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How Republics Die
Around 2009, I managed to get a little essay published in TCS Daily. It was the early days of the Obama administration and single-party Democrat control of the federal government.
Plato’s Republic may be about the soul, but there’s plenty of interesting political commentary in there. Maybe the early days of the Biden administration and single-party Democrat control of the federal government is a good time to revisit this Platonic critique of the leftist shift that destroys a republic.
Yes, seriously. (Here’s my short intro to what the Republic actually says the Republic is about, and to some first steps in interpreting it.)
Also, apparently TCS Daily is no more, and I can’t even find my article online. So let’s try putting it on Ricochet. Below is the text of the article I found in my files. (Maybe there were a few things the TCS editors changed, but I honestly don’t know. I haven’t changed anything except italicizing book titles instead of underlining. I’m actually afraid to read it! I hope there aren’t too many embarrassing bits of bad writing!)
How Republics Die
Insofar as an economic downturn has traceable causes, the present recession seems to have origins in the behavior of at least three groups of people: reckless lenders, who encouraged people to spend their money irresponsibly; reckless borrowers, who took their advice and spent well outside the limits of need and the ability to repay; and a government which at times encouraged such behavior through organizations such as Fannie Mae and Freddie Mac.
This is old news to the astute observer and the regular reader of TCS. What they may not know is how vividly, and how long ago, great philosophers warned us just how dangerously our society was using money. The great philosophers understood that economics operates on a moral plane, indeed a spiritual plane; that economic problems are often moral problems; and that financial markets are corrupted as much by bad behavior as by bad economic theory. The antiquity of their advice only serves to belie its strikingly acute contemporary relevance.
Read along from an excerpt of Plato’s Republic (Book VIII, 550d-566), and see if any of it sounds familiar. It’s the tragic tale of a declining republic, a tale of war, money, and politics all gone wrong through a combination of bad judgment and disordered cravings. We begin with moneylenders who have a nasty habit of lending money to people they know will use it irresponsibly, especially to youths whom they encourage to fritter it away on useless luxuries. They prefer that their money be wasted on frivolities; the more of it is wasted today, the more they can charge in interest tomorrow.
But their clients are just as bad, if not worse. By spending others’ money on frivolities, they fail to take responsibility for themselves. A group of people recklessly spending other people’s money soon becomes a leech on society: a class of those who have ruined themselves burning through borrowed money.
The class of bitter, bankrupt borrowers finds it has a friend—or what looks and talks like a friend—in a group of politicians who promises them honey, served in a silver bowl at the expense of the moneylenders who got them into trouble in the first place. Their alliance only lasts until one of the honey-tongued politicians stirs up the bankrupted class, whips them into a frenzied mob, and makes war against the wealthy class, seizing their money by force. This politician emerges as a tyrant, and the old republic has died.
Republic is a complex and profound morality tale in which we can see, if darkly, the reflection of our own republic. Its story is not exactly ours, but we have a lot in common with this once-beautiful city. Specifically, we have the same moneylenders and borrowers. The eeriest similarity to Plato’s moneylenders is the agressive marketing of credit cards to college students. However, the reckless use of home loans on the part of both lender and borrower has proven more devastating.
We have been blessedly spared from the final stage of the societal destruction portrayed in Republic, wherein a redistribution of wealth proceeds by way of a violent coup to tyranny. The American republic is stable enough that for the foreseeable future we need not fear such madness.
But the same disease can also kill a republic slowly. Cicero, the great Roman statesman and philosopher who was also a great reader of Plato, warns that redistributing wealth by taking it from lenders and giving it to borrowers is among the worst things a leader can do because it wreaks havoc on a credit system (On Duties, Book II, chapters 83-85). This in turn can cripple an economy and lead to the same awful result: the death of the republic. Since credit is a function of the credibility a borrower has in the eyes of a lender, nothing can damage it more than if lenders expect to be repaid with their own taxes. While we can be grateful we haven’t seen more of this, we should keep a hawk’s eye on the new Congress for any signs of this sort of redistribution.
After all, we would only be deceiving ourselves if we thought that our republic by virtue of its size, technology, hefty GDP, or anything else is somehow immune to what destroyed other republics. Human nature destroyed ancient republics, and it could destroy ours.
Published in Religion & Philosophy
Like forgiving college/university loans?
About that.
Socrates, as I recall, suggests that one good law would prevent a lot of this problem: Young people aren’t allowed to spend borrowed money on anything they like.
Another law, almost as good, would be this: Lenders lend at their own risk.
But that’s not how it has been working, and even less so now.
Yes.
Think about all of these loans. Think of the worthless degrees, the overpaid ‘professors’, the crap that was ‘taught’ to our kids at astronomical prices, the fiscal improprieties of the smarmy, squishy University administrations. And allowed to expand, because of poor Government loans, that AOC and her band of anti-Americans are now ready to extinguish. Before they are permitted to do such a fiscally irresponsible thing, the GOP should demand an expense offset to forgo this bit of “using other people’s money”. This is a tax reduction to a small minority of Queer and Feminine -Studies majors, and at the same time that they are raising taxes on corporations and the job-producing small business owners and individuals. Economy-crushing and obvious bias against the hard-working segment of ‘We the People’.
