In response to the argument that homeowners - i.e., regular working stiffs - owed banks no moral obligation to pay mortgages on an underwater property, Megan McArdle flipped out. Of course people should! In this very polite slate essay, Daniel Gross explains why McArdle is an embarrassment to thinking people everywhere:
Blogger Megan McArdle expressed disdain for people who chose to indulge themselves on consumer goods and services while not keeping current with their mortgages.
Um, do any of these people read the Wall Street Journal? Strategic defaults are the American way, and I'm not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time.
That's exactly right. People used to take McArdle seriously, but are not beginning to see her for the pro-banking shill that she is. She believes that people who borrow money from banks should play by different rules than the banks themselves.
McArdle like other moralists, isn't actually interested in creating what we consider morality. Instead, she wants to create a morality that blesses banks for the same conduct we'd condemn individuals for. This is slave morality.
To people like McArdle a bank that defaults on a debt is a rational economic actor. Indeed, banks should default on bad deals, since it leads to great market efficiency. People who default on loans with banks deserve to burn in Hell.
As is usually the case with moral questions, one must always ask: Whose morality is this, anyway? McArdle's morality is banker's morality. What's good for the banks is moral, and what is bad for the banks is immoral.
