Tom Friedman Blames the Victim for Subprime Values

Tom Friedman blames the victims:

We are not as powerful as we used to be because over the past three decades, the Asian values of our parents’ generation — work hard, study, save, invest, live within your means — have given way to subprime values: “You can have the American dream — a house — with no money down and no payments for two years.” [NYT]

The mortgage crisis is not a reflection of the moral turpitude of the borrowers. If you want to criticize someone's values, assail the greed and shortsightedness of lenders who got caught up in a speculative frenzy and loaned money to people who had no realistic prospect of paying it back. Professionals loaned money to amateurs, not the other way around.

Earlier generations weren't more virtuous because they had less debt. Their dollars bought more. They were more likely to have steady jobs with benefits, including employer-subsidized incentives to save (retirement plans, life insurance, etc.).

Housing and college were more affordable, relative to the average worker's salary. Health care costs had yet to spiral out of control. Gas was cheap. If worse came to worst, people could still declare bankruptcy and get a real fresh start.

Americans have always valued hard work--and nothing has changed. In the USA, the average worker clocks more hours than anywhere else in the industrialized world. The work week has been getting longer, not shorter. Paid vacations are going the way of the dodo.

Friedman implies that consumers got locked into balloon mortgages because they were morally degenerate. He wants to paint these decisions as weakness and self-indulgence. He doesn't seem to understand that buying a home is an investment, a way to save for the future.... Buyers thought they were taking advantage of a rare opportunity to better themselves over the long term.

Remember how you couldn't turn around in the subway or open your email browser without being bombarded with ads for ridiculously cheap mortgages? Even "respectable" lenders went along with these schemes because of the collective faith that housing prices would keep rising indefinitely. The human weakness for speculative frenzies is as old as capitalism. It's not some new-fangled moral defect. (Tulip bulbs, anyone? How 'bout some tech stocks?)

Americans may be bad at math, but they aren't lazy.