ABC News brings us tragic tales of life in the financial sector:

“A lot of those people will have to sell their homes, they’re going to cut back on the private jets and the vacations. They may even have to take their kids out of private school,” said Frank. “It’s a total reworking of their lifestyle.”

He added that it’s going to be no easy task.

“It’s going to be very hard psychologically for these people,” Frank said. “I talked to one guy who had to give up his private jet recently. And he said of all the trials in his life, giving that up was the hardest thing he’s ever done.”

I'm not a financial expert by any stretch of the imagination. The way I understand it, lots of financial institutions spent years loaning out money in really risky (but lucrative) ways. To prevent their investors from freaking out, they figured out creative ways to hide the riskiness. Everyone knew this was going on, but it meant more profits so no one was willing to look too close. After years of this, it was institutionalized: if the house of cards fell, it wouldn't be just one institution but loads of them all taking the fall.

Again, as I understand it, that's what we're experiencing now. Unless I'm totally mistaken, the problem is the systemic nature of the failure: all of the financial institutions were doing it, even the huge ones that have been thought of as 'rock solid' for decades, and if they collapse the whole economic structure goes topsy-turvy panic-mode.

Can someone knowledgeable about these things clue me in, or is the government essentially planning a $700,000,000 $700,000,000,000 bailout of people who got rich by making too-risky investments with other peoples' money?

Over the last decade or so, conservatism in the United States has become increasingly dominated by a couple of key ideas. Several related directly to the use of force and international relations. One, though, has bubbled up from the pool of economic talking points to *pop* noisily and grab everyone's attention. It is simply this: No one has the right to demand that others pay their way.

Often, this comes up in the context of health care or education or welfare or what not. An individual on welfare, after all, is effectively demanding that productive members of society subsidize their lifestyle. How fair is that, hmm? Not one bit. And someone who's wheeled into the emergency room, but can't pay their bills -- why should I, a healthy hard-working American, be forced to pay their bills? It's precisely the sort of thing that private charities should handle. The government is notoriously inefficient at that sort of thing anways, and the market should be allowed to find the perfect solution.

I think the real failure of conservatism is that it hasn't been willing to take this idea all the way -- probably for fear that liberals would be angry, or some pantywaisted silliness like that. I, for one, think it's high time that we embraced the truth.

Not only is it unfair for me to pay for someone else's health care, it's unfair for me to pay for someone else's police protection. After all -- I live a modest life. I drive an older car and I pay my bills and I don't keep valuable things lying around. Why should I pay for the police to investigate burglaries at the houses of millionaires? If thousands of disgruntled employees decide to lay siege to WalMart headquarters, it's certainy not my problem.

Now, many will probably object. "Police protection benefits everyone," they'll bleat. Pshaw. That's exactly what the liberals say about public education, and health care. How much of our nation's money is sucked into the black hole of law enforcement? Far, far too much in my opinion. If you have soemthing valuable, you should be able to afford to protect it! And if you can't, well. I shouldn't be punished for your irresponsible behavior.

Now, if you don't mind, I have to head off. I'm organizing a looting party for this Friday.

Reason Online has posted a fascinating dialogue between a few noted free-market types. John Mackey, the CEO of Whole Foods, argues that corporate responsibility must include more than simple monetary profit. Milton Friedman, the god of free markets, responds as does another CEO.

I’m a businessman and a free market libertarian, but I believe that the enlightened corporation should try to create value for all of its constituencies. From an investor’s perspective, the purpose of the business is to maximize profits. But that’s not the purpose for other stakeholders—for customers, employees, suppliers, and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate.

Mackey's point is an interesting one, and I have to admit that I'd never considered that someone from a libertarian perspective would articulate it in such a way. The idea of focusing not just on shareholders but on stakeholders in the company is a fascinating one. Another angle of discussion the nature of the investor relationship.

I believe {corporate charity programs} would be completely justifiable even if they produced no profits and no P.R. This is because I believe the entrepreneurs, not the current investors in a company’s stock, have the right and responsibility to define the purpose of the company.... It is the entrepreneurs who set the company strategy and who negotiate the terms of trade with all of the voluntarily cooperating stakeholders—including the investors.

