Essay on the Economic Crisis: The Spoiling of a Perfectly Good Myth

If there has been one pervasive theme to lately imbed itself in the American conscience it is that of “crisis.” Crisis has been singled out and infamously dubbed the rearward of the first decade of the 21st Century. One hopes it continues dutifully onward, quickly following its charge into oblivion. Good riddance! But our brighter hopes aside, there is no small feeling of apprehension and pragmatic concern that such a hydra-headed creature will not go gently into that dark night. If one gets too close on its heels, seeking the legendary ‘green shoots’ (which purportedly rise like the Phoenix from the desolation of its passage) for instance, one may sadly discover, too late for personal retreat, a new face of terror with grim teeth set, ready to devour.

Such is the cast of popular consciousness regarding our current ‘Crisis.’ It has reached mythic proportions. The perception of its origin has become mythic as well. Why? Well because anything that so completely captures our collective conscience must have an equally auspicious beginning. Human nature demands symmetry in these matters. But what is the content of this Crisis-origin myth, and who is responsible for its content? Unfortunately the answer has too much to do with partisan politics.

First off a word about what is meant by the term “myth.” Interestingly, the term does not necessarily implicate untruth, just unreality. That is, a myth, much like a scientific theory or model, explains the physical world in a predictable and consistent way, based on current understanding. The unreality comes from the fact that a myth is itself only a story about the world; it does not handle the raw material itself. The myth can serve a useful purpose by distilling observations down to a memorable and sometimes accurate analogy for what has transpired in the world. For example, much of the Christian world (myself included) knows that many tales in the Bible, seemingly mythical in aspect, nevertheless convey true teachings. Moreover, most deviations from the truth in the Bible owe more to transmission and translation error than fabrication. But the politicization of a myth almost without fail twists a story away from an objective, truth-seeking use and forces it to serve ideological ends. By ideological ends, I mean those ends designed to generate political currency, generally at the expense of truth.

We take the current Crisis as our case study. First we have the politicized Origin-myth of the left. In it, secret covens of reprobate bankers and financiers were responsible for the release of a new strain of viral mortgage. They poured over arcane tomes full of twisted financial mutations, until finally learning the secret to begetting new breeds of misshapen mortgages. These new abominations had arms of varying fractional lengths, like 2/28s and 3/27s, sticking out at unnatural angles. Other “balloon” mortgages were incubated with a self-destructive gene that, like a ticking time bomb, caused them to one day explode and spew foul viscera onto unsuspecting mortgagors.

These spawn were hideous, unrecognizable alongside the vestal fixed-rates of orthodox mortgagdom. In order to entice the gullible public to scoop up such fiendish brutes with open arms (pardon the pun), these malefactors (and to be fair, there were no doubt a few malefactresses as well) enlisted whole phalanxes of snake-oil brokers. This denizen, skilled in deceit, dispersed itself like a legion of berserkers in a confused melee, leaving financial mayhem in their wake. No device or stratagem however low fell prey to a scrupulous hesitation, for they were past human sympathy, urged forward by a boundless laissez faire fervor. They scooped up tranches and flung them out with pitchfork and shovel, with steam shovel; they sprayed them through pipeline and conduit; they pooled and warehoused funds; they issued and reissued securities; they sliced and diced, arbitraged, leveraged and hedged, insured and reinsured. They were relentless. They were going to give every helpless, hopeless, hapless single, immigrant, minority mother of no too confident English (or steady employment) a no-doc, four-point, 0%-down, 105%-LTV, variable rate, subprime, jumbo loan whether she wanted it or not. No sooner could she return and singlehandedly stage a coup against her native Central American government (though, on second thought, this analogy may fall a bit short of illustrating utter futility) than escape the ‘American Dream’ that was fast descending upon her, Dorothy style.

Or as the more right-leaning spin the tale, liberal policymakers – those devious malcontents clogging the arterial channels of government with demands for ever more bureaucratically dispensed largesse – tweaked, and pushed and probed; lobbied; threatened sticks and promised carrots; blustered and bullied; matched tits for tats; pulled favors and blackmailed bedfellows, all in pursuit of some ephemeral ideal, a naïve utopian vision of social justice where the ‘American Dream’ would be spread just a little thinner, to reach those on the margins. Or perhaps they were merely after the populist power.

Both wings of this gilded butterfly myth have sailed steadily higher on the winds generated by newsmen, politicians and academics. Truth or untruth is not put into issue by those powerful enough to have a voice or who should know better. Instead of illuminating, they embellish. They ride the upward currents of public outcry in order to justify political reaction. The reaction is touted as the natural and commensurate response to the Crisis. It is packaged and sold as “Change.” Through this process, the Crisis-origin myth is made to serve as the foundation for new policies, programs and regulations.

