Several cases of selective blindness in news reporting have struck me of late. Many commentators pile onto the bond rating agencies for rating what turned out to be junk bonds with AAA ratings. Often this is given as the root cause of the financial crisis. How could the agencies have been so stupid, or corrupt?
Put yourself in the place of these bond raters prior to the crisis. They saw bonds that had been issued by Sallie Mae or Freddie Mac, quasi-governmental organizations established by congress. Surely such bonds would enjoy the full faith and credit of the U.S. Government. Is it really so hard to see how the rating agencies could rate them AAA? After the crisis struck, the government did in fact step in to infuse trillions of dollars in cash and credit to cover the losses. So the AAA rating, villified by the commentators, was vindicated, at least in part.
What is going on here? I see a triple blindness at work. To blame the rating agencies in the first instance, commentators had to overlook the involvement of the government itself in setting up Sallie Mae and Freddie Mac and instructing them, and all other banks, to make very risky loans to would-be home owners. By implication, the rating agencies were expected to pass judgement on government policy, accurately assess its consequences, and lower the ratings accordingly. In fact, the rating agencies
did exhibit blindness in this regard. But it turns out that their rosy judgement was far from entirely wrong, a fact that also escaped much notice. Banks
were bailed out at unprecedented cost.
Stockholm Syndrome can explain these instances of selective blindness. Once government policy is established, we fail to see beyond its boundaries. We stop arguing the merits of the policy. It suddenly becomes difficult even to imagine a world in which the policy does not hold. Our minds have become imprisoned, fenced in by statutes raised to the status of holy writ. In the end, we come to love our captors, as did the prisoners in the famous experiment.
Another case: it was recently announced that GM was ending the production of the Saturn. This, while it continues the production of massive four-door pick-up trucks, advertised on cable. On the one hand, the government funds a cash-for-clunkers program to get people to drive smaller cars. Yet its own car company stops production of its only really small car, and continues to advertise the sort of car liberals have been deploring for decades. Did anyone notice? Not too many.
Or again. Sixty Minutes had a segment last night on illiteracy in America, in which it was claimed that one seventh of our population is functionally illiterate. During this interesting segment one question was never raised: in a nation with universal compulsory education, how can it happen that one-seventh of our population can't read? I am not amazed that some illiteracy exists, but I do find it amazing that no question concerning the educational experience of those interviewed was asked. My take: since education is a government function, it lies outside the walls of our mental prison. We simply don't see the problem.
The big news of the day is the proposed "overhaul" to our medical care "system". The bills are offered in two versions, a plain language version and a statutory language official version. It seems that no one can understand the official versions,
not even the congressmen involved, most of whom are lawyers. Our own DownsizeDC website has long pushed for a
Read The Bills Act, requiring congressmen to read bills before approving them. It seems that even this may not solve anything if they can't understand what they read. What appears as blindness in the reader can instead be deliberately cryptic legislative drafting.
Our financial situation remains in doubt. Here it is October again and no investor knows what to expect. Will inflation strike? Will interest rates rise? Will gold remain legal? Will the markets fall? Nothing seems certain as our trusty government remains ready to do whatever it takes to......preserve itself. Uncertainty as to what the government will do produces a blindness concerning the future that poisons the markets.
Liberty has many aspects. Perhaps the mental aspect has been neglected. How can we escape from prison if we fail to see the walls?
