in the United States. Or, he does what amounts to the same thing, in the end: Subverts the marketplace and either forces banks to lend to people who can’t afford mortgages, or provides non-market incentives for private lenders to do so.

In the end, the bill comes due and, as we have seen, taxpayers end up subsidizing the loans when they go bad. Everyone suffers, except for the politicians who can still claim to be Santa Claus with other people’s money. These politicians blame the ‘bad guy’ capitalists for the consequences of their own policies.

I share your anger. I share your perspective that political intervention in the economy is nothing more than a glorified mob, legalized plunder in which inept politicians play fast and loose with the well-being of an entire society. Even the most mediocre of businessmen is morally and intellectually superior to any lowly politician, because a politician should be out in the world creating valuable goods and services rather than stealing them from others to make himself popular. It’s interesting to be called naïve for my article, because more people have called me horrendously cynical for simply calling things what they are.

The entitlement mentality refers to an attitude. Attitudes are grounded in what are ultimately philosophical ideas. The philosophical idea that man’s sole purpose in life is to serve others is an idea that people who feel entitled are eager and willing to cash in on, quite literally in the case of the housing market disaster. The world is full of philosophers (and psychotherapists) who preach the idea that the purpose of life is to sacrifice the self for others. Consequently, the United States is filled with people who feel they should be served by those allegedly obliged to serve. That’s where President George W. Bush or Barack Obama comes on the scene and says, ‘I’m here to serve you,’ which means serving up people who feel entitled to other people’s money.

To you, the tactics and motives of the power-lusters in office are what matter most. To me, what’s most important is what makes them powerful in the first place: What ideas animate them and the people who keep voting for and supporting them. It’s those ideas that brought about the collapse of the real estate market, not the tactics of those who cashed in on them. You see a conspiracy of men. I see a philosophy of incredibly wrong and stupid ideas.