But amidst all this foment, we should pause a moment and bask in the warmth of a simple truism: big undertakings are best prosecuted after due reflection. We have limited resources, power and attention. Should we not act in as prudent and well thought-out a manner as possible to avoid unintended consequences and the need for future spasmodic reordering? In a word, should we not act efficiently? And what better means to achieve the end of efficiency than a quest for the truth behind the current Crisis, to identify the living, breathing creature between the wings? In this way we put an accurate label on our fears and level our swords at the true enemy.

To those who doubt the need for such a course, I point to what I think is a natural duty: to question a polarized political framework that so artfully and indifferently casts aside questions of truth. The inherent justification for making truth our aim, and for shaping change and political action to meet it, is self evident, or should be. Is not the underlying premise of all change the notion that the status quo has failed to grasp the truth or has strayed from it? Truth must be the end that all change serves, otherwise change is arbitrary and tyrannous.

So the truth is important. But it also has a weakness (or rather a strength that is inconvenient to humans): it is an abstract virtue. We humans are creatures of only relative perception and must always ask “What truth?” and “To whom is the truth to be told?” In the political arena, politicization of an issue means that an object (in this case the Crisis-origin myth) is made to serve political ends, ends of politicians and their confidants, not the common good of the citizenry. In other words, the good of the citizenry is not the center of the representatives' loyalties. This behavior is dishonest because it sells out the citizenry. The people believe, or want to believe in a free society, that their representatives pursue their common good as a matter of duty and high honor. This notion is mostly taken for granted in a long liberty-blessed country. But that is not what really happens.

Let's think about this a little more. What happens when official action lacks this just motivation? Begin with the public interest that we expect our representatives to serve. Is it not the alleviation of the current Crisis and the prevention of similar future ones, insofar as legitimate governmental power allows? Do not the politicians stray from this objective in their hearts and in their acts when they bow to special interests or make moves for short term and shortsighted political gain or to frustrate and exploit their political adversaries? And then deepening their transgression, do they not avoid confessing these narrow interests? Instead, do they not turn and face us and sound the continual alarm of “Crisis!” in order to maintain the power of popular fervor? And finally, do they not falsely play on our sympathies to lull us into expending just a few more of our children’s dollars to further their programs?

Frankly, the People deserve the truth. Official acts are arbitrary if done for someone or something other than for the People by the People. They are arbitrary because they betray the electorate, a transcendent body from whom legitimate power derives and to whom its use must be justified. In such a course, the electorate is reduced to a mere dupe. Thus, as far as a well ordered society is concerned, a sleight-of-hand approach to official action is corrupt and must be rejected; it is the antithesis of truth.

Of course representatives stand to gain from their indiscretions, and that is why they continue in them. Their primary gain is a tactical advantage in the war of partisan politics. They fight for an ideological viewpoint rather than the truth (rather than for the common good of the People). Our Founders understood this dynamic. One need only skim the 10th Federalist Paper to understand the danger they knew was lurking and always would lurk in the escalation of partisan bickering. Politicians have succumbed to the temptation to use situations like the current Crisis to present a public cover, to speak and act as if their true ends were transparent, as if their actions were attuned to addressing the public interest. But the cover (and the Crsis-origin myth that is made a part of it) is only a sort of counterfeit currency that these representatives spend profligately, in public to prove their bona fides and in private to improve their position vis-à-vis the other party.

But obviously counterfeit currency has no value. How then are the people taken in and bought off so cheaply? We can only turn to ourselves for the answer. While politicians may waiver in their love of justice, we are equally to blame if we passively play into their deception. The Founders recognized that it was good for the people to retain a healthy dose of skepticism towards the exercise of governmental power, as manifested by their division of powers in the federal government, their adoption of an express bill of rights and their retention of the common law principles of due process and the law of the land. It is thus incumbent upon us to identify and resist influences that make us susceptible to illegitimate uses of the public trust. Our own love of justice is our motivation. But what distracts us from this duty? How is our skepticism turned to acceptance?

In my own reflections I have identified three particular forces that I believe help contribute to the exploitation of the Crisis-origin myth: a human mythmaking impulse, an over stimulated society, and the politicization of the media.

Our crisis is an extremely complex issue that can be viewed through a thousand lenses, to the frustration of facile explanation. Consequently, my three factors represent only three tiny islands of insight on a vast ocean frontier. But we must each start with what capacity and experience we have. Only over time and with a collaborative spirit will all the lessons of such a far-flung cultural phenomenon as our Crisis open themselves up to us.

Mythmaking is an old human habit, engrained deeply in our subconscious minds. It would prove futile, and probably extremely harmful, to try to root out such a fundamental human characteristic. What is new and different in the present-day Western world, however, is the lack of a deep sense of history. All our focus turns to the present, with its vast array of color and gadgetry and interconnectedness, and to the future with its promise of even more, shinier baubles. Having only limited attention spans, and after a heady consumption of all things present and future, there is little appetite left for the old and the obsolete (that is so five minutes ago!). What results from our loss of history is an unanchored, shiftless mythmaking impulse. Myths lose their empirical underpinnings and become subject to manipulation by opportunistic partisans.

