Thursday, October 02, 2008

Sheltering Ourselves from the Crash

Thoughts about the Stock Market Crash

By John Taylor; 2008 Oct 01

To make the Badi' blog topical I will address the big headline of the past couple of days, the stock market crash that threatens to turn an economic downturn into another Great Depression. This head over heels tumble over the brink started, as often happens, with a small stumble, a housing bubble followed by a mortgage insurance scam gone wrong. Throughout the financial system, bankers and other lenders are afraid to offer credit.

As always, what seems at first blush to be an outer, material concern is really a faith issue. The human spirit depends upon belief in the future, faith that our efforts will have meaning under a benevolent providence and that in the long run we will attain happiness. In the same way the economy depends upon an invisible belief in one another. This faith, the foundation of credit, is under grave threat. A crash comes when enough lenders cease to believe in other peoples' creditworthiness.

In order to avoid a meltdown a bailout scheme was devised, modified, rejected and may soon be modified again by an American government sadly weakened by partisan squabbling, corruption and blind ideology. My favourite columnist, George Monbiot, points out the base hypocrisy of these legislators on whom the world depends to save the financial system, the banking and insurance industries, as well as the pension funds upon which workers depend for their retirement income. In his latest column he summarizes the huge amounts of corporate welfare these politicians hand out, all the while hypocritically claiming to be advocates of capitalism, discipline and free enterprise.

"... the Congressmen and women now railing against financial socialism depend for their re-election on the companies they subsidise. The legal bribes paid by these businesses deliver two short-term benefits. The first is that they prevent proper regulation, which allows them to make spectacular profits and to generate disasters of the kind that Congress is now confronting. The second is that public money which should be used to help the poorest and weakest is instead diverted into the pockets of the rich." (

Just as it was when Baha'u'llah wrote the kings of Europe, the world's wealth is being skimmed off not only into the pockets of the rich, but also into means to protect them, that is, arms research, weapons manufacture and oversize defence expenditures. At the same time those areas of the economy that affect us most, our homes, neighbourhoods and the infrastructure that maintains them, remain primitive, underfunded and neglected.

How can we reverse this flow of funds so that it goes into what is ultimately most productive, human beings, starting with the poorest and most in need? The basic moral lesson of this crisis is that materialism is a virus that needs vigorous measures to defeat. Like any disease, it is invisible. It attacks from where the eye cannot see; its fever permeates our thinking.

Another Monbiot essay called "Property Paranoia" discusses a "hedonic treadmill" that lulls the elites and the wannabe wealthy into giving their all for slight enrichment compared with their peers, ignoring the fact that any number of other sacrifices and investments would better conduce to what they are really after: happiness. Instead, the materialists forget ethics and the general good and even their own freedom and they scrape, cheat and scrimp for the almighty dollar.

"Comparison is not the only reason the professors of happiness cite for our failure to feel better as we become richer. They point to the fact that we become habituated to wealth: Layard calls this `the hedonic treadmill'. They blame the longer hours we work and our deteriorating relationships. But there is something I think they have missed: that wealth itself can become a source of deprivation. Having money enhances your freedom. You can travel further and you can do more when you get there. But other people's money restricts your freedom. Where you once felt free, now you find fences. In fact, you MUST travel further to find somewhere in which you can be free.

"As people become richer, and as they can extract more wealth from their property, other people become more threatening to them. We know that the fear of crime is a cause of unhappiness, but so is the sense of being seen as a potential criminal. The spikes and lights and cameras proclaim that society is not to be trusted, that we live in a world of Hobbesian relations. The story they tell becomes true, as property paranoia makes us hate each other. The harmless wanderer in the woods becomes a mortal enemy." (George Monbiot, "Property Paranoia", January 31, 2006)

Monbiot is absolutely right here, a spiritual poverty drains us of the ability to create real wealth -- which is love for our fellow man -- and exclusive, absolute ownership denies everybody of the right to enjoy goods by roaming through them. Sole land and home ownership are great evils, greater I think than even he realizes.