Did you try the Internet Archive Wayback Machine?
Unfortunately your article repeats the mantra utilized by the PTB that it was the little guy and gal who brought about the devastation of the economic collapse.
In repeating that mantra, the actual causes are ignored. Yet still many people accept this “conventional wisdom.”
First of all, the 1999 Banking Modernization & Reform Act ended the sensible provisions of Glass Steagal, making it possible for the lucrative World of Insuring the Big Financial Firms & the World of Banking no longer divided by a firewall. Through that concerted effort on the part of the Big Money People, a Congressional destruction occurred relating to a provision that came about in the 1930’s. This GS offered great protection for the middle class to have a sustainable economy, even protected and unencumbered by the gambling on Wall Street.
When the 1999 Banking Act came to the Senate, only one senator, Senaotr Deagle, voted against it. He stated quite clearly, that in ending this provision, America would be guaranteed an economic collapse within 10 years. He was off by one year, as the Collapse arrived in 2008, not 2009.
Secondly, for the amounts of money that were requested by Big Financial Firms circa Autumn ’08 all the way thru to ’12, & then slid over to them under the Geithner/Obama Presidency, you would have had to have seen a half billion times as many poor people taking on mortgages they could not afford.
What happened was these zero interest mortgages made available to anyone with a heart beat were not only given to anyone asking for them, but those mortgages were then assembled into tranches of mortgages, and sold off as investment schemes. Slicing and dicing the values of the mortgages made it impossible for any investor to know if the tranch of mortgages offered to them included snippets of mortgage values already offered up to other investors.
Now the people accepting these investments were not necessarily unschooled mom and pop investors, but included government officials across the globe. Various Norwegian utilities took on these investments. As did governmental officials in Iceland.
Meanwhile the modeling of our economy as handled by Wall Street concerns no longer involved very much input from human beings. Everything was done according to computer-based modeling schemes, whose first rule was this one “The housing market, already rapidly inflating,w ill continual to rapidly inflate, not only now but into perpetuity.”
This theory of course ended up being the perfect example of GIGO (or garbage in and garbage out) for financial models. But from 1995 on, no one wanted to state that the Emperor had no clothes. Almost everyone wanted to ride the housing bubble up. I knew of one individual who sold the family home in1997, telling his wife they could rent an apartment til the housing bubble was adjusted. His wife divorced him in 2005, sick of living in apartments and by then convinced that “What will go up will always go up.” End of Part One
Part Two
So since Wall Street firms gambled on the mortgages of the housing market, a gambling spree of unprecedented numbers, using the mortgages as values that could through the tranch system be multiplied over and over, when the crash came, WS lost heavily. Yet for whatever reason the Big Truth that it was Wall Street’s gambles with its monies being lost via mechanisms such as derivatives and CDO’s, that was concealed from the public again & again. Every Talking Head out there, except possibly Glenn Beck & a few others, repeated the mantra that an army of poor people had descended on loan officers at banks, demanding mortgages that they knew they couldn’t repay.
The American public, or much of it, wanted to cling to the idea that it was the poor people out there that did this to us. Only the Aaron Russo’s, Glenn Beck’s and independent thinkers were willing to say otherwise. The internal Wall Street consensus was that the “Too Big To Fail” principle was deemed satisfying to their interests, so the effort was made to hide the blame of the real perps and instead focus on blaming “poor people.” Perhaps the American public was simply uncomfortable with the idea that their local bank officers, local realtors and local investment counselors all defrauded our nation.
In Iceland, which lost heavily due to opening itself up to the “can’t fail”policies of Wall Street before the Crash, that nation had politicians openly discussing how it was the gambles & not the poor people who put investments in jeopardy. That nation also decided that it would not even consider a “Too Big To Fail” policy. Instead of handing its middle class economy over to their bankers, they let the banks go down. Although initially that was painful, the nation recovered far more quickly than ours. The Geithner/Obama Administration put our recovery on a L-shaped recovery pattern laid out by Geithner. (He excelled at L-Shaped recoveries, having already been sent by the World Bank or IMF over to Japan, where he did the same thing there to that nation 15 years earlier.)
In the end, some 23 to 32 trillions of dollars were leaked out to various banks &other too big to fail entities. AIG became a pass through holding for Goldman Sachs. One example of what went on was Wells Fargo paying pennies on the $$ for Wachovia, through a system of financial incentives and outright tax breaks. “Our” economy was so slanted toward banks that the main industry from 2009 to 2011 became big banks buying other banks, not something an average citizen could get a piece of. It is also worth noting that in one of the final bills of Congress relating to the crash, that sometime circa 2012, language inside the bill stipulated that when another crash occurs, again the average person must pick up the bill, not the deviants who handle the deals and cause the problem.