The next piece to this puzzle is our modern language of sensation. Our society has become fluent in the language of disjointed, spasmodic sound bites and graphic images, available through ever more immediate and visceral mediums. The natural competitive interplay in such an environment suggests that the claims to the most shocking or noteworthy or novel must grow ever shriller. Hence, our Crisis quickly became touted as the biggest all-consuming public concern since the Great Depression (itself little more than a modern sound bite with only faint overtones of an actual historical time and place). Such a result was inevitable if the Crisis were to maintain our attention for long. Ironically, such vying for attention probably helped catalyze the downward spiral, through what we have been taught are known as “feedback loops”—but this is another point for another day.

The third and final element to the problem – from the angle I am viewing it – is the politicization of media. This is a widely recognized phenomenon, but not one whose ultimate effects are widely understood. A once healthy and well rounded public discourse, filling much middle ground, has been pulled back, like a receding tide, towards opposing poles. Its retrocession has left moderation and civility denuded in a wide no-man’s-land. The Truth has also been lost. In attempting to lay the loudest claim, each side prostituted what it claimed was the Truth until all her legitimate attributes were stripped away and only a garish effigy remained. In such a state, followers appear nothing more than silly, besotted hypocrites.

It is no great surprise that in such an environment the story of the origins of our Crisis would become altered. The inclination to create and adopt myth as a convenient explanation for the world around us is inborn. But this doesn't automatically mean we are misled. Still, extraneous influences can distort a myth and move it far away from the truth. Consequently, we should identify, study and excise these tainting influences if possible. We are then free to cope with an innocuous, even helpful, myth. Remember, a good myth is little different from a scientific theory or model. Both share similar goals. They attempt to take the messy, multi-dimensional raw material of the physical world and create a coherent story based upon it, one that is consistent and allows us to make accurate predictions about what will happen in similar, future circumstances. A good story or theory is necessarily an abstraction: it cuts out unnecessary details and simplifies the elements and processes involved. This is useful because it makes our experience in the world usable. Usefulness begins to wane, however, when too many important details are cut out or unaccounted for or are purposely distorted to create meanings not naturally deducible from the original elements.

In the context of the current Crisis, we observe a trend to both aggrandize and polarize the account of current events because of these three social and political pressures. The urgency of our Crisis is being used as a sort of currency, to bring about change—towards ends that are not completely transparent, and thus not inherently legitimate in a democratic republic. Politicians are only too happy to let shock-jock media inflate that currency. The people collectively fall victim to these excesses because of their predisposition to put faith in myth without rigorously testing it for reliability.

Our first step out of this predicament is a prudential one. However grand we (or the media) may want to chronicle our present struggles; however mythic, timeless or global in aspect they begin to appear; we cannot forget the individual nature of reality. We must pull back from total abstraction and myth toward individual element and matter. After all, the raw elements contain the key to all truth when they are understood in all their combinations and effects. Of course this understanding is beyond us, and we must rely on myth and science to a great extent; for from these we infer truth as best we can. But the willful machinations of government leaders and partisan players hinder us in this endeavor. We must be on the lookout for their stratagems, for their hyperbole and gross generalizations. We must retain a healthy dose of skepticism and, when torn between the strident claims of two warring camps, remember that truth is more likely than not to be found somewhere between them, obscured by the den of battle. We must jump in the fray and search for it. We may suffer blows and an occasional casualty, but that is the cost.

What does the truth of our Crisis look like? I know only what I can infer from the principles adduced in this discussion. Backing away from partisan depictions, toward the raw data, I see millions of individuals making millions of individual decisions over a course of years. Each and every mortgage represents an individual choice, several choices actually. Each has its own story. Each was undertaken with a greater or lesser understanding of risk. Many individuals took a chance that was not even available just a few decades before—society as a whole felt to take an additional risk in making that opportunity available. The lenders were similarly motivated by a panoply of influences. In fact, at only a few removes, we find ourselves in their camp: seemingly strangers to most mortgage transactions but nonetheless implicated by the great wheels of commerce, which circulate our retirement and investment money, round and round, till it makes its way to the farthest reaches of human industry and then comes back again at our call, if we are lucky. I resist the partisan’s generalizations, his version of the Crisis-origin myth where a clear-cut victim (again, pardon the pun) lies at the foot of a still crouching, red-handed villain. I reject extremely stylized interpretations of cause and effect, guilt and innocence, cleanness and uncleanness. I believe that it is only in humble recognition of a system of much vaster scale, with many more shadings of gray, that our society will begin to discover truth and to adopt means to bring about efficient change.