Materialism reflects from the heart out into the outer, built environment. It created this insidious, outmoded system of real estate. Housing for both rich and poor is badly designed, overpriced and underplanned. We unthinkingly use land and buildings as investments and collateral and do not worry if they do not perform their function. Housing infrastructure routinely sinks homeowners heavily into debt just to put a roof over their heads. We are addicted to precarious mortgages, easy credit, complex regulations and mortgage insurance, a complex arrangement that became a precarious house of cards that nobody understands. Earlier this year economist Paul Krugman fingered housing as the main precondition of this crisis,

"In effect, U.S. policy is based on the premise that everyone should be a homeowner. But here is the thing: There are some real disadvantages to homeownership. First of all, there is the financial risk. Although its rarely put this way, borrowing to buy a home is like buying stocks on margin: if the market value of the house falls, the buyer can easily lose his or her entire stake. This is not a hypothetical worry. From 2005 through 2007 alone -- that is, at the peak of the housing bubble more than 22 million Americans bought either new or existing houses. Now that the bubble has burst, many of those homebuyers have lost heavily on their investment. At this point there are probably around 10 million households with negative home equity that is, with mortgages that exceed the value of their houses." (Home Not-So-Sweet Home, by Paul Krugman, New York Times, June 23, 2008,

Bad housing is both cause and symptom of our gravest ill, materialism. Krugman in the same article points out another ill effect of owning a freehold dwelling: it ties workers down so that they cannot readily go where they are most needed. This binds the entire economy and prevents the people and their leaders from reacting quickly to changing conditions.

"Owning a home also ties workers down. Even in the best of times, the costs and hassle of selling one home and buying another -- one estimate put the average cost of a house move at more than $60,000 -- tend to make workers reluctant to go where the jobs are. And these are not the best of times. Right now, economic distress is concentrated in the states with the biggest housing busts: Florida and California have experienced much steeper rises in unemployment than the nation as a whole. Yet homeowners in these states are constrained from seeking opportunities elsewhere, because it is very hard to sell their houses."

We should rethink everything. We need to change the whole housing system, and indeed the institution of exclusive ownership itself. If public corporations can have multiple shareholders, why not other possessions? Why, in an age of computers, do we still allow large items like land, houses, planes, trains and automobiles to rest solely in the hands of one owner, be it individual or corporation, exclusive of everybody else?

Many tries have been made to reform housing from the ground up, but they always fail. I recently toured one of the most interesting attempts, Buckminster Fuller's Dymaxion house, which is on display at the Henry Ford Museum near Detroit. I videotaped the entire experience and will make it available on YouTube sometime soon. Fuller understood that housing should be more mobile and high tech. The Dymaxion house is specifically designed, among other things, to be easily cleaned, to circulate the air and offer dwellers the largest possible view of its surroundings. Most importantly, it is not only prefabricated, it is also collapsible. It can be taken apart and reassembled on another location quickly and easily by a couple of workers. Such mobility would free up the workforce to do an end run around regional economic reverses. Everybody would go where they are most needed.

Because our houses are so fixed and grounded in dead earth we forget that more mobile lifestyle in an efficient, flexible dwelling would be the optimum green solution. Present houses are very wasteful, and located in places that force us to travel more than necessary. The more mobility we have in housing the less carbon and time are burned up by commuting long distances to work, as Krugman points out.

"Finally, there is the cost of commuting. Buying a home usually though not always means buying a single-family house in the suburbs, often a long way out, where land is cheap. In an age of $4 gas and concerns about climate change, that is an increasingly problematic choice."

Most important, increased public space, the right to roam and mobile housing would make us happier. Whatever our political rights, if we live in cramped, ugly surroundings we will never be free or happy. We will be prisoners confined all our lives by four walls stuck in the same locale. Ironically, as things are even the rich tend to be glued to one location longer than is good for them. Even the most beautiful mansion becomes tedious if it sits unchanged. Only the super-rich can afford to own several mansions. Multiple homes, as well as suburban sprawl among the middle class, lead to gross waste of space and further destruction of natural habitats.

Inadequate houses in lifeless neighbourhoods cause not only economic depressions like this one, but they are at the root of personal depression as well. Gloomy, stodgy living conditions are the root of the world's most common mental illness, depression. Recent studies have shown how important a good night's sleep is to mental health. Yet we allow noise to permeate our days as well as our nights. Quiet, along with heat, should be a requirement of every bedroom. In well designed houses this would happen as a matter of course, thus curing -- according to these convincing studies -- almost all mental illness.

I dream of a more flexible, open, high density housing system that would, like the dymaxion house, be extremely moveable. It could even change our surroundings automatically according to physical and psychological needs that we tend not to be aware of ourselves. At times everybody needs to be around nature, so why not have our homes move us near a park or into the country? If we crave community, let it plunk us into a vibrant city neighbourhood.

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