Enforced Empathy

Dolors & Sense

by Sanford Rose

KISSIMMEE, FL—(Weekly Hubris)—3/7/11—The clerisy* in this country includes a substantial group of non-institutionalized lovers of pain.

Not their own, to be sure. Check that! Yes, their own—but not the direct kind. Rather, referred pain.

I allude to those investors who say, often publicly, that recessions are a good thing because “they clean things out.”

I allude to politicians who want to let the housing chips “fall where they may.”

I allude to academics, many myrmidons of the plutocracy, who support this position by advocating an end to all government efforts to prevent mortgage foreclosure.

Let’s get something straight: markets in this country are rarely free, and even if they were, it is sometimes necessary to reject the price signals they emit. And we do—often.

Or, if we allow the market price to prevail, we frequently offset price action which is unfavorable to interested groups if that is in the national interest.

Indeed, a major tenet of economics is that government should offset the pain of free trade by retraining those adversely affected by it.

Presumably, it is a question of properly computed benefits and costs. If the benefits of free trade exceed its costs, those who benefit (society at large) should give up some of this excess to help the victims of that trade (those who lose their jobs to imports).

In the case of housing, the benefits of propping up prices are really negative costs. If we don’t make an effort to raise house values, there is a better-than-even chance that the housing market, which has always behaved like the proverbial unmaneuverable battleship, will continue its five-year downward trend until it effectively drowns the economy.

Thus the benefit of manipulating housing prices is the avoidance of a double-dip recession, which will generalize the concentrated pain now being felt by the mortgage holder.

And that justifies a lot of prophylactic spending. It may even justify some sort of direct subsidy to home owners who are most underwater and therefore most likely to default as the market continues its slide.

Is that subsidy equitable? In a narrow sense, it is not. It takes from all in order to give to those who have mortgages.

In a broader sense, it may be if it takes from all less than would have been lost without that subtraction.

The recession causes us all pain. Empathy for its immediate victims is compulsory in order to reduce the sum total of suffering. It is simply a form of self-defense.

*Editor’s Note: Sanford Rose’s vocabulary (among much else contained in his noggin) rocks! “Clerisy,” should you be unfamiliar with the term, means “intelligentsia.” If “intelligentsia” is also unknown to you, never mind; read no further.