econotheology

Really? The "Dismal Science" and the increasingly irrelevant discipline of theology?

Category Archives: Banking

Does anyone not look out for their own self-interest?

Before I get to far, there is a great opinion piece about the government’s role in the sub-prime mortgage crisis and how this led to the Occupy Wall Street movement in the Wall Street Journal this morning.

My real concern, as I state at the top, is the question about what is greed? Is it a bad thing? Are all forms of self-interest necessarily a bad thing? In the popular media, moralizing abounds about people being greedy and only looking out for themselves. Usually, it is CEOs, bankers, businessmen, pretty much anybody involved in finance or business broadly. I started thinking about this while listening to this radio show from Here and Now on NPR. The main guest Mr. Ron Hira, calls out the heads of Microsoft and other IT companies for being “greedy” and “only looking out for their own self-interest.” The entire show is about older IT workers who can’t get jobs, while at the same time, IT companies are looking for relaxed immigration regulations to higher new workers. The story is mildly interesting but the whole time I was thinking, “the IT workers are looking out for their own self-interest too.”
It seems to me that this is a classic case of people using ethics as a will to power. Of course the IT workers are looking out for their own self-interest. They need work. But, it is not correct to say that the only ones looking out for their own self-interest are the CEOs. I am trying here to clarify some terms. On the popular level, greed means something like “wanting any amount of money more than I say you can have.” I should think we could do a little better. I am proposing something like greed meaning, “wanting an excessive amount of money or wealth.” Excessive being the key term that would be difficult to pin down. The old IT worker would be immune from being called greedy simply because he does not have a good enough job (he is a janitor) and wants to work in IT because at one point in his life he was qualified. The CEO, who already has a high paying job, wants cheaper, younger, better trained employees so his/her company can run more efficiently to maker more money is the greedy one.*
*I guess at this point, we should say that because this show was on an American radio station, and presumably most of the listeners are Americans, that we should not be concerned with Indians being able to get work that they are qualified for.
I guess I am just wondering do we really expect people not to act in their own self-interest? Maybe there is a better way to frame this discussion such that we do not just resort to amateurish moralizing in order to get the upper hand in a debate.
I guess I can’t get away from my academic days, so I like a lot of citing. I recently read a great piece by Michael Lewis on the problems in California government, focusing on the local level. He writes, “Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.”
So, I am circling back to Occupy Wall Street and the IT workers. We are all grabbing as much as we can. We are all self-interested. Let’s not deny that this is the case. What we need to do is find a way to be for our own self-interest while also looking out for the self-interests of others. The mad grabbing and name calling will not work out in the end. I think that there is some kind of “selfishness” that is a bad thing. But, it has to be more than just looking out for your own self-interest because that is unavoidable. Selfishness has to go deeper and more insidious. Selfishness must me grabbing so that no one else can have any and totally denying that my grabbing won’t have larger social implications or caring about those larger social implications.
I have said much about selfishness without bringing it into the theological or religious arena. Some must be wondering, “where is the Scripture quoting and theological language about selfishness?” That is where we get the idea that selfishness is bad isn’t it? Scripture? Certainly, it is. Much of the discussion of selfishness and money comes form Jesus himself. In the Sermon on the Mount in Matthew 6, Jesus says, “No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.” Moreover, you do not need a prooftext to realize that the purpose of Jesus life was to lay down his life humankind. This example is clear, we should not just look out for ourselves. While, I am not going to exegete all of this, I think that the interesting part in the whole discussion is just before the previously quoted verse. Jesus discusses storing up for yourselves “treasures in heaven.” Jesus does not spell out exactly what he has in mind. However, it is clear that Jesus knows that incentive drives behavior. He does not say, “do not seek out treasure or reward, or any self-interest.” He wants us to have self-interest. Not self-interest that grabs at the complete expense of others. Self-interest that looks out for the interest of others. In the broader context, the Sermon on the Mount is primarily about looking out for other people. This is probably what Jesus has in mind for treasures in heaven, although it is not made explicit.
I think that Paul sums it up nicely when he writes, Phillipians 2:4 – “Let each of you look not only to his own interests, but also to the interests of others.” What I am arguing for is really nothing new. I am not saying St. Paul could have foreseen what is going on in today’s society, but the injunction seems particularly apropos. And, let’s be clear. The people who have failed to look out for the interest of others, are NOT just Wall Street bankers or CEOs. People signed up for the mortgages that they should have known they could not pay for. Our ENTIRE society is at fault for what is going on here and it will take much more cooperation to rebuild it then what I have seen is going on.
Sorry that was so long. Bonbons for those who finished! Although I doubt there were any! Let me know if you did!

“Inherent right to” free banking

I was reading the Wall Street Journal this morning, as I do most mornings (ahh the benefits of underemployment). Anyhow, I was reading a short little article about Timothy Geithner correcting statements President Obama made about what banks were and weren’t allowed to do. Obama’s direct quote was, “Banks don’t have some inherent right just to, you know, get a certain amount of profit.” This was in reference to Bank of America’s decision to charge $5 to any person using their debit cards to make purchases.
First of all, I am glad that Geithner has clarified that the government will not decide how much a bank can profit. It is just my opinion, but I think it would be a scary sign of how much populist opinion could control our government. Banks and Bankers are not all bad, but they do want to make a profit. That is their job. These are not credit unions or not-for-profit banks. And, the idea that the government should impose limits on what some entity can or can’t earn is a scary draconian proposition.
Second, the thing that I find most curious about this is just how free our banking really is in this country. If you are student, you can almost certainly get free checking. If you have some kind of job with direct deposit, you don’t pay anything for banking (at least at BofA). Yes, in the US, we have to pay over draft fees. It is a slap on the wrist and a small immediate loan that the bank gives you so you don’t look like a fool at the checkout counter. What an amazing time we time we live in? We can get money, in a moment’s notice, when we don’t have any! No it’s not free, but it shouldn’t be. Now, individuals will have to pay $60 a year for a service that allows them to have at their disposal all of their money without having to go to the ATM. It can be carried in a neat little card, that fits into a wallet and can be used everywhere from restaurants, to our little town market here in Boise. I have literally bought fruit on the side of the road with a debit card. Unbelievable! And now, I am being asked to pay a little for that service. Yeah I am bummed. I don’t want to give up $60 a year. But, this is not so bad. Go with me for a moment. When I lived in France, I had to pay 7 euro/month just to bank at Societe Generale. I had never had to pay anything to bank until I went to Europe. This is the norm there. Everyone pays a little to bank.*
*On a semi-related note, everyone pays with their debit cards, never credit cards. Most people are fully aware of exactly how much money they have at a given time and spend accordingly. In 2006, less than 50% even owned real credit cards. Now, I am sure it depends on the bank, but I didn’t have overdraft protection, so my card was just declined. I had no access to money if I didn’t have it, which might be in the long run a better system.
Finally, as my insider industry source has told me, this amount is probably what was lost because of a certain addition to the Dodd-Frank bill that passed in Congress during the height of the populist outrage against banks. In the bill, banks were limited in what they could charge companies who used the service of charging at the counter. So, the companies were protected and it has come out in consumer fees. Tit for tat. It was always going to happen my source tells me. And NONE, of any of this, has anything to do with sub-prime lending, credit default swaps, or middle-men taking huge commissions on finding buyers and sellers for this CDOs, or any of the other financial innovations that helped plunge our economy into recession in 2008.
So, we pay $60 a year to use our debit cards and now our President has made it a national issue. What a crazy world we live in.