Friedman responds, getting in jabs at the nature of charity, but essentially spends his column-inches trying to explain Mackey's views as enlightened self-intrest disguised as altruism. In that sense, says Friedman, their differences are largely rhetorical.

It's TJ Rogers, CEO of Cypress Semiconductor, whose response borders on charicature.

I balk at the proposition that a company’s “stakeholders” (a term often used by collectivists to justify unreasonable demands) should be allowed to control the property of the shareholders. It seems Mackey’s philosophy is more accurately described by Karl Marx.

Shouting 'Marx!' feels like the economic equivalent of Godwinizing a discussion like this. I'm reminded of how barren our collective vocabulary is when we talk about issues like this. We've taken Adam Smith and turned his observations about markets into a moral force -- but who says that all of society must operate like a market at all times? As reasoning creatures, we're perfectly capable of shaping new norms. Self-interest is a powerful motivator, but it has never been and never will be the only motivator.

Rogers also asks, rhetorically, why Mackey feels giving to charity is better than giving to investors. Investors, after all, are individuals too -- they'll donate profits to charity, use them to put children through college, use them to fund a retirement... And Mackey is stealing from them to fund his philanthropy! Scandalous! Rogers sets the trap, then walks into it. Having spent his five paragraphs saying that profit is a corporation's sole purpose and responsibility, he sugar-coats his statement by implying that investors are themselves a sort of charity. As Machey notes in his rebuttal, investors can choose to put their money in a corporation whose goal is pure profit, or to put their money in one whose goals are broader.

Mackey's writing comes across as mature and thoughtful, framing the debate in terms of human issues. Friedman, for all his influence, seems genuinely blind to the idea that there is a world beyond the spreadsheet. And Rogers just looks like a Wall Street cartoon -- the "Greed Is Good" rationalizer. He's not a bad person from the sound of it, but I've always been baffled by the genuine anger and venom that many free-market types seem to reserve for people who act on moral principles inside the market system.

Hurricane Katrina has been and continues to be a punch to the gut. It's horrifying and tragic -- if you have anything to spare, donate to help.

My good friend Doctor Chuck has posted a couple of pieces on the hurricane and the country's reaction to it. I think I'll probably be livid soon, but for now it's a little numbing.

For now, I'll pause to reflect on this gem from TechCentralStation, the net's own little cross between The Cato Institute and Engadget. It springboards off of Katrina coverage, and bears the happy little title, "Three Cheers For Price Gougers." I'm not sure what free-market libertarians love so much about hurricanes, but every time one hits, they seem to crawl out of the woodwork to squawk Randian tripe about the inherent wisdom of the market.

If a gas station owner has gas, someone has to decide who gets it. If the price remains at pre-hurricane levels, many will fill their tanks, because they can afford to do so... Many will do so even if they have no immediate need for it. But after the first few people do this, the gas will be gone, and none will be available for those who come after, because it's now tied up in the gas tanks of those who didn't really need it.

This is certainly true, but he takes a bold step by stating that price gouging - boosting prices dramatically in areas where critical resources are scarce -- is a great solution. That works fine, as long as you live in a happy fantasy world of classroom abstractions. "Bob has $100, and Jane has $100. How will they choose to spend their money?" The reasoning goes. "Their decisions are what makes the free market run!" That's a fine way to determine the price of plasma TVs and ice cream -- it ensures that the people who REALLY want them will get them, rather than just the early-birds. The writer of the article isn't talking about plasma screens and ice cream, though. He's talking about how to best distribute critical resources like fuel, water, and food in the wake of a natural disaster. Just in case we misunderstand, he clarifies:

If ice prices rise to the market, the man who needs to keep his insulin cold for his diabetes treatment will place a higher value on it than the man who wants to keep his beer cold, and will have a better chance of getting it.

The writer, in his wisdom, seems to have overlooked the system's critical flaw. What if the man with diabetes has $50, and the man with a warm beer has $200? No amount of price-gouging will help the man with diabetes as long as our hypothetical beer drinker really wants some ice. The 'value' that the diabetic man places on the insulin is infinite, but the resources he has can't match the value. Tough luck for him -- that's the way the market works!

