Unreal EstateROGER SCRUTON
If you borrow money you are obliged to repay it. And you should repay it by earning the sum required, and not by borrowing again, and then again, and then again. For some reason, when it comes to the state and its clients, those elementary moral truths are forgotten.
A verse of the Koran says: 'Oh ye who believe, do not eat up your property among yourselves in vanities' (An-nisa, 4, 29). This is one of many verses and hadiths interpreted as forbidding interest, insurance and the trade in debts. The Prophet was appalled by the sale and purchase of unreal things, and especially when people seek to forestall the will of God, by selling something that they do not possess or which they may never be called upon to provide. Traditional Islamic law therefore forbids many of the commercial constructs that we take for granted: for example, limited liability, which permits people to escape from the consequences of what they do by wearing a corporate mask. Of course, an economy without interest, insurance, limited liability or the trade in debts would be a very different thing from the world economy today. It would be slow-moving, restricted, and comparatively impoverished. But that's not the point: the economy proposed by the Prophet was not justified on economic grounds, but on moral grounds, as an economy of righteous conduct.
But matters are not usually improved when the state steps in. The underlying premise of state interference is that the state and its clients come first. The main concern of the political class is to ensure that those on whom it immediately depends for an easy life – the bureaucrats and the clients – will be properly provided for, with a reserve fund to buy favour from the discontented. The trade in unreal estate goes on.
The European norm, in which the largest part of the economy is controlled by the state, represents a kind of default position of modern democracies, and one to which the USA, long the exception in Western politics, is now tending. High taxes on all who work hard, take risks and keep the economy going, combined with a free ride for all those from whom votes can be most easily purchased – such is the tendency of the democratic state. Nobody in Greece or Portugal has ever doubted it, and only a residual glimmer of the Protestant Ethic has distracted the Germans from the truth that they are not really entitled to complain, when the Greek political class tries to transfer the cost of its borrowing, which it cannot pay, to the German taxpayer, who can. For that is what social democracy means, and social democracy has been Germany's greatest post-war export.
Many economists write learned and technical articles to explain how the current debt crisis arose, and how it might be managed. The theory of re-financing and sovereign debt fills many a volume of innocent-seeming graphs and statistics. But this should not blind us to the truth that dawned on the Prophet, which is that we have another and truer way of perceiving these matters, which is the way of moral judgement. If you borrow money you are obliged to repay it. And you should repay it by earning the sum required, and not by borrowing again, and then again, and then again. For some reason, when it comes to the state and its clients, those elementary moral truths are forgotten.
If a private person behaves in this way we expect him to be punished by bankruptcy. To escape this punishment by borrowing again is merely to augment the crime. But when businesses and banks judged by the state to be 'too big to fail' do likewise they have to be 'rescued', in other words nationalised. This is good news for those who have been wearing the corporate mask, since they can continue to transfer the costs of their behaviour. Thus last year the CEO of Chrysler, a fiction now maintained by the state, rewarded himself with a salary of $8 million dollars for his work in the world of dreams. Only in this way could he show that he, too, was 'too big to fail'. And the same goes for states. 'Defaulting on a sovereign debt' is supposed to be inconceivable, just as it is inconceivable that the dead industries of Detroit or the profligate banks should be buried.
Roger Scruton. "Unreal Estate." Open Democracy (September 12, 2011).
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Roger Scruton is a research professor in the department of philosophy at St. Andrews University, a visiting scholar of the American Enterprise Institute in Washington DC, and a senior research fellow in philosophy at Blackfriars Hall in Oxford. He is a writer, philosopher and public commentator who has specialised in aesthetics with particular attention to music and architecture. He engages in contemporary political and cultural debates as a powerful conservative thinker and polemicist. He has written widely in the press on political and cultural issues. He has held visiting posts at Princeton, Stanford, Louvain, Guelph (Ontario), Witwatersrand (S. Africa), Waterloo (Ontario), Oslo, Bordeaux, and Cambridge, England. Mr. Scruton has published more than 30 books including, The Uses of Pessimism: And the Danger of False Hope, Beauty, Understanding Music: Philosophy and Interpretation, I Drink therefore I am, Culture Counts: Faith and Feeling in a World Besieged, The Palgrave Macmillan Dictionary of Political Thought, News from Somewhere: On Settling, An Intelligent Person's Guide to Modern Culture, An Intelligent Person's Guide to Philosophy, Sexual Desire, The Aesthetics of Music, The West and the Rest: Globalization and the Terrorist Threat, Death-Devoted Heart: Sex and the Sacred in Wagner's Tristan and Isolde, A Political Philosphy, and most recently Gentle Regrets: Thoughts from a Life. Roger Scruton is a member of the advisory board of the Catholic Education Resource Center.
Copyright © 2011 Roger Scruton
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