So, an economics reporter for the New York Times, who makes over $120k per year (120 plus overtime, whatever that is), couldn't pay his $4,700 per month mortgage. He wrote a book about his situation. He stopped paying his mortgage 8 months ago, and just sits in his house, waiting for the bank to kick him out. He does not mention it, but I imagine if the banks try to kick him out he will fight it, even though he is basically living there without paying anyone. He truly has no shame, as this is the center point of his New York Times Magazine article and his book.
He can't afford his mortgage, but instead of moving into a smaller place in a worse neighborhood he has chosen to stay in his current house without paying. He does not value the bourgeois virtue of paying one's debts. Legally, he can default on his mortgage, but extra-legally, he is a shmendrik (aka, loser).
I think he is a thoughtful person, probably a good neighbor and friend. But that he could rationalize this kind of unethical behavior highlights a big problem we all face. If the zeitgeist says that those who don't pay their mortgage, for whatever reason, are victims of big, greedy banks, then we have a big problem. It has always been proposed that a jubilee, or absolving debtors of their obligations, would fix problems, but doing this just raises the costs of debt for future borrowers, most of whom had nothing to do with the prior situation. You can't break promises without considering their effect on future transactions.
He can't afford his mortgage, but instead of moving into a smaller place in a worse neighborhood he has chosen to stay in his current house without paying. He does not value the bourgeois virtue of paying one's debts. Legally, he can default on his mortgage, but extra-legally, he is a shmendrik (aka, loser).
I think he is a thoughtful person, probably a good neighbor and friend. But that he could rationalize this kind of unethical behavior highlights a big problem we all face. If the zeitgeist says that those who don't pay their mortgage, for whatever reason, are victims of big, greedy banks, then we have a big problem. It has always been proposed that a jubilee, or absolving debtors of their obligations, would fix problems, but doing this just raises the costs of debt for future borrowers, most of whom had nothing to do with the prior situation. You can't break promises without considering their effect on future transactions.
14 comments:
"He truly has no shame"
In which economics textbook would I find the chapter on shame?
He is a dishonest person hiding behind his profession
have I stumbled on a religious web site by accident?
I thought in Economics we started with the assumption that people acted in their own individual interests? That its an essentially amoral activity?
There's nothing wrong with seeking your self interest. But if you aren't looking at the long run, you aren't a good business partner. That is, paying your debts is in your self interest. It's short term thinking to suppose that welshing on debts is simple self interest. Enlightened self interest generates what is often seen as altruism.
What constitutes the long run? In this environment, it could well be 6 months, not 6 years. I agree that we should all pay our debts, but when the NYT author suggests that he tried to do the right thing (repay) and was told that he must wait until he's clearly in arrears, it seems that there's collusion between the borrower and lender. Not a good situation.
He does not consider himself a victim of the banks. He bit off more than he could chew. How easily he could do so shows how sloppy things had become in the middle of the decade. He doesn't blame the man in the article. But he doesn't fully own up to the fact that he should not have done what he did.
What he's done isn't good, but this isn't a case of someone not paying because the mortgage is underwater. He doesn't have the money. Maybe the book he writes about not having money will make money.
The fact that he stopped paying the mortgage entirely didn't bother me, that just seemed sensible given his situation (certain bankruptcy), but his general attitude was really obnoxious and not sympathy-inducing. He can't reign in his wife buying crap they can't afford? I'm supposed to feel sorry for him?
This guy is a great example of why living beyond your means is immoral. It's unbelievable the way this fraud tries to shift the blame for his behavior to those who lent him money. Even worse than the alcoholic blaming bartenders.
His midnight panic attacks are the symptom for his subconcious knowledge of his own moral worthlessness. This guy is far from acting in his self-interest. Ultimately he's been following the path of self-destruction, and evasion, as Ayn Rand could better explain.
This economics reporter really practices what he preaches - living the Keynesian lifestyle.
If he legally doesn't have to pay, then it's not really a debt. The bank knew that was the deal which it signed the contract.
Megan McArdle has backstory on this that wasn't in the book or newspaper.
Apparently the wife is a serial declarer of bankruptcy, even with six-figure income in the past.
And the husband's situation wasn't really a case of "get married, then get in over your head with a bank offer too good to refuse" .... it was: get in over your head to start with to get all that money, or the marriage isn't going to happen.
DDipper -
It's not about religion. It's disingenuous of you to equate amoral free-market transactions (hire, fire, buy what you want from who you want at the price you wish to pay) with immoral (and, as it happens, illegal) reneging on contracts.
You will not be able to find a chapter on "shame" per se in an economics textbook. You will, however, find plenty of material on "reputation", "repeated games", "contractual undertakings" and perhaps, even "promissory notes".
If you believe that promises don't matter and that rational beings can, do, and indeed, must shamelessly break promises when it suits them then I'm not sure anything anyone says will make much sense to you.
That said, I'm chuckling to myself as I imagine the following: were you to face the actual consequences of people shamelessly breaking all of their actual and implied promises to you, would you be singing the same tune? Would you be rationalizing their behavior just because "shame" didn't merit a chapter in an econ textbook?
We live in a strange world where not only are people shameless, they can write books and earn money as they offer voyeuristic delights about their shamelessness, and have others defend their actions and attitudes as beyond any moral reproach.
In case you didn't already see it, there's more to this story than meets the eye.
The debtor pushes back against McArdle, saying his wife's serial bankruptcies are irrelevant, and McArdle counter-pushes with yet more revelations.
The guy's got to learn that court decisions are in the public record. (You'd think a Times reporter would know that.)
Getting away from the ethics:
It was foolish of the banks to lend him so much money. They have a large statistical database to analyse this and make lending decisions. The reporter is an idiot, although he didn't have the benefit of the banks database or rationality.
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