The following is excerpted from a new article published in Public Integrity. If you wish to read a full copy, contact me.
The discussion here includes four topics. First, there is the concern for personal responsibility. From the classical liberal and contemporary conservative perspective of the rugged individual to the communitarian perspective of the individual embedded in community organizations, there are divergent ideas regarding the extent to which individuals ought to be held to account for and suffer the consequences of their actions within the context of a crashing real estate market. When the whip cracks, or when the house forecloses or short sales, who should be left holding the bag?
Second, there is the concern for justice, empathy, and equity. Again drawing on various philosophical perspectives, the question asked is not just whether social justice should be promoted at the expense of profit and free enterprise, but if it is promoted, by whom and for whom? Does it depend on the character of the person or family, or the situation in which they find themselves? Third, institutional biases manifested through the relationship between regulations, laws, and other social institutions with the propensity for individuals to act in a manner that is selfless and community oriented. How willing are individuals and families to be transparent in their needs and hardships, thus opening themselves to being labeled and defined outside their “middle-class” cultural norm? Questions of trust, empathy, civility, and community can be considered within the context of a real estate market crash and of institutional rules and norms that may not encourage such ideals.
Last, what are the lessons learned from this experience? Is there a way to restructure institutions to change the outcomes associated with inevitable financial and mental anguish and distress? In the end, there is need for discourse on a path forward, institutionally and ethically, to avoid the negative externalities associated with the accumulation of rational but self-interested and ultimately destructive decisions.