Sunday, February 1, 2009

Moral Hazard: Our Responsibility Crisis

When I read of the unwed 33-year-old California welfare recipient who just gave birth to a litter of eight children,in addition to the six she already had, I thought many unkind thoughts. Absolutely vile thoughts, really; the first sentence out of my mouth in reaction was really, really nasty: somebody shoot that damn woman. Now, that is a really vicious thing to think, and I would never actually do a thing like that. But I don't for one minute apologize for the sentiment that inspired it and I was somehow not surprised to learn that this same woman had bankrupted out of $1 million in house debt.

So far, this lady is into the taxpayers of not only California, but the whole country, for about $4 million, including the house debt and the estimated $4 million her delivery, which entailed a team of 46 medical professionals, and the ongoing care of the seriously underweight infants of about $400,000 each.

To most people, welfare recipients who breed like rats and the medical practitioners who supply them with the means to give birth to a litter of 8 kids at once; and the trillions of dollars of house loans and derivatives based on them that will never be repaid, or, for that matter, the ongoing problems with crime in our neighborhood, are separate issues.. Most people don't see a connection between the irresponsibility of the folks who spend their lives living and breeding incontinently on the back of our welfare system; the reckless foolishness of the millions of middle-class folk who borrowed against their houses to 5X their income, and, in spite of spending up to six, or even eight years warming seats on college campuses, can't figure out that $798 a month doesn't pay down a $700,000 mortgage or that you should actually read and understand a contract before you sign it and are responsible for what you sign; or the flaming criminality and malfeasance of our policy makers and financial executives who built the towers of leverage 100 stories high,of unrepayable loans and instruments based on them knowing full well, quite early on, that the entire structure was tricked to collapse, for they felt safe in the knowledge that the taxpayers would be the guarantors of the last resort and step in to assure their multi-million dollar bonuses and prop up their tottering institutions.

What we have managed to do in this country in the past 65 years is create a massive moral hazard, a system that encourages and rewards stupidity, irresponsibility, extravagance, and criminality, while punishing prudence, restraint, and hard work. If you are one of the millions of people who waited out the housing bubble so that prices would back off to put a decent place within the range of an honest mortgage you could actually afford, you are rewarded for your prudence by watching your neighbor walk free and clear after borrowing hundreds of thousands of dollars against her house to buy $80,000 cars, and live-rent free for months in the expensive place she could never afford to begin with, while she goes delinquent on her loan and begs the government for assistance staying in her home. And if you are a single mom or family of modest means struggling to stay afloat on a stagnating salary while wondering when your head will go on the block at your company and wondering where you're going to find the money to take your kids to the dentist, you have to help pay the $3 million in medical bills that a multiple birth of seven or eight infants now costs, by a woman who can't even support herself and has never worked in her life, or for the in vitro fertilization of a 55-year old unemployed homeless woman. And we all are paying for the massive bonuses and 40-room houses of financial maniacs and criminals while we lose our jobs, or take reduced hours and pay, or watch our own small businesses spiral down into failure as this bubble-induced recession deepens into depression,with little hope of bettering ourselves and the real likelihood that the day we have to default on our own debts will come soon, because we've been rendered stone broke supporting the recklessness and criminality of the 5% of the population that incurs the costs that nobody can pay.

We need badly to restore accountability, and knowledge of causality,or the connection between what you do and the consequences you bear, to a large portion of the population of this country. This is not a class or race issue, either, for the childishness, whimsicality,wish-based reasoning; and refusal to accept responsibility and sense of entitlement to unearned benefits to be paid for by someone else who will receive no rewards, runs from the top of our society clear to the bottom. Maybe we've just had it too easy here for the past 65 years, but now our incredible luck is running out, because we're now stone bankrupt, over-populated, and in resource depletion. We can no longer afford people like the California mother of 14, or Casey Serin, or Hank Paulson and his buddies on Wall Street, or the millions of other people out here, of every degree, who think that the rest of us exist to walk behind them mopping up their messes while our own incomes and lives deteriorate, our jobs vanish and our businesses fail, and our costs escalate.


Anonymous said...

