Thinking about Things: The Rise of Rights, the Decline of Responsibilities, and the Transmogrification of the Social Compact

John DeQ. Briggs

Hard as one might try, it is increasingly difficult to be optimistic about the future of America. We are living through a time of systematic government actions designed to relieve preferred constituencies of their responsibilities and to grant preferred constituencies significant rights, often at the expense of non-preferred constituencies. The Social Compact, if one can be said still to exist, is barely recognizable. The Social Compact theory as a basis for government was birthed in Greece but much developed in the 17^th and 18^th centuries by philosophers such as Thomas Hobbes, John Locke, and Jean Jaques Rousseau. It was important for this country’s Founding Fathers inasmuch as it supplied a framework to limit government to function only with the consent of the governed. Under the hypothetical Social Compact, citizens give up some of their natural rights to the government in exchange for protection of certain individual rights and privileges. Citizens also undertook responsibilities to society generally in the nature of good citizenship.  In other words, citizens agree to abide by the law and in return they can expect the government to do its part in protecting their freedoms and their right to life, liberty, and the pursuit of happiness. Implicit in all of this was the acceptance by citizens of a variety of civic responsibilities. I shall come back to this in a couple of pages. 

The problem of government relieving people and institutions of their bargains when they have turned south is not a new phenomenon, but until recently it was understood to be a dangerous thing because it presents a classic case of moral hazard and its various analogs. Moral hazard is an economic concept that describes the tendency of people to act differently once they know they are protected against risk. It is an especially pervasive problem in American society as people often take on more risk than they normally would in the presence of certain safety nets, which results in the risk being passed on to those (often but not always taxpayers) who did not bargain for them and got no benefit. Government bailouts do not always present moral hazard, but they usually do present something quite like it. In this article, I am being a little looser with the term “moral hazard” than I should be, but just to have an easy way of referring to a set of allied problems. 

The government intervention during the Great Recession of 2008-09 presented a huge moral hazard situation. At that time, many enormous U.S. companies were on the verge of collapse as a result of years of risky investing, accounting blunders, and inefficient operations. These companies (most notably AIG, General Motors, and Chrysler) contributed billions of dollars to the country’s economy. In the wake of the collapse and bankruptcy of Lehman Brothers, other at-risk companies were deemed to be “too-big-to-fail” and were bailed out by taxpayers to the extent of hundreds of billions of dollars. The willingness of the government to rescue these and other companies sent a message to executives at large corporations that any economic cost from engaging in excessively risky business activities (in order to increase their profits) would or might be shouldered by someone else. The Dodd-Frank Act of 2010 sought to mitigate the likelihood of another massive moral hazard situation involving these “too-big-to-fail” corporations by forcing them to create in advance specific plans for how to proceed in the event of financial trouble and by stipulating that these companies would not be bailed out of the expense of taxpayers again in the future. Ha. 

The current administration has specialized in creating moral hazard and its analogs. Perhaps the most visible of these is the student debt “forgiveness” program, which was implemented without congressional action and hence without any sort of approval by those who would bear the cost (taxpayers). While the constitutionality of the executive action is now before the Supreme Court, and odds are that the Supreme Court will find the executive action to be unlawful, the administration has used its probable loss as an opportunity to demonize the Supreme Court rather than tighten its mainsail. The obvious larger problem is the message that this sends to a generation of students: they have the “right” to be bailed out of contracts they entered into willingly and knowingly and, more troublingly, they have no responsibility for commitments they agreed to undertake. This message has been sent and received in other ways as well, such that many of today’s college students feel empowered not just to discriminate against disfavored constituencies, but to force college administrators to do the same. It is this perception of a right to discriminate, but only in certain ways, that has given rise to the so-called “cancel culture.”

The same administration recently bailed out huge corporate depositors at the Silicon Valley Bank and Signature Bank and by the time you read this, Republic Bank will have been seized and sold by the Federal banking authorities. While FDIC insurance only covers $200,000 of deposits, many of Silicon Valley Bank’s largest depositors had deposits in the tens or hundreds of millions of dollars.  To be sure, as in 2008 and 2009, allowing those large corporations to fail because of their own stupendously stupid risk-taking could have led to contagion throughout the financial system and perhaps was in the end warranted. But at least in 2008-09, the same government that engineered the bailouts took care to take responsibility and to recognize that there was a real social cost to introducing this kind of moral hazard into matters. In the situation last month, the administration showed no such recognition of moral hazard or anything like it. Instead, the administration did what it always does:  blame the now long-departed Trump administration for vague and unspecified regulatory failures.

More recently we have executive action from the administration, action that would surely never be possible legislatively, that will require mortgage borrowers with high credit scores to pay more for their home mortgages (a fee that shall never be called a tax) to subsidize home mortgage borrowers with low credit scores. The optics of this are just terrible given that it was the encouragement given by the government to unqualified mortgage borrowers that led to the Great Recession of 2008-09. But even apart from that, the incentive structure here is bizarre. One suspects that a nontrivial number of savvy mortgage borrowers will do what they can to lower their credit rating not just to avoid the tax (er, surcharge) but also to get a lower mortgage rate. What could possibly go wrong with this policy? What member of Congress would ever vote for it? 