This is not to say that a free-market economy is somehow inherently bad. It's simply how things work when people can buy and sell goods freely. To pretend, though, that The Invisible Hand of capitalism is some sort of inherent moral force is a disgusting and crass insult to the victims of Katrina. According to stories coming out of New Orleans, Katrina's worst-hit victims are people who were simply too poor to leave when the storm approached.

"Let them know we're not bums. We have houses. Our houses were destroyed. We have jobs. It's not our fault that we didn't have cars to leave," Shatonia Thomas, 27, said as she walked near New Orleans' convention center five days after the storm, still trapped in the destruction with her children, ages 6 and 9.

Money and transportation -- two keys to surviving a natural disaster -- were inaccessible for many who got left behind in the Gulf region's worst squalor.

"It's a different equation for poor people," explained Dan Carter, a University of South Carolina historian. "There's a certain ease of transportation and funds that the middle class in this country takes for granted."

They had no cars, no money to hire transportation, and obviously state and federal evacuation plans offered them no help. The Market, in its infinite wisdom, left them high and dry. Or, more accurately, low and drowned. By the reasoning of TechCentralStation's article, though, they didn't "value" escape highly enough.

Thanks to Substitute for finding this story before I did. It reduced both of us to baffled, boggling silence.

For centuries, the argument in favor of laissez-faire capitalism has been simple. If you step back and let businesses pursue profit without restraint, legitimate needs and desires will be taken care of in an efficient manner. Moral concerns, the argument went, were better handled by consumers voting with dollars than governments coercing with legislation.

While I have my issues with that presupposition (see earlier posts about The Miracle Of The Market and the language of economics), it has given rise to some innovative approaches to social activism. The Social Investment Forum, SocialFunds.com, and other similar projects play by the rules of the free market, investing money in corporations that don't abuse the environment or exploit their workers. In that way, they're putting a dollar value -- their own money -- on those positive business practices.

Sounds cool, right? Putting moral value into The Market as something with economic weight? Bzzzzzt. According to Steven Milloy, a FoxNews and New York Sun columnist, they're bad people trying to weaken businesses. In order to combat those nasty, nasty investors who let moral responsibility get in the way of stock returns, he's founding a new mutual fund to counter Socially Responsible Investing.

Conrad posted a choice quote from the Wall Street Journal's article:

Founded by Steven Milloy, a columnist for FoxNews.com and The New York Sun, the fund aims to get good returns for investors while - in his words - evening the score with leftist forces that are chipping away at business. Culprits include corporate management, mutual funds and other groups that promote so-called corporate social responsibility.

"Businesses are being pressured by radical politicized left-wing activists to do things not in the best interest of the whole free-enterprise system," said Milloy, also an adjunct scholar at the Cato Institute and publisher of junkscience.com, a commentary site that bears the motto: "All the junk that's fit to debunk." "We want to be a counterforce to the activists," Milloy added.

So, let's revisit. When people decide what to invest in based on moral principle, they're bad. Because if a corporation is doing something legal to make a profit, that's good. But if people try to change laws to keep corporations from doing things they think are wrong, that's bad. Because if people really thought the things were bad, they would vote with their dollars. But if they vote with their dollars, that's bad. So, to stop them, Milloy and his friends will invest in companies that do bad things. And that's good.

Got it.

Catherine and I have been talking over the last week or two about the difficulty of discussing moral and ethical choices in our society when the discussion takes place in the language of economics. Free market capitalism is a well-oiled machine at this point, churning along and refining itself with little concern for troublesome bits like ethics or humanity or long-term viability.

Economics is a strange, magickal science to begin with. At certain levels, it's about describing the interactions between different parties and how they exchange valued things, like work and gold and time and DVD players. On a large scale, trying to predict how a nation's economy will go depends on very abstract philosophical models. Figuring out what to do to change and shape that direction is even trickier. In many cases, even deciding what we're measuring to determine success or failure is debatable. The only true anchor point of economics is this: Having More Is Good, Having Less Is Bad.

