The View From 1776

A recent New York Times editorial titled Homeowners at Risk lamented the upsurge of mortgage payment delinquencies and the likely wave of foreclosures. 

In that regard, the Times editorialists opined:

Responding to the mortgage bankers’ grim report, Senator Christopher Dodd, chairman of the Banking Committee and a presidential hopeful, broached the possibility of federal help for struggling homeowners. The most plausible relief measures — detailed in a new report by the Center for American Progress, a liberal research and advocacy group — involve federal boosts to existing state and local programs. Those include counseling to help strapped families plan for rising monthly payments and renegotiate their loans, legal aid and short-term loans for eligible borrowers. One study shows that a federal grant of $25 million could replicate proven local programs in other areas now experiencing spikes in foreclosures.

Implicit in the editorial is the assumption that it should have been the Federal government’s responsibility, first, to keep borrowers from assuming debt beyond their capacities, and, second, to bail borrowers out, no questions asked.

This is pure socialism, which tells us that citizens are incapable of fending for themselves in a free market and that they are at the mercy of greedy businessmen.  Under socialism, the ideal is an economy tightly regulated by bureaucratic planners and managed by the sort of people who make the IRS famous for compassion and the Post Office renowned for efficiency.

Let’s grant the Times one point.  Far too many people were enticed into mortgages with features they didn’t understand, with payment structures that began with low amounts, then moved into much higher payment amounts. 

The Times editorialists and their liberal-Progressive confreres probably would prefer ultimately to consolidate all mortgage lending under a Federal agency that would permit home buyers to assume only the kinds of mortgages, in the amounts that bureaucratic regulations might prescribe.

A more fundamental point should be noted.  Excessive borrowing by almost all economic and social levels is a phenomenon unknown in the United States before 1933.  The change factor was the New Deal’s adopting Keynesian economics as revealed truth.

Keynesian economics, as employed by President Roosevelt in the New Deal, placed massive emphasis upon consumption expenditures as the only way to get the nation out of the Depression.  “Excessive” personal savings became a social crime and the Federal government bent its energies to spending as much money as possible on every make-work project that bureaucrats could imagine.

Most people who were adults in the 1930s knew from long exposure to the Judeo-Christian ethic that this was nuts.  They knew that every parent had a moral duty to work hard and to save as much as possible to provide better lives for his children.

Several things in the 1940s and after World War II changed public attitudes. 

First was the inflation deliberately set in motion by FDR.  The future value of savings was being eroded steadily.

Second, the twelve year hardship of the Depression and the absence of consumer goods during the war left a huge void that consumers began filling as fast as goods became available after 1945.  This set the tone for consumption in amounts and ways that the parents of young adults would never have countenanced.

Third, the GI Bill flooded college campuses with young veterans in numbers many times greater than pre-war attendance.  There young students were taught the atheistic materialism of socialism (see William F. Buckley, Jr., God and Man at Yale - 1951).  They were told that another Depression would be impossible because Keynesian economic remedies were in place to keep the nation at full employment.  Keynesian fiscal and monetary policies, of course, fostered high-octane consumption by government and individuals.

In addition to Keynesian economic nostrums, students were taught the Darwinian hypothesis that they lived in a godless world and that the God of their fathers was superstitious ignorance. 

The product of that historically unprecedented volume of exposure was the revulsion of the Baby Boomer generation for their parents’ generation and all that their parents believed.  A typical expression of this was Paul Goodman’s Growing Up Absurd (1956).

In the final analysis, the present situation is exactly what liberal-Progressive politicians desire: a voting public as fully dependent as possible on Federal largesse. 

The welfare state has done its job, exactly as Chancellor Otto von Bismarck envisioned it in the 1880s when he established the world’s first welfare system.  He wanted a public so dependent upon the Kaiser’s government that it could be herded like cattle by State bureaucrats. 

Far better for the United States, and perhaps the only means of its survival in a largely hostile world, would be a return to God, to teaching the moral principles of Judeo-Christianity that would keep the people focused upon saving first and spending only what they can really afford.

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