Wednesday, April 1, 2009

Why We’re Secular, part 240

The dogmatic just don’t get it, do they? If they did, then they wouldn’t be dogmatic! Of course, the circular logic of a dogmatic belief system is successful in preserving itself precisely because a central tenet of an enduring system of dogma is that its assertions are beyond question; or, cleverly, beyond our ability to question; or even more cleverly, that belief in that dogma is a “gift” of some sort, hence the inability of dogmatic believers and followers to break free of whatever arbitrary and capricious system of dogma that entraps them.

Dogma need not be the full foaming-at-the-mouth kind that motivates terrorists and other zealots. Dogma can, in fact be totally mainstream and socially acceptable in polite company, but its acceptability renders the acceptor incapable of arguing against competing dogma even if it is indeed full foaming-at-the-mouth style dogma. A baseless and faith-held belief system has as much reason to support it as the next one.

Take for example our old friend, the God Squad’s Rabbi Marc Gellman. Considered a “moderate” by many, he seems unable to recognize the pointlessness of even bothering to use reason or logic (even poorly) when answering religious questions. Check out this exchange which appeared in Newsday on Saturday, March 07, 2009:

Question from a reader: I'm sorry that as a Jew you cannot accept the biblical fact, but Jesus Christ is the Messiah, and He came to save the world from sin and give us eternal life. If you accept this, you are saved; if you don't, then you're not. The scripture is clear that we are told these things so we may know that we have eternal life. Can't you acknowledge this truth? – B. via email

Answer: Not.

Does Rabbi Gellman realize that his answer to this reader’s question would suffice as an answer to his own question posed to an atheist on whether they could accept that God exists? Duh, I guess not!

The implications of faith-inspired tunnel vision and dogmatism encapsulated in this little exchange are mind-boggling and apparently totally lost on Rabbi Gellman. If he did see the implications he’d immediately become agnostic and understand he has no answers worth offering on the question of the existence of God.

Consequently, the need to continually justify his dogma often leads him into vicious and slanderous territory. Readers of the INQUIRER are well aware of his past attacks on non-believers (and his left-handed apologies). In the same column as his dogmatic rejection of salvation from a concerned dogmatic Christian letter writer comes the following piece of nuttiness:

Question from a reader: Considering, over many centuries, events like the Inquisition, countless and unceasing religious wars, the Crusades, 9/11 and the recent Mumbai killings, can you say that, on balance, religion has caused more good than bad things to happen? -- A., Melville, N.Y. via email.

A: Group A: (Mother Teresa, Gandhi, Martin Luther King Jr., Pope John XXIII, Pope John Paul II, Billy Graham, and Father Tom Hartman)

Group B: (Mao, Stalin, Hitler, Pol Pot, Idi Amin)

My conclusion: Group A wins over Group B.

(Go to

What is implied by these two groups and by what random process did he select the groups? Group A has two genuine heroes, Martin Luther King Jr. and Gandhi, two homophobic Popes who believe that condom users deserve eternal damnation, a religious fanatic who believes that any woman who uses a contraceptive is incapable of love, an anti-Semite and a close friend of the Rabbi. You could ask yourself however, where are noted theists bin Laden and David Koresh?
Group B does indeed have all villains but includes Communists, a Muslim and a Catholic.

Oh yeah, I get it – in Group B they’re all really atheists because they are evil no matter whether they actually believe in God or not. The actual facts are irrelevant. I did notice that noted non-theists Christopher Reed, Pat Tillman. Albert Einstein, Mark Twain, Robert Ingersoll, Carl Sagan, Bertrand Russell, Elizabeth Cady Stanton, Kurt Vonnegut and John Lennon were omitted from Group B; it must have been an oversight!

But in the same newspaper edition that Gellman is attempting to claim that Group A (the “religious”) are better than Group B (the “atheists”) we have the following reality checks:
Senior leaders of Iran, Hamas and Hezbollah offered international support Friday to Sudan's president after he was charged with war crimes in Darfur, a sign that the bid to prosecute him could sharply radicalize his regime.

For a third straight day, President Omar al-Bashir's supporters marched and vowed to defend him against what his government called a "colonial" conspiracy to overthrow him. Hundreds emerged from mosques after Friday prayers, chanting "jihad," or holy war, and shouting, "With our souls and blood, we will sacrifice ourselves for you, al-Bashir."

After the International Criminal Court issued an arrest warrant Wednesday for al-Bashir, Sudan's government responded by expelling 13 of the largest aid organizations in Darfur.
The U.N. human rights office said in Geneva that it was examining whether the expulsion could itself constitute a war crime.

The order opened a giant hole in the safety net that has kept many Darfur civilians alive during six years of war in the vast, arid region of western Sudan. Without the groups, 1.1 million people will be without food, 1.5 million without health care, and more than 1 million without drinking water — and outbreaks of infectious disease are a greater danger, the U.N. said.

"To knowingly and deliberately deprive such a huge group of civilians of means to survive is a deplorable act," said its spokesman, Rupert Colville. "To punish civilians because of a decision by the ICC is a grievous dereliction of the government's duty to protect its own people…"

Jennifer Cooke, head of the Africa program at the Washington-based Center for Strategic and International Studies, said the Western reaction "may drive al-Bashir further to the hard-line radicals."

"He is framing the ICC's decision as yet another Western attempt to undermine the sovereignty of a Muslim developing state," she said. "And realizing he can rally support, whether from the Arab League or more radical elements, and possibly the (African Union), it gives him less incentive to move back on his decisions." (Go to .)
Yes, support is lining up behind al-Bashir on a religious basis with supporters of al-Bashir depicting the “secular West” as colonialists when their only true motivation is mere religious chauvinism. (This is not to say that the religious elements in the “West” do not at times exhibit the religious chauvinism as well.)

If a religious “moderate” takes exception to the above story as non-representative, we offer another story regarding the supposedly non-extremist Catholic Church, the largest church on earth:

“The Vatican has defended the excommunication of those involved in helping a nine-year-old girl get an abortion in Brazil after she was allegedly raped by her stepfather.

Cardinal Giovanni Battista Re, the head of the Roman Catholic Church's Congregation for Bishops, told the Italian daily La Stampa over the weekend that the unborn twins the girl was carrying had the right to live.

"It is a sad case but the real problem is that the twins conceived were two innocent persons, who had the right to live and could not be eliminated," he said.

The senior cleric's comments come after Brazil's president, Luiz Inacio Lula da Silva, criticised Jose Cardoso Sobrinho, the Brazilian archbishop who excommunicated the girl's mother and the doctors involved in aborting the baby, but not the stepfather who allegedly raped the girl.
Lula said that as a Catholic, he deeply regretted the archbishop's "conservative attitude".

"It is not possible to allow a little girl raped by her stepfather to have that child because it could put her life at risk," he said.

"I believe that in this sense, medicine is more correct than the church."

But the cardinal said "life must always be protected, the attack on the Brazilian church is unjustified".

The nine-year-old from the northeastern state of Pernambuco in the world's largest Roman Catholic nation, was found to be four months pregnant last week after allegedly being raped by her stepfather.

Abortion is a crime under Brazilian laws except in cases of rape, if the woman's life is in danger or if the foetus has no chance of survival

Doctors said they decided to terminate the pregnancy because the girl's life was in danger due to her young age, and because she was carrying twins.

But Sobrinho, the archbishop of Olinda and Recife, in declaring the excommunication, said the abortion went against "the law of God".

The stepfather was not excommunicated because the church said that his action, although deplorable, was not as bad as ending the life of an unborn child.

"It is clear that he committed a very serious sin, but worse than this is the abortion," Sobrinho said.

Under church law, excommunication is automatic for followers who have, perform or help procure an abortion.” (Go to .)

Let’s summarize: the Roman Catholic Church position is that the raped 9 year old child should risk death so that the product of her rape not be terminated – not that they have a good chance of surviving this pregnancy anyway! In other words, a form of involuntary human sacrifice to an angry God! Yes the girl and her doctors would go to hell, but her rapist just needs to turn to Christ and he’ll be welcome in heaven!

To the reader; ask yourself what is the cruelest thing that a person could do to another person? The easy answer by definition would be to consign another person to an eternity of the ultimate in torment, misery and suffering. The Roman Catholic Church, believing in the reality of hell, has purposely and willfully committed the cruelest act possible; this is the horror of what they think they have done via ex-communication! And they have no remorse! They’re, in fact, righteous about their infinite punishment to a finite “crime.”

But wait! You might argue that an abortion, even to save the life of a child, is somehow immoral. Let’s go with another example of the “moderation” of the moderate and non-radical or extreme Roman Catholic Church, the world’s largest church.

While visiting Cameroon, where AIDS is a huge problem, the Pope said about the battle against AIDS, “You can’t solve it with the distribution of condoms. On the contrary, it increases the problem.” (Go to .)

France’s health minister, Roselyne Bachelot said that the Pope “proffered a monstrous scientific untruth.” In other words, the Pope lied.

Rebecca Hodes, head of policy, communication and research for Treatment Action Campaign in South Africa said the Pope should be promoting condom use if he wants to help fight AIDS. “Instead,” she said, “his opposition to condoms conveys that religious dogma is more important to him than the lives of Africans.”

While the Pope lies, people die.

In the meantime, back in the US, one of the leading activists on behalf of the suffering people of Darfur is actor George Clooney.

Here is a quote from Mr. Clooney: "I don't believe in Heaven and Hell," he says. "I don't know if I believe in God. All I know is that as an individual, I won't allow this life -- the only thing I know to exist -- to be wasted."

Rabbi Gellman, where does Mr. Clooney go: Group A or B and where does the pious al-Bashir and all his sanctimonious supporters belong?

To give you a clue, in recorded history, probably no war has been fought in the name of a non-belief (not counting self-defense) such as atheism or a failure to believe in capitalism. Wars are motivated by a strong positive belief in an economic system or religion or a form of nationalism; by something that compels many to give up their lives for an idea – in other words, a dogma.

Doubt leads to introspection and consideration of all the possibilities; it is certainty that can lead to fanaticism.

Advice to Rabbi Gellman: he should begin to appreciate the non-dogmatism of secular humanism.
At least we don’t think he deserves to rot in hell forever for his failure to accept the alleged “Truth” as some of his “fans” do.

The End of Faith and Denial

A few years ago Sam Harris wrote a scathing book about faith titled “The End of Faith”; it touched a nerve in many persons. Those of us who had their doubts that faith was a virtue easily related to the themes contained in this book. At the same time it presented a visceral challenge to persons of faith. After all, exactly why should anyone believe in something for which there is no evidence or poor evidence? In this book, words were not minced, feelings not spared.

The book had its faults, of course. While Sam Harris has amazing powers of observation and can effectively dramatize in writing the points he is making, his conclusions can be hit or miss, and his vision of the future can be unnecessarily inflammatory. Additionally, he could have made even more of the point that irrational faith is not restricted to religious matters; all beliefs held on faith, even those pertaining to secular matters, are not justified and can prove to be dangerous.

Surprisingly there has since been some progress in the battle against faith in this society. Thanks to Sam Harris, Richard Dawkins, Daniel Dennett, Christopher Hitchens and others, faith, religion, irrationality and unreason are no longer off-limits for criticism in the media. A flame has been lit. The youth in our society have shown some indications that they may prefer to “know” rather than simply to “believe”.

This modest progress is all good but of course, it is not enough. Faith is now occasionally questioned in public and although that is a welcome change, we have many more challenges to becoming a freethinking society.

Even if we were to vanquish the concept of “faith”, there is a related concept that although it does not necessarily lead to beliefs being held without evidence, it does lead to even not asking questions that could have unpleasant or inconvenient answers and it can lead to refusing to acknowledge what one actually believes; it’s called “denial.”

Denial is not just refusing to think about something; it almost certainly leads to not doing anything about things that can become a matter of life and death!

Consider all of the things that the average person may be in denial about; their health, their marriage, their job, their future, the future of their country and all things about all the persons they care about!

What could be more important than having a good handle on one’s life and the lives of those they care about? Yet many, if not most of us, refuse to deal with the most basic issues in life!

How many of us ignore health concerns and do not do what we know we need to do to stay healthy and not become a burden to others. Everyone must plead guilty to either not exercising enough, overeating, smoking drinking in excess or some other obvious form of abusing one’s own health. Yet this is still “small potatoes” for us as a society. In a sense, if we want to abuse ourselves, we should be allowed to do so although in most cases even self-abuse leads to pain for others.

As a nation, however, we have spent too much, borrowed too much and paid too little of it back – for at least the current decade if not for many decades. This harms generations not responsible for our current and past stupidity.

We have neglected our infrastructure, our schools and our energy self-sufficiency. We have no plan for the impending crush of baby boomers on social security or our health care system. We KNOW all this, yet we are in denial at one and the same time!

We absolutely already KNOW it is too expensive for most parents to send their children to private colleges without incurring too much debt on the student or the parents.

We already KNOW that our healthcare system is the most expensive system in the world even though many persons are not covered in any organized manner and that our outcomes are below average in the industrialized West.

We KNOW that we are sending our wealth out of the country, quite often to dictatorships, to pay for fuels that are contributing to a future environmental crisis. We’ve probably even started a war because we have not dealt with the well-known fact that we are not energy self-sufficient!
Denial almost makes faith look good! And denial crosses all boundaries of the secular and religious.

How many more matters of utter importance on a society-wide level can you name that we are and/or have been in denial about?

How about the fact that we cannot eliminate “pork” from the Federal budget as long as politicians are re-elected for delivering the pork?

Aren’t many in denial about our economic system being best left free from government regulation? Aren’t others in similar denial that government planning would solve all the problems?

How obvious is it that all vehicles should be fueled by renewable fuels (if not now, then eventually) and should be hybrids that also plug in? We KNOW that all cars could be designed & built thusly – why aren’t they?

It has become clear to me as time goes by that freethinking is little more than not being in denial. It is asking the tough questions and accepting the tough answers. It is acknowledging the obvious. It is not simply accepting authority or tradition as an answer.

Now we have the legal right to be in denial on any subject we choose as long as it does not lead to a crime against others.

But we no have no moral right to either belief in things for which there is no good evidence nor to ignore the things for which we know and accept that the evidence is overwhelming.

We no longer have a moral right to demand lower taxes, AND a expect a lower deficit; we no longer have the right to ask for universal health care and expect that everyone’s health care will be as extensive as before; we no longer have a right to buy SUV’s and complain about pollution and money being sent to Al Qaeda; we cannot expect to buy too much house, borrow too much money based on income that is not verified and then have other homeowners who are also suffering but more prudent pay more taxes to bail you out when you fall behind.

We, as a nation, have no moral right to attack a nation, kill tens of thousands if not hundreds of thousands of their citizens based on mistaken or false premises and ever expect them to be your “ally”. Again, I’m sure the reader can supply many more examples.

In other words, we do not have the moral right to ask for what we KNOW is the impossible. War, suffering and poverty are the cost of denial. We need the end of denial.

There is No Place for the Supernatural in the Public Square

News item: (AFP, 3/5/09) An Iranian woman living in Spain who was disfigured and blinded by a man in Iran said Thursday she welcomed a Tehran court ruling that awards her eye-for-eye justice against her assailant...

"My intention is to ask for the application of the law not just for revenge but also so that no other woman will have to go through this. It is to set an example," the 30-year-old added.

In November an Iranian court ruled that the man -- identified only as Majid -- who admitted blinding Bahrami in 2004 by throwing acid in her face because she rejected his marriage request should also be blinded with acid based on the Islamic law system of "eye-for-an-eye" retribution.
Iran's Supreme Court confirmed the sentence at the beginning of February.

Bahrami, who moved to Barcelona after the attack to get medical treatment, said the court had originally ruled that she was entitled to have the man blinded in only one eye in Iran because "each man is worth two women".

"But I explained to the judge that with one eye one can still live," she told top-selling newspaper El Pais in another interview.

The court then ruled that the man would be blinded in both eyes if in exchange Bahrami agreed to give up the 20,000 euros (25,000 dollars) which she was set to receive from her assailant's family.

"He will be anesthetized and will not suffer pain. His face will not be disfigured because only a few drops (of acid) will be needed, he will not have the internal injuries which I had," she told ABC when asked if she felt she was less cruel than her aggressor…

She says she survives on a rent subsidy of 400 euros per month which she receives from the (secular) Spanish government and charity from friends. (End story.)

Some may suggest that incessant religion-bashing serves only to alienate religious moderates from the advancement of secularism and humanism. It would be suggested by those critics that, for example, the above monstrosity is not “typical” of religion or Islam or anything in particular. I maintain that such criticisms directed at the exposing of the excesses of religious belief are simply wrong; not enough persons are exposed to where irrational beliefs can lead, even if all such beliefs do not lead to disaster.

It is Iran’s Supreme Court’s claim that "each man is worth two women". It is the moral right (and duty) of anyone to denounce this ruling and beyond the utter misogyny of it, this ruling serves to show how laws and rulings based on supernaturally supported beliefs bring nothing to the table in the real world.

Is this a radical and exceptional ruling by an irrelevant body of fanatics? Although it is a ruling by a body of fanatics, a ruling by the worlds most populous Shiite nation’s actual Supreme Court is hardly irrelevant; and if this Court’s decision is exceptional, exactly where do we turn to understand what the orthodox ruling should have been?

Addressing religious moderates, is the religious attitude of the Iranian Supreme Court confined only to “radicalized” societies?

Please take note of the following; From Pew Research: “For example, six-in-ten white evangelical Protestants say that the Bible should be the guiding principle in making laws when it conflicts with the will of the people, a view rejected by an equally large majority of Americans, including most Catholics and white mainline Protestants.”

The last time I checked, evangelical Protestants had their run of the White House for the last 8 years and had a Vice-presidential candidate, Sarah Palin, on the last national ticket of the Republican Party. An early favorite for the 2012 nomination is Rev. Mike Huckabee!

The ruling by Iran’s Supreme Court can be contested on grounds that it is un-Islamic; but if one is honest, one would have to admit that most conservative and literal Islamic fundamentalists would agree with the proposition that "each man is worth two women" and that a more “moderate” view has less claim to orthodoxy.

One can make the claim that “their religion” or “their God” would never endorse such a ruling but if one is honest, one would have to admit that many average Americans would agree “the Bible should be the guiding principle in making laws when it conflicts with the will of the people…”, a principle that entirely supports the ruling of the Iranian Supreme Court.

As a study in logic and law, is the passing of Proposition 8 in California destroying the right of gay couples to marry that much different that the Iranian Supreme Court’s ruling? Just substitute the concept that “homosexuality is immoral because it offends God” for "each man is worth two women" and the shared concept that “the Bible (or Koran) should be the guiding principle in making laws when it conflicts with the will of the people…” and let the results speak for themselves.

Religious moderates of all kinds must face up to the impossibility of governing fairly and reasonably if supernaturally supported beliefs guide law. There is no way to categorize a belief as “moderate” as opposed to a “radical” – certainly the fact that a belief is widely held is not assurance of its “moderation”!

From Iran to the US, the common thread is impossible to deny; human well being simply is not the goal of faith-held beliefs; faith-held beliefs have no goal – they are arbitrary and capricious. They can claim anything from “homosexuality is immoral because it offends God” to "each man is worth two women" to “all non-believers are damned and deserving of it.” What is sure to follow from these propositions is human misery.

There is no place for the supernatural in the public square.

How Does a Humanist Approach Economics?

Exactly what should a humanist think regarding the economic woes that we are suffering through in the US and around the world? What economic approach should a humanist embrace or are there a number of approaches that can be embraced?

There have been volumes written on the subject, of course, with points of view that are literally diametrically opposed to each other and everything in between. Ayn Rand, a non-theist, advocated unfettered capitalism; Karl Marx, another non-theist, advocated a communistic approach. Closer to the mainstream, Adam Smith, Milton Friedman and John Maynard Keynes have all exerted differing influences on economic thinkers and policies that have followed.

Indeed, if you enjoy contradiction and opposing opinions, listen to a number of different economists and economic forecasters explain what has happened and what is about to happen and you will undoubtedly hear everything ranging from a prediction of the next great depression to the next economic boom being just around the corner.

And this is the problem for the freethinking humanist; economics is most certainly still an inexact “science.” There are simply too many factors involved, not the least of which is almost completely factor of unpredictable human nature at play in the economies of an increasingly complex world. “Random” stimulus such as weather, war, corruption and good and bad luck conspire to make the future nearly totally unpredictable. Add human emotions such as fear and euphoria and it becomes clear that forecasting the economy requires more than complex math; it requires complex psychological analyses of masses of human beings as well!

That is why it is unwise, in this writer’s opinion, to have an unswerving approach to economics. The guidelines that we should respect in the economic field involve those common decencies that we revere in all areas of human endeavor, such as not causing unnecessary harm, enabling individual freedom to the degree that others are not harmed, honesty, responsibility, fairness and reasonableness.

This approach does not rule out many moderate economic approaches; it would rule out, for example, communism which promotes a dictatorship of a particular class and may disallow the individual right to be enterprising. A humanistic approach would also rule out a fascistic alliance of large businesses with government. These two approaches are not compatible with fairness or individual freedom, not to mention the fact that fanatical followers often will accept human suffering rather than sacrifice any aspect of their economic belief system.

What is left for us to decide as rational agents is to figure out in each economic situation, what approach harmonizes with the common decencies; what approach allows for individual freedom and, in addition, works well to raise our standard of living and mitigate human suffering! What may work for auto-making or banking may not be the right approach to a utility or other business involved with common areas of a nation, such as roads, police, the army or schools.

Should the goal be as little government taxing as possible, with its concordant fewer government services; or should we band to together via higher taxes to create a social safety net for those who may fall into need?

Would the low tax approach allow for more human suffering? Would the higher tax approach lead to sloth and “gaming the system” lowering everyone’s standard of living?

Should the market determine the price of a product; should a government or a bureaucrat?

Once again, we know that both approaches have problems and limitations. The market approach gave us Enron, Lehman Bros., AIG, Bear Stearns, the health care system we now have and the US auto industry. And, of course, the Great Depression and our current woes.

The Command Economy approach gave the world the disastrous economies of Russia and China for much of the last century. It has only been when both those countries abandoned those failed economic policies for freer markets that their economies grew tangibly improving the lives of many citizens. Even though their new economies have brought other problems to the fore, lives have improved. It is clear already that even in Russia and China, despite capitalism’s success in improving lives, this success is not unqualified.

Admittedly this is a frustrating and not totally satisfying way of approaching the topic of economics; it’s so uncertain and non-committal. It is much easier for those who crave certainty to be total and unblinking capitalists, libertarians, socialists or communists.

But no one said freethinking and humanism would lead to simplistic answers. In the category of economics there are none.

So when you read about the next “bailout” or “rescue” or “financial stimulus” plan, do not make up your mind so quickly; there is no guarantee that this idea is not either the best or worst idea to come down the pike. Each idea should be looked at in a non-dogmatic manner and assessed in as scientifically a manner as is possible. If our economy is anything, it is complex.

