There has been more blogospheric discussion on the topic of my post Doing the right thing, doing the legal thing. Megan McArdle, who started the discussion, has a long post elaborating on her objections to strategic defaults. Steve Waldman has two good posts up. Finally, at The Big Money Daniel Gross concludes:
Of course, corporate managers and financiers don’t suffer from these neuroses. Do you think billionaire investor Sam Zell feels any guilt or shame because his buyout of the Tribune Co., which had $12.9 billion in debt, ended in a Chapter 11 filing last December? Rather than worry about whether Americans will take cues from modest homeowners who make a tough decision not to stay current on debt, perhaps we should worry about middle-class Americans taking cues from billionaires and Fortune 500 companies who make the rational decision not to stay current on debt.
As I admitted earlier, as a matter of description a society where people are relatively trustworthy, and do the right thing as opposed to the legal thing, is a happier place than one where trust is in short supply. The problem is that these societies don’t emerge out of thin air, but are created though vigilant policing of norms, and frankly a level of interpersonal nosiness or homogeneity which is probably considered uncouth or retrograde today.
Perhaps what we saw in the last generation was the slow but steady exhaustion of values which arose in the context of small towns and urban neighborhoods. With the decline of the small town and the decay of close-knit urban neighborhoods perhaps the modern state is one where atomistic rational actors are intent on doing what they can get away with because of the anonymity which is the normal course of existence. The power of modern media means that Americans, no matter where they live, see how the high and might live and how they comport themselves in their peer groups. The “community” has now expanded into cyberspace and the norms are not just created by interaction with those whom you meet face to face.
Instead of demanding that Americans stay true to the values of old, and basic decency, I think it is perhaps time to engage with the future which we are facing. The horse of old-time values has left the barn. Perhaps more transparency in personal records and immediate access by anyone in relation to anyone will bring back some accountability to the choices one makes.
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