There are lots of ways to extrapolate this into what appears to be an equitable ethical and moral framework. In a large group of people, for example, one might decide that the median valuation of personal net worth is the measure of societal success. Or, perhaps the frequency with which people on the bottom of the net-worth pile advance to higher net-worth tiers. Or perhaps the percentage of people whose net worth is below a certain 'acceptable' level. If that number shrinks, we can declare victory.

These valuations, though, still collapse the human experience to a purely economic one. This isn't shocking -- economics is a language, a set of tools, and it doesn't include the meta-tools to describe the world outside of itself. You can't describe a work of art in economic terms -- only what people are willing to pay for it. You can't describe a child in economic terms -- only the cost of raising it, its potential productivity, and so on. There's nothing wrong with that; theology, for example, doesn't include very useful tools for analyzing the repercussions of international trade agreements. But increasingly, because economics seems very objective and rational, our society turns to its language, its constructs, to resolve inherently moral and ethical problems.

The concept of "The Market" is an example. Libertarians especially are fond of talking about The Market as if it is Providence, a force that works all events to good, even if we can't yet see it.

The International Herald Tribune has an interesting (if depressing) article today that highlights the problem. While the main focus of the piece is on Administration restrictions on African AIDS programs, there's a nugget that highlights the moral neutrality of The Market.

Here in Livingstone, Zambia, I visited Corridors of Hope, a U.S.-financed center for young people that has proved cheap and effective in reducing HIV among prostitutes and long-distance truck drivers. One prostitute in the program is Mavis Sitwala, an orphan (probably because of AIDS) who is supporting her five siblings and one child. She says that truck drivers pay $1 for sex with a condom or $4 for sex without.

"At times, you need food or money to pay the rent," she said, "and so even if he won't use a condom, you agree."

In the language of The Market, Mavis Sitwala is simply a free actor willing to do certain things in exchange for monetary compensation. Those who risk more receive more -- The Market has put a certain value on sex, both protected and unprotected, and that's just the way it is. The question of whether what she's doing is right (or what the truckers who hire her are doing right) can't really be considered. The only reason to intervene is if, say, Mavis' actions cause a ripple effect of economically detrimental health care problems.

Terri Schiavo's case recently highlighted the issue. A Christian acquaintance of mine said that we should work to build a Culture Of Life, to prevent anyone from being taken off life support. I pointed out that this would take metric tons of money -- Terri Schiavo is alive as I write this entry only because her husband won a malpractice lawsuit against her doctors and secured more than half a million dollars for her medical care. In low-profile cases, where low income families have no money to pay for the care of an infant or elderly loved one, are we as a society willing to foot the bill? The Market won't take care of that one -- it's brutal in its efficiency, as any study of insurance industry practices will show.

Are we as a culture willing to make decisions that are 'economically bad' but 'morally right?'

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is a bad piece of legislation that's floated around for years. It's a complete wet dream for the Credit Card Industry, and it raises the hackles of consumer advocates all over the country. Put simply, it makes it much much more difficult for individuals to file for bankruptcy when they're caught in the doom-spiral of debt.

The rationale for the bill (unchanged since the first versions were floated in 2003) is that lots of people, scandalous libertines that they are, enjoy lives of wanton excess. They run up bills with caviar and furs only to leave poor, overworked credit card companies with the check -- escaping the consequences of their actions via bankruptcy laws. Clearly, eliminating the loopholes and preventing these abuses is essential! *cough*welfarequeens*cough* This is horse shit, plain and simple. Others have dissected the flaws in the bill's various incarnations, and its record should speak for itself. While irresponsible spending is bad the recent increase in bankruptcies our country has seen since the 90's has little to do with irresponsible consumers and a lot to do with the credit industry's eagerness to extend credit to risky people, then hit them for exorbitant fees when they can't pay the debts back. This is generally known as "predatory lending" and as a Christian, I find it especially troubling. Scripture condemns the process (remember "usury?") and even the Old Testament, hardly a progressive document by today's standards, mandates regular economic redistribution to prevent cycles of poverty and indebtedness.

The Washington Post published an interesting little anecdote on Sunday that highlighted the problem:

For more than two years, special-education teacher Fatemeh Hosseini worked a second job to keep up with the $2,000 in monthly payments she collectively sent to five banks to try to pay $25,000 in credit card debt.

Even though she had not used the cards to buy anything more, her debt had nearly doubled to $49,574 by the time the Sunnyvale, Calif., resident filed for bankruptcy last June. That is because Hosseini's payments sometimes were tardy, triggering late fees ranging from $25 to $50 and doubling interest rates to nearly 30 percent. When the additional costs pushed her balance over her credit limit, the credit card companies added more penalties.

"I was really trying hard to make minimum payments," said Hosseini, whose financial problems began in the late 1990s when her husband left her and their three children. "All of my salary was going to the credit card companies, but there was no change in the balances because of that interest and those penalties."

Punitive charges -- penalty fees and sharply higher interest rates after a payment is late -- compound the problems of many financially strapped consumers, sometimes making it impossible for them to dig their way out of debt and pushing them into bankruptcy.

The industry makes its money on people who run up large balances and have trouble paying them off. Whether this is due to dumb spending patterns, emergency medical bills, a broken marriage, or identity theft is irrelevant: the industry wants to make a profit, and high-risk people are the best way to make a profit. Rather than changes its lending patterns, the industry has lobbied congress for years to make credit card debts unprotected -- in other words, they want credit card debt to be bankruptcy-proof, following debtors around until the sun burns out.

That's exactly what the ironically-named "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" does.

The real beauty of it, though, is the bill's sponsor, Chuck Grassley. He's got a conservative voting record on moral issues like gay marriage, abortion, and sex education. He talks a strong game on this front -- he's a member in good standing of The Family, a creepily named Washington group that melds Christian language with conservative nationalism and hides itself behind a veil of media-hostile secrecy. With this strong moral foundation, Grassley should be very sensitive to concerns about Biblical standards, right? Not quite.

This gem just in from the Des Moines Register:

A national group of Christian lawyers is appealing to church leaders to join them in lobbying against the bankruptcy reform bill introduced by Sen. Chuck Grassley, R-Ia.

The lawyers say the legislation runs contrary to the forgiveness of debt and charity required by the Bible.

"As Christian attorneys, we strongly believe that it was never God's intention to create a society where indebtedness was a crime or a badge of dishonor," Christian members of the National Association of Consumer Bankruptcy Attorneys wrote in a letter sent Feb. 26 to hundreds of church leaders across the nation.

The lawyers note that in the Old Testament, God did not outlaw borrowing and lending, but provided that loans would become discharged every seven years.

In response, Grassley said Congress could not be bound by biblical mandates because "the Constitution does not provide for a theocracy."

"I can't listen to Christian lawyers because I would be imposing the Bible on a diverse population," Grassley said. "I'll bet those lawyers wouldn't want us to impose the principles of forgiving debt every seven years. If that were the law, nobody would loan them money."

This isn't shocking to me. Despite Grassley's moral fortitude on popular Christian hot-buttons, he's jumped at every chance to screw individuals since he was elected in 1980. He's voted against eliminating the "marriage penalty" for married taxpayers. He's voted to repeal safety standards for assembly-line workers. He's voted to limit appeals in death-penalty cases, even when new evidence may prove the innocence of those on death row. He voted against minimum wage increases. He... well. You get it.

Grassley is quite happy to demolish Church-state lines when it favors his political career. He's thrown his support behind new legislation that would allow churches to endorse political candidates without losing their tax-exempt status. But when it comes to bankruptcy legislation, he knows which side his bread is buttered on. The credit industry, and MNBA in particular, is one of the GOP's largest campaign donors, and when they come calling Grassley answers. When their exploitative business model is threatened, society's morality and compassion runs a distant second. "I can't listen to Christian lawyers," he says, "because I would be imposing the Bible on a diverse population."

Remember this, Christians. Remember this moment and remember it good.

You are tools in a political game, and you are fools if you believe otherwise.