I think this is wrong. Republics die because for all their virtues, they emerge from the rough and tumble of history as oligarchic institutions which contain elements of injustice that contradict the best of their professed values. As the marginal elements of society demand to be let into the inner circle they attract “class traitors” from the elite who would ride the wave of that striving to gain ultimate victory in their aristocratic competition with their peers and become autocrats. It’s ultimately a matter of a society suffering from it’s own success, in that it must appear attractive enough for those marginal groups to want in.
America has already gone through its late Republican period (from Andrew Jackson to Lyndon Johnson) and emerged into the stable state on the other side. We don’t recognize it because a.) It didn’t start particularly late in our history and b.) we actually managed those trends far better than did the Romans leading to a different result. That is: an imperial presidency agrandised beyond its constitutional bounds while still existing very much within and under the republican framework.
Our current problems are not late republican, they’re late imperial, which is far scarier, but also its own conversation.
You don’t think people who take out loans they can’t afford to repay deserve any blame at all?
Now the first sentence of the article blames two categories of the PTB, and the article itself blames the government rather a lot.
Your refutation of me, apparently, is to elaborate on how the government I blamed is blameworthy.
Not smart enough to think of that. I should try later from the laptop. Thanks.
That sounds like Book VIII of Republic to me.
Ah! Here’s a clone of the original, courtesy of Wayback Machine.
My point is not that people who take out loans they cannot pay off are undeserving of blame. Of course they deserve blame. But my point is that their existence was irrelevant in terms of the Great Economic Collapse.
I dislike the repetition of lies. No matter how popular the lie happened to be at the time it was created.
In fact, if a person wants to examine the issue of a great society self imploding, you don’t need Plato. All that is needed regarding whether or not a given society is set up to implode is to determine if that society has allowed for the entertwining of great financial wealth with great political power, with both branches of those powers being founded on lies and corruption, and with the minimalization of the average citizen decreasing in direct proportion to the amount that the wealthy and powerful have their power increase.
Which is where we are right now.
This is confusing. We agree that they are deserving of blame. We agree that the government and some financial institutions are deserving of blame. On what do we disagree?
Do you think we disagree on whether the government deserves more blame than the little guy? I’m all for blaming the government more, if that helps.
Or maybe you think something like this: There are always foolish spenders, and the real problem is that the PTB enabled their foolishness.
Well, I agree with that too.
I dig.
Except that if everybody who had a loan had paid for their loan, the collapse wouldn’t have happened. So yes, people taking out loans they couldn’t pay off are deserving of blame.
One can be sympathetic to people who were speculating that the increased value of their home would be sufficient to make their payments. But individuals still have agency for how they manage their finances.
One of the great joys that may be discovered in reading classical philosophy is the extent to which they got to the root questions that confront us as human beings. At least that was my experience reading Plato. That’s really the mark of the greatest philosophers isn’t it? Not necessarily that they gave all the “right” answers, but they knew what the critical questions are. Lesser thinkers are like explorers cutting their way through the jungle, finally getting through it, only to be confronted by a mountain they didn’t realize was there and looking up, they see Plato halfway up it. This is especially true of modern thinkers, who think they have leapfrogged past ancient thinkers on the deepest questions, when mostly they haven’t arrived yet where those philosophers were.
So I pay attention when someone like Plato identifies money management as the critical issue that can cause the death of a republic. It’s a clue that we should be paying more attention to it than, say, transgenderism, which is a sign of cultural decline, for sure, but if Plato is any guide, not as critical to the survival of the republic.
And the money management has gotten insane in ways unimaginable just a few short years ago. Remember when Obama’s trillion dollar stimulus bill in 2009 generated the Tea Party movement? That’s chump change in terms of today’s multi-trillion dollar, bi-partisan “stimulus” bills of today. The money creation has gone vertical.
I’m surprised there has been no mention of the Federal Reserve yet on this thread. The creation of the Fed back in 1913 set us on the course of debt and money debasement that had today’s circumstances as an inevitable endgame.
This discussion of debt is timely for me because I made the mistake of watching John Oliver’s show this week. It was about the national debt. His thesis was as follows:
This seems to be one of the current “progressive” talking points, because many of them are saying the same thing, including a friend of mine who told me, “The government can just print more money.”
I don’t pretend to be an economist, but I note that Biden’s own Treasury Secretary is quoted as saying the following just last year:
“The U.S. debt path is completely unsustainable under current tax and spending plans,” and it is “something that most people don’t understand and I see very little evidence of concern about it.”
To me, unsustainable national debt seems like a sure path to fiscal crisis. It calls to mind the old metaphor of the frog sitting in water on a stove. By the time it’s boiling, it’s too late to jump out.
I think that one of the real reasons that “progressives” hate capitalism so much is because they have no idea at all how money works.
Right on.
Republicans do incur massive debt.
But not this massive.
And who has the right approach on the debt?
The deregulation needed to grow future federal revenue by unleashing the potential for economic growth? Trump.
The entitlement reform that’s the only way to get spending under control? George W. Bush. Paul Ryan; may he return some day and work on that.