Sending Grace to Wall Street
At the risk of saying something blasphemous…
During this whole financial crisis, which seems to be getting worse by the day, the Parable of the Prodigal Son.
I’ve always been fascinated by the two sons; the younger one, who demands his inheritance and goes off and spends it wildly and the older son who stays and is the “good son.” There is always a lot of sympathy for the younger son who realizes his wrong and comes back to his father asking to be made no more than a slave. The father instead gives him a party, joyous that his wayward son is finally back home.
The older son isn’t so happy. Here he was, the good one, who stayed and was faithful to his father and his irresponsible brother is getting a party.
I’ve always identified with that older brother, because I understood his anger. He was the good guy, and he felt like he was not be rewarded for his faithfulness. I’ve been that situation as well.
But Jesus was trying to get at the whole concept of grace, of loving and caring for someone regardless of what they’ve done. The father loved both sons, but he was happy that his son that wandered off was now back home. This was no time for laying blame, but for granting forgiveness.
So, what does this have to do with the current crisis? Well, I’ve been reading how so many Americans are calling their Representatives and Senators in anger over the proposed “bailout” of American financial institutions. The argument is that we should not be helping these ultra-rich people who were greedy, while we are trying to make ends meet. “Let them hang,” many say.
I can understand that. These CEOs and other heads either made incredibly stupid decisions that got us to this point, or even worse, did things that are criminal. Why should we prop up these companies, when they were greedy?
Americans are in a punishing mood and it makes every bit of sense. But as tempting as it might be to pack up all these execs and place them in jail or worse, I think it might be time to extend a bit of grace as it were. Not because they deserve it, but because we shouldn’t want exact punishment at the risk of plunging in this nation into an economic crisis that most of us have never faced.
Blogger Megan McArdle has written extensively on this whole situation and argues that it is preferable to letting some Wall Street execs walk, if it means saving the American financial and economic system.
Say GDP contracts by a third and unemployment hits 25% or so–a not unreasonable supposition if we’d let the money market be destroyed and pushed all the institutions that regularly borrow there into liquidation. Short of aerial bombing, there is no “even worse”; that’s what a country looks like when its financial system collapses.
I suspect there’s an awful lot of anthropomorphizing the economy going on here. What happens to an economy when its credit system implodes is not that it cancels the cable subscription and takes a second job waiting tables on weekends. What happens is that everyone stops making so much stuff, because no one else wants to buy their stuff. Everyone’s living standard falls, especially those who are shoved into the double-digit unemployment figures caused by the dislocation.
Listen, it’s not fair that the taxpayer has to help Wall Street out of this mess. (Though I would agree with Victor Davis Hanson that many taxpayers on Main Street are also responsible for this mess as well.) But if we don’t do anything, then we will see more and more banks fail, credit markets will freeze (this is starting to happen already) and that will then ripple through the economy with the results being closed businesses and lost jobs. So, we can get our ounce of justice, but we would do it at risk of punishing ourselves. We need to show some grace in order to save our own skins, not to be nice to the wheeler-dealers.
If we want to express our anger, then lets work on better regulation to prevent this from happening again. That’s justice. But let’s show some grace right now and get a “bailout” passed, because the stakes are too high to be asking for vengeance now.
Cross-posted at the Square Deal