The Social Compact is also being shredded by laws in states such as California and New York and big cities such as Chicago and Philadelphia. Even before the violence of the summer of 2020, progressive prosecutors had run successfully on a reform platform of redefining and not prosecuting non-violent crime. Nonviolent felonies were reduced to misdemeanors and shoplifting involving goods less than $1000 are no longer prosecuted at all in these and other jurisdictions. Amplified by the events of the summer of 2020, and by the economic impact of Covid generally, shoplifting became big business for gangs of shoplifters, who swarm into department stores, drug stores and family-owned shops emptying the shelves of anything that can be sold for cash on eBay or through Amazon. There has been but a modest counter reaction to all of this so far (except that gun sales are through the roof, such that guns now substantially outnumber people in this country). The larger impact has been that scores of stores large and small are leaving the downtown areas of many big cities with resulting loss of jobs and quality of life. One senses that a fuse has been lit and that a counterreaction will come. But that is not certain. 

An ancillary reality in many big cities is that the “defund the police” movement has left law enforcement personnel demoralized and greatly understaffed. Recruitment into big city police forces is difficult with the result that there are massive shortages of experienced (and inexperienced) officers. The situation is exacerbated by the public union problem. Municipal governments have made a Faustian bargain with the unions: in return for electoral loyalty, the unions get highly favorable contracts and unusually generous pension terms. Contractual provisions make it difficult for cities to retain policemen over age 50, since they are usually eligible to retire at that age. Not surprisingly, young people do not seem to want to join law enforcement, probably for political and peer pressure reasons. 

So, back to the social compact. According to my “just trying it out” GPT chatbot, under the social compact, citizens have certain duties and responsibilities towards their government and society in general, in exchange for the protection and benefits provided by the government. These duties and responsibilities are listed as these:

1. Obeying the law
2. Paying taxes
3. Serving on jury duty
4. Defending the country through military or other essential defense service
5. Voting
6. Respecting the rights and freedoms of others and not engaging in behavior that harms others
7. Contributing to society in a positive way, such as through volunteering or charitable work
   

I personally do not trust AI answers and think that the duties and responsibilities of citizenship are more nuanced than what my chatbot says. For example, I have long believed that voting is both a right, a duty and a responsibility of citizenship. But I have also long believed that the right to vote might sensibly be limited to those who can pass the same citizenship test required of immigrants. Sublimely ignorant voters do not make a positive contribution to a democracy. Relatedly, as Allysia Finley has written in the Journal, “You Can’t Throw the Bums Out if You’ve Voted With Your Feet.”  Almost 200,000 people have left Cook County in the last two years. More than 70,000 people left San Francisco. More than half a million people left New York. She suspects that those and other cities are driving away the very types of voters and businesses needed for an electoral course correction. It all has the feel of a downward spiral that may not be readily reversed.

As Gerard Baker wrote in an OpEd piece for the Wall Street Journal last month entitled If Western Civilization Dies, Put It Down as a Suicide

If we are losing [the competition between global civilizations], it is because we are losing our soul, our sense of purpose as a society, our identity as a civilization. We in the West are in the grip of an ideology that disowns our genius, denounces our success, disdains merit, elevates victimhood, embraces societal self-loathing, and enforces it all in a web of exclusionary and authoritarian rules, large and small.

I frankly think it is also because the Social Compact is being replaced by a form of nihilism in which there is no balancing of rights and responsibilities. Citizens have only rights, and too many believe, and fervently, that it is incumbent on government to protect them from cradle-to-grave not just financially, but also from the emotional strain of suffering the presence of disagreeable political views or concepts. Virtue or virtue signaling is rewarded, but in the evolving educational system merit or merit signaling is not. As I find myself saying with increasing frequency: what could possibly go wrong? 

Extra Credit Reading

• Michael Barone, The Feminization of America: What Will it Look Like? The Washington Examiner, September 9, 2021. I stumbled across this article while looking for something totally unrelated. A couple of statistics are interesting, although one is not quite sure what to make of them. In postwar America, men outnumbered women on campus, with many veterans taking advantage of the G.I. Bill. In the post-Vietnam decades, that trend reversed. In the last 5 years,  higher education enrollments declined by 1.5 million students and  men accounted for 71% of the drop. In the 2020-21 school year, 59% of college students, and 61% of private four-year schools were women. Women are also more likely to graduate, with 65% of women getting a degree within 6 years, as compared to 59% of the smaller number of men. We are seemingly headed toward a society where women will outnumber men by 2-1 in higher education and by an even greater proportion among college graduates. The disparity will be even greater among holders of postgraduate degrees.

• The emergence of Robert F. Kennedy Jr. as a challenger to President Biden is, as Alice might say, “interestinger and interestinger.” Shortly before he got fired by Fox News, Tucker Carlson hosted an extensive interview with RFK Jr.  It is 90% RFK speaking and it is more than a little bit interesting.  Biden will be in serious trouble if he has to face this man in a debate. And the DNC has yet to figure out how to prevent RFK from running in the Iowa and New Hampshire, which they claim to have “prohibited.” Kennedy has also described Carlson as “breathtakingly courageous” in the wake of his Fox News departure. 

• This mutual admiration might (or might not) have triggered Andrew Sullivan to suggest (and he was not altogether kidding) that Kennedy and Carlson would make a plausible alternative ticket. His column is here.  His underlying points seem very much on the mark.

• Finally, and speaking of interviews, Bill Maher’s session with Elon Musