- The Washington Times - Saturday, November 29, 2008

ANALYSIS/OPINION:

ANALYSIS/OPINION:

They are “the” questions, unspoken but bitterly nagging, that are on everyone’s minds. They haven’t come up in a major public manner quite yet. But they did begin to reveal themselves last weekend, when 70-some demonstrators marched on Wall Street protesting you-surely-know-what.

As I pondered this, I received a thoughtful e-mail from a friend in Japan, one of our foremost foreign correspondents and a man of high integrity. “I find it disturbing that, in America, we jail bank robbers but give lavish payoffs to bankers who bankrupt banks,” he wrote at the end. “I’m reminded of that fact at the end of every month when I receive my Merrill Lynch statements.”

That same day, the New York Times, in one of its Page One articles on what could become the collapse of the American economy, noted that even President-elect Barack Obama, despite surely wanting to do the right thing on re-regulation of our gone-wild economy, nevertheless brought into his economic team men like Robert E. Rubin and Lawrence H. Summers. No one questions these men’s brittle brilliance and star power, as the Times noted, but it was “Mr. Rubin, with Mr. Summers, [who] helped tear down the regulatory walls between banks, brokerages and insurance companies, and freed them to trade in unregulated and little-understood derivatives worth trillions of dollars.”

And thus, the questions: Is nobody really going to pay for these horrible mistakes? Are the same people who so thoughtlessly and greedily got us into this mess now going to sit at the head of the White House team ostensibly trying to get us out? And, above all, how do we effectively “remoralize” our economic society, which seems to have forgotten and/or thrown aside the original moral basis of Western, and especially American, capitalism?

Let’s back up for a minute and recall the old “Protestant ethic.” This was the principle that underlay all of America’s original settlers. It said, in effect, that mankind would profit from hard work, thrift and efficiency in one’s worldly calling — but it also tied human beings to one another in honest labor and the profits from it.

I especially like the old story about J.C. Penney, founder of the Penney chain, who, having made it possible for 2,000 others to have and run their own stores in his chain, said happily, “And now I have 2,000 partners!” Funny thing about the Protestant ethic — it provided prosperity through morality.

Today, one can still find in America small businessmen, like my late, respected father who ran his own dairy on the South Side of Chicago, who still exemplify this historic ethic. But one has only to look at the decline, and even disappearance in public life, of the largely Eastern Establishment families who carried these moral precepts down through two centuries of American life to see what we have lost. Where, indeed, do you see a Rockefeller, a Carnegie or a Morgan in public life today? Instead, we read that:

• As late as September 2007, Citigroup’s chief executive, Charles O. Prince III, learned for the first time that the bank owned about $43 billion in mortgage-related assets and was told “no big losses were looming.” The bank’s risk managers never investigated deeply enough because of “longstanding ties that clouded their judgment” and, of course, booming short-term earnings (the New York Times). And this week, we are bailing them out.

• Investors in the U.S. stock market, including hard-working middle-income Americans like ourselves, have lost more than $9 trillion since the market’s peak a year ago. But 15 corporate chieftains of large home-building and financial-services firms each reaped more than $100 million in cash compensation and proceeds from stock sales during the last five years (The Wall Street Journal special analysis). Four of them have now filed for bankruptcy protection.

• When Countrywide Financial felt pressured by federal agencies charged with overseeing it, “executives at the giant mortgage lender simply switched regulators in the spring of 2007.” The new regulator, the Office of Thrift Supervision, promised “more flexible oversight” (The Washington Post). At last count, the combined assets of the failed thrifts “overseen” by OTS totaled $355.7 billion.

If one believed in the original American message to the economies of the world, to open a major newspaper any day now is to have one’s heart broken anew. One looks in vain for some American, man or woman, in this sad story who said “no.” One searches for the moralist who will ask, “Isn’t anyone going to pay?” Except, of course, us?

And now indeed, already — we face the latest indignity: The very people who blithely caused all this, with some personal and professional intention that balances between sheer carelessness and cold, precise deliberation, will come out of it just swell. While we … .

The problem that this president-elect faces, then, is a moment not only of grave economic collapse outside, but essentially of profound moral collapse inside. But how do you redo a country’s moral credo when so many have played the squandering game? How do you do what creative financier George Soros suggests, which is to “abandon the prevailing theory of market behavior”? Which is, since Ronald Reagan’s era, that markets will monitor and essentially regulate themselves.

Finally, how do we update the Protestant ethic? How do we return to a modernized version of, as that pretty song puts it, “the way we were”?

Georgie Anne Geyer is a nationally syndicated columnist.

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