We do know that the previous administration proudly took the certain dogmatic approach: pure ideology ruled until disaster stared the administration in the face.

We can safely say that the dogmatic and ideological approach has failed.

Good riddance.

On a note of hope, the approach of the new administration of President Obama, has been, on the surface, open-minded. It remains to be seen if they can truly think “outside the box,” and govern in that manner as well, but that is the image they are trying to convey. We hope that they succeed in being innovative, creative and freethinking in their economic approach and do not succumb to political pressures, from the right or left that would promote an unthinking ideology.

We shall soon find out.

With all this said I can now offer my opinion on what the approach should be going forward, in the full knowledge that even the best of all possible plans has only a certain percentage change of succeeding as intended, and that even a bad plan might work - with luck.

It is obvious that the current problem has its roots in the abuse of credit by both business and consumers. Businesses borrowed too much, relying on continued growth in the economy to enable them to pay back their loans as they expanded. Consumers borrowed heavily on both the housing front and the credit card front in the expectation that their home’s value would always rise and if they were unable to pay the exorbitant mortgage, they could simply sell their house – at a profit.

The disaster began when so many persons could not pay their mortgages at the same time that home values started to decline because of the glut of homes for sale by distressed sellers.

The situation began to snowball – if sellers could not pay their mortgages and home prices dropped, banks that lent them money had to repossess home that were now worth less than the loans that were owed. It did not help that many mortgages were fraudulently issued without proper credit checks or home appraisals – many of these are the “sub-prime loans” that were the first to go bad.

As more and more persons defaulted, and banks lost more and more money on those loans, and houses became less and less valuable, those financial entities that had bought securities based on home mortgages came to realize that those securities were becoming less valuable. In fact, the value of securities backed by mortgages declined so badly that financial institutions soon had less overall capital or value in relation to deposits and other liabilities as required by both law and common sense.

So some stopped lending, especially to each other, and others went bankrupt.

When banks stop lending, it becomes difficult to buy a house, further driving down home prices, or even buy a car.

If you’re a business, it becomes hard to refinance as you had previously. Good luck to the firm that has a loan due to be paid or refinanced!

When consumers began to realize that their homes were declining in value, and they could no longer be used to finance other purchases they did in fact do the logical thing: they stopped making purchases.

Businesses started to realize that consumers had reached their credit limits and were not buying their products anymore – so they began to lay off workers and lessen inventories.
So this is what you get when consumers have little available credit, and banks have little to lend; a huge and sudden recession.

This is a negative feedback loop if there ever was one and there are many contributing factors. Last year, crude oil soared to $147 per barrel in price; at that moment the credit related bubble began to burst in earnest. Since then practically ALL commodities declined in value, including oil, metals, real estate and even gold. With billions and trillions of dollars in “paper” wealth gone, primarily due to the decline in real estate values, stocks and mutual funds, there was less cash in existence to chase commodities and who needs commodities when you’re not making stuff anyway?

This is called “deflation” and it is deadly to the economy. Why buy something now when it will cost less later? Another negative feedback loop!

Obviously, it’s not as if people do not want to buy stuff and banks do not want to lend their money. Both borrowers and lenders are afraid to do their thing.

Businesses know this and retreat to a protective position.

But consider this; the recession is essentially the result of future expectations which right now are extremely bad. In other words, there is great fear and it is fear that prevents consumers from buying, lenders from lending and businesses from expanding.

Remove or reverse or moderate the fear and the recession can be ended.

What would reduce the level of fear?

The key items must be jobs and job security and the banking system’s viability. If you are secure in your existing job, you will spend normally. Obviously if you are now unemployed and then find a job, your spending should only increase. When businesses see this happening, they will expand further.

If banks are not worried about being paid back because people will not be losing their jobs, they will lend - that is unless they are too bankrupt or deficient in reserves to lend.

So it would seem the task at hand for our government is to foster jobs creation and ensure bank viability.

A stimulus package not focused on job creation may be worthless. Simply sending out tax rebates, for example, will NOT ELIMINATE FEAR! Only a secure job will do this, in my opinion, and to avoid wasting taxpayer money, the job created should be a useful and necessary endeavor, not a time waster such as digging and filling in ditches.

“Fortunately,” over the decades, we have neglected many necessary tasks, such as improving our infrastructure and making our nation energy independent. Building schools, hospitals, repairing crumbling bridges or creating an improved electrical grid or funding advanced technological research would lead to further economic expansion, keeping the economy growing even after the stimulus has run its course. Our quality of life would improve.

Fixing the financial system may be the tougher task. The Federal Government has some choices; buying preferred stock, common stock or nationalizing certain banks. Or, if a price can be calculated, perhaps purchasing the non-liquid assets (e.g.: bad loans) of banks would be the right move; or facilitating a market or exchange where this junk could be sold in an orderly and transparent manner. The choice is complex but the goals are ensuring viability while keeping the expense to taxpayers to a minimum. Letting them go bankrupt is really not a choice – see the mess the bankruptcy of Lehman Bros. has caused. It could take years to sort it all out! Imagine the mess if a Citibank were to fail!

Allowing banks to remain “too big to fail” in the future should not be a choice either. Going back to their core business of lending to consumers for more than they pay out for deposits may be boring but it has worked for centuries. Exotic financial instruments such as derivatives, credit default swaps and triple short ETFs should be regulated if not eliminated. There is much to do.
But why did banks (and other companies) get in the position they are in? They were not required to make bad loans or bad business decisions, were they? After all, not all companies made those bad decisions!

As the system now works, the CEOs of banks (and other corporations) do not necessarily have their company’s interest in mind as they drive them to bankruptcy – why should they? If a policy is likely to benefit the CEO and other higher officers of the corporation, rather than the bank or corporation, what do you think will happen – or has happened?

A $100,000,000 bonus is a difficult thing to forsake for the good of a corporation!

Here is the conflict – a corporation, if it was a sentient entity, would have a goal of surviving well, like any other sentient entity. Unfortunately, running a corporation are numerous other sentient entities – officers, directors, and laborers, all with conflicting goals. The corporation thus suffers – you wind up with Enron, Citibank and General Motors.

Therefore corporate governance, in order to protect stockholders and employees in particular, must be codified and made into enforceable law or otherwise a company is at the mercy of sentient beings with conflicting goals. Simply requiring an officer to have a fiduciary responsibility has not worked particularly when corporate boards who oversee the executives consist of the corporate officer’s “pals” who are corporate officers elsewhere. (Note: I’m available for Board of Director work.) This is simply not working in too many situations.

Ethical and responsible captaincy of a corporation has long been neglected and too many in the corporate world accept the myth that humongous corporate bonuses are “necessary” to preserve “talent” within a company.

I don’t think so. In fact it may be that the larger the bonus, the worse a corporation is run.

Limiting bonuses to executives to stock in the company, with the size of the bonus tied to size of the executive’s salary, and then not redeemable for at least 5 to 7 years so that the current stock price cannot be manipulated is a simple solution.

Consider that Major League Baseball, an industry where performance can easily be measured, mostly bans bonuses – even based on performance. Why should they do this; wouldn’t it motivate players? Their answer is actually logical.

Major League Baseball limits bonuses because they do not want players to “game” the system and go for homeruns, strikeouts and other milestones that do not 100% correlate to winning baseball. Corporations similarly should NOT want executives that game the system in order to achieve bonuses in ways that could hurt the company.

What is the most an employee/executive should be paid? If Alex Rodriguez can get by on about 30,000,000 per year, and is obviously good (though not perfect) at his job, that should be about enough for most anyone else. But of course, I could be wrong or unlucky about all of this.

We would love to hear from readers how their humanism informs their take on the current economic crisis.

(Gerry Dantone has an M.B.A. in finance from St. John’s Univ. and was elected to their chapter of the International Honor Society for Economics - )