I, too, am on the bandwagon on your thoughts regarding this woman. Her, I don't feel sorry for. I, too, am outraged at the fact that she is on welfare and the doctors who performed the in vitro fertilization process. The ones I now feel sorry for are the children. California is bankrupt and can not afford to pay welfare recipients and pay out tax refunds. What is this mother going to do to feed and clothe all these children?? What I am hearing now is that she has an obsession with having children. That does not give her the right to bring more mouths to feed into this world. An obsession is something that should be dealt with in a psychiatric setting.

Lately I have been thinking how our society is akin to the ancient feudal societies of long ago times; ours is just on a much grander scale. The peasants. back then, were there only to keep the royalty happy and well-fed. We have been supplying the dollars to keep these big corporations rolling in greens. We have also swallowed the crap that the banks have fed us regarding how easy it is to get credit cards and loans that generate the revenue that these financial institutions rake in by the fistfuls.

I do feel, though, that there has been a massive dumbing down of our society. Unfortunately we now have to pay for what we have been willingly led into, like a docile flock of sheep.

The North Coast said...

God, how I feel for the children, and we can't leave them in the lurch, can we?

But there's a real possibility that California's huge structure of lavish entitlements, which that woman is clearly counting on, could just crash....or that the whole state could collapse. They've already cut state workers back to minimum wage, can't finance their schools, and are closing state offices one day a week.

Some people forget that every benefit has to be paid for by somebody, and as we get poorer and poorer, some very nasty choices will have to be made.

emaho said...

An analogous situation may be found in the Medicare program which, to date, has unfunded liabilities in the hundreds of trillions. Why? Because statisctics show that 90-95% of our lifetime expenditures for health care are made in the very last couple of years of life. I'm an RN who has witnessed this over many years of practice. Just as we shouldn't subsidize irresponsible breeding practices, neither should the public at large be asked (forced) to subsidize the costs of a for-profit health care system to needlessly resuscitate and maintain patients (elderly or otherwise) who are terminally old or ill and who, without these "heroic" efforts, would simply die.

Triage is a time-tested practice for deciding, from the hospital to the battlefiled, what constitues an appropriate level of care. It's time to apply this concept in our hospitals, nursing homes, etc. It would reequire a wholesale reordering of priorities, but that's what will be needed if any of the health care system is to remain viable. Of course, it will be made easier by nationalizing every health care-related enterprise, up to and including the pharmaceutical industry. Today, given the bloated epectations placed on the system (everyone MUST live as long as they possibly can), everyone's right to competent and compassionate health care is simply not compatible with, and is jeopardized by, the profit motive.

I'm 65, and the prospect of being triaged out of this veil of tears doesn't bother me in the least.

Fargo said...

There should be ethical guidelines for fertility treatments. Preference should be given to those who have no children. Treatments and procedures should NOT be done unless the mother has the means to care and provide for the resulting children.

What happened in this particular situation far outside the ethical pale. I don't envy those children. Their start on life is anything but promising.

The North Coast said...

You would think there would be guidelines concerning suitability. I work in financial, and I can tell you that if I took this woman's last few hundred dollars and bought her a high-risk stock and lost her money, I would be looking at serious discipline.

These children are HUMAN LIVES,people who will have to live with what was done to them, yet no consideration regarding the suitability of the treatment was ever made. How did she pay for fertility treatments to begin with, being a welfare recipient on Medicaid? Did the state pay for this? Did the doctor do it Pro Bono? Clearly, the practitioner gave no thought to the woman's financial condition, existing family obligations, or her overall health or welfare. He had the right to refuse her the treatment on these grounds, and most people would say he had the obligation.

Personally, I wish these advanced fertility treatments had never been devised, because they've opened an ethical can of snakes and have created ethical quagmires that wouldn't be possible without them. For example, one 30-something man, single and with no marraige prospects, decided he wanted a kid and engaged a surrogate mother, who was artificially inseminated with his sperm for a fee. When the child was born, he did not want it and neither did she. We are having a lot of children born whose parentage cannot be traced and for whom no one is responsible. Worse, though, we are coming to regard a human baby not as a unique human being with a unique soul and human rights, but as a product that can be ordered up to spec, like a computer or something. Now, many scientists are talking about how to patent particular genes. What's next? Will people be born without the legal right to reproduce for fear of violating someone else's patent? The implications are very scary. These technologies degrade human life and turn us all into livestock.