What is Really Wrong?

Perhaps you too are watching as America and the world scramble to address the current financial crisis. So, how would you characterize exactly ‘what’ is going on? We’re told an effort is underway to 'save'our economy... and by extension the world economy.

In the simplest terms, the ‘what’ that is going on seems to be threefold: a) a free market that is naturally cleaning itself up, b) a hurried attempt by our leaders to artificially avoid the negative consequences of some really bad economic decisions that have been made and c) a political power struggle to take advantage of this crisis to re-distribute the control of the economy.

I don’t want to pretend like this is a simple problem. It isn't. I have spent many hours over the last few days talking with and reading what really intelligent people have to say in an attempt to understand the many layers of this problem (e.g., subprime mortgages, credit deposit swaps, lack of liquidity in the credit world, etc.). It points out the design of our financial system is a house of cards – and our leaders desperately attempt to keep that house from crumbling.

Yes. It’s complicated. So much so, that I bet you don’t have a clue what YOU could do to help solve it.
Do you?
Where would you even start?

I have a simple suggestion that might encourage you: Choose who you will place your trust in based on morality.

Morality? What’s morality got to do with our financial crisis? Well, morality is the ability to make distinctions between right and wrong conduct. If you are a ‘moral’ person your conduct is motivated by doing what is right.

Clearly, our financial system either fails to prevent – or promotes – immoral practices - choices that are wrong. Borrowers falsify their earnings and assets in order to acquire mortgages. Lenders ignore risks to provide unworthy people access to capital (mortgages, credit cards, etc) and charge immoral interest rates. Investment banks ‘gamble’ their depositor’s money. Financial institutions mis-state the balance sheets to attract investors and clients. CEO’s manage their companies to maximize their own pay package. And so on.

Interestingly, capitalism (economics – or an economy based on the free principles of supply and demand), generally speaking, has almost all the mechanisms required to ‘deal’ with all sorts of economic problems – without any intervention on the part of anyone. In fact, that is what is going on now as we await our 'bailout'. Our economy is punishing the immoral and rewarding the ‘good guys’. People that could not otherwise afford houses and those institutions that financed them are losing them. Some of the banks that ‘gambled’ are gone – others may be gone soon. Financial institutions are restating their balance sheets in an attempt to regain the trust of their investors and clients. Companies are reviewing and in some cases changing how their leaders are compensated - to regain investor trust. Again.. it goes on and on.

I said capitalism has ‘almost all’ the mechanisms required to produce a well run economy. In fact, it lacks only one element that I can see. Morality. It was present once. In fact, it has been a part of America’s fabric for a very long time. It was ‘built in’.

Alexis De Tocqueville – said more than 200 years ago: “America is great because she is good. If America ceases to be good, America will cease to be great.”

It was our inherent ‘goodness’ that restrained our free economy. That goodness formed the basis of our government – which rightfully undertook to protect American’s right to the pursuit (not.. 'obtainment') of happiness within a free country. It was the goodness of our leaders that resulted in good laws. Usury laws that limited the amount of interest you could charge someone. Surity laws prevented people from being held hostage to credit. Securities laws were enacted to compel companies to truthfully report their financial situation. You get the idea. And we put some regulatory agencies (good people) together to ‘watch’ the economy and make sure it was operating honestly. There have always been ‘issues’ – but for the most part it worked.. and works - fabulously.

However, at some point – we lost our way. We lie. We deceive. We are selfish. We covet. We gamble. We steal. We are greedy.

On both sides of the aisle our lawmakers and people we have entrusted to protect our freedom – while also compelling right behavior through laws – have lost their morality. They no longer place ‘doing right’ above their self interests (retaining power, benefiting their constituents and donors, etc.). They no longer believe in economic freedom – but promote over-regulation, control, re-distribution (taking from one to give to another), and other forms of exercising their authority over us and our economy. They may pay lip service to the ideals of freedom. However, in many cases, they are primarily interested in being in charge. Managing. Controlling. Being on top.

Not all. But too many.

America in on the brink of ceasing to be great because it has ceased to be good.

Please – consider choosing good people to put your trust in – so that America can remain great. Work for and promote good people in the workplace. Vote for good people at all levels of government. Pick a bible-study leader because they are a good person – not because they look good or know everything. Let a ‘good person’ be the lead in the high-school musical instead of the ‘best singer’ (as long as they are at least a reasonably good singer ;>). Invest in companies run by good people – doing good things.

CHOOSE GOOD EVERY CHANCE YOU GET. That’s MY big idea. Let’s weave being good back into the fabric of America – where it belongs. The rest will sort itself out in due time.

This too shall pass.