the badge
by Mark Hunter Mulvey
Published: July 23, 2008
“If there were ten men insured against either wealth or starvation, and offered a green ribbon for five hours’ work a day and a blue ribbon for ten hours’ work a day, nine out of ten of them would be trying for the blue ribbon. That competitive instinct only wants a badge. If the size of their house is the badge they’ll sweat their heads off for that. If it’s only a blue ribbon, I damn near believe they’ll work just as hard. They have in other ages.”
- F. Scott Fitzgerald, This Side of Paradise
“On its website Fannie Mae boasts that it has helped ‘55 million families achieve the American Dream’ of home ownership.”
- Times Online, July 18th, 2008
The Badge is to blame for the subprime mortage crisis, but the question remains: who is to blame for The Badge?
Who created the Acquisition Imperative that has infected so many American souls? This sense that one must steadily acquire more in order to pursue, and eventually obtain, a sense of achievement? Is it man’s frilly plumage designed to impress potential mates or just an indication of nature’s sense of humor? The instinct to accumulate for the sake of accumulation is, after all, humorous to watch.
But when the accumulation exceeds the means to accumulate we see the emergence of loans, a fine way for one man to profit from the lofty aspirations of another. Loans have become an essential part of the American experience, and the marketplace has been designed to expect them. Big ticket items like homes and cars are virtually impossible to obtain without a financial “head start” in the form of a loan, even when these purchases are relatively modest in scope.
But the recent collapse of two of the largest mortage lenders in the country, Fannie Mae and Freddie Mac, has brought the crisis straight to Pennsylvania Avenue. The Bush administration decided to rescue the two institutions and pull them out of their monetary void in order to fend off further plummeting and the beginning of a legitimate fiscal disaster. The move was a necessity: to lose these two behemoths, whose combined debt tallies $1.5 trillion against the $5 trillion in mortgages they guarantee, could have effectively stomped out the mortgage business altogether. This would not merely have resulted in the lack of means to acquire overinflated Badges, but the means to purchase even the most humble abode. This is not to mention the overall economic ripples that would have trickled inevitably into every sector of business and finance.
Though some disagree with the government’s move here, I disagree with the circumstances and standards of living that brought (and continue to bring) hard-working Americans past the point of affordability. This overinflated and grandiose desire to own and acquire many objects, this Badge, is driving people to spend far more than they have to spend.
Could an American culture built around a more reasonable measure of success have prevented such a financial collapse? Perhaps. But there’s no turning back now. The American Dream is hard-coded into the cultural fiber, and will continue to be the point of reference by which the working class measure themselves and relate to one another.
The Badge is slowly burning our American wings.
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July 24th, 2008 at 2:37 am
Bemoaning the negative aspects of our culture makes a good article but what’s your solution?
July 24th, 2008 at 2:39 am
So, are you a commie?
July 24th, 2008 at 3:33 pm
The desire to achieve the most you can is in fact part of human nature. You can’t change that. If you look at Maslow’s hierarchy, the top spells out self-actualization. Self-actualization is different for each person, but note that every human being will try to strive for the best he can be. Not every person gets there, but the point is that they will keep trying and trying provided that they have met their basic needs, safety needs, love, esteem, and experience needs. This process is sort of a path that human beings take throughout their lives. Now, for the average joe, his self-actualization is to live the american dream: buy a house with green grass, get married, and have kids. For others, their self-actualization is much more than that. You cant say that every american’s desire should be to own only one house because that wouldnt suffice their “need” for self-actualization. So, for you to say that humans’ desire to have more and more ruined the economy is a fallacy because by saying that, you’re trying to change or even impede on human development, not to mention look like a dictator.
If you give your hypothetical son an apple, and he drops it on the ground, will you give him another? What if he drops the second one? We, as a society, must learn from mistakes, and i mean the hard way. Thats the only way for us to continue growing to become a better society. When you get to it, houses cant go up in prices any faster than incomes over long period of time. Housing prices were going up and everyone was making money and prospering, especially the banks, who made more money off the fees than the interest. Once you get drunk off the power of all this earning capacity, you want to keep the game going. And, eventually, you run out of people who can make the payments. Banks were making bad loans and consumers were trying to so hard to get a house that they overestimatged their buying capacity and even fudged their numbers to make them look more profitable. As long as prices were rising, everything was accepted and fair game. The problem though is that price appreciation was a phantom, it never really existed. So, now prices are coming back into line with income and earning power….but the DEBT IS STILL THERE! Thats a problem because now people are defaulting and the people who owned that paper, now own a house..and the house is only worth what they gave you for it! Bankers made billions and billions of dollars off this because they could afford to make risky investments, there was tons of credit, and now its all coming down. So these bankers who took out billions of dollars out of the system and pocketed it have the gull to come and ask us, American citizens, to pay for their mistakes. I dont want to pay for the bankers who “dropped” the apple on the floor and i dont want to pay for the consumers who “dropped” the apple on the floor. They both should take the hit and learn from their mistake. If the gov’t keeps bailing out wall street and bailing out consumers who are so stupid that they thought they could afford something they couldnt, this will lead to a very dangerous america, where more risky behaviors are welcome because the gov’t is behind your back.
This just reinforces my notion that there shouldnt be any federal reserve because they caused this superficial inflation in the prices that never really existed. Let the market operate on its own. You can bail out people which would put a temporary band-aid on or you can let this play out and let the inevitable happen. Let the market do its magic. By bailing people out, youre making it better inthe short-run, but MUCH MUCH worse in the long-run. And at whos expense? The people who work 80 hours a week and are smart with their money?
My message is: Banks and faulty consumers: TAKE YOUR LOSS, NOT MY TAXES!
August 7th, 2008 at 6:37 am
I agree with Nicholas Singer, however,.. the fault extends not only to the banker and buyer, but to the federal government that provided the tax roll overs incentive on capital gains, so long as that new house was your your primary residence, you could put off paying the capital gains tax until you retired..this encourage middle class Joe to speculate in the housing market….guess what a lot of baby boomer’s are getting busted on that one…just in time for retirement….
August 22nd, 2008 at 3:34 pm
I agree with Nicholas as well.
We have to let the bubble burst, even if it hurts. The alternative is to keep making the problem bigger, and inevitably the hurt bigger as well.
If an American family did what the federal government does (and some do) every time they ran out of money they would get another credit card. The reality is someday you have to pay the piper and the longer you wait, the bigger the bill.
Recessions aren’t bad. They help remind us all to tighten our belts in small, if slightly painful ways. Depressions are bad. They force us to tighten our belts in drastic and disasterous ways. Recessions also teach us something about needs vs. wants. Depressions take people who haven’t learned that lesson and throw them into chaos without any mental, financial or emotional preparedness.
There’s no point arguing about whether American could experience another Depression. It can. Let’s pay the piper, brush ourselves off and consider it a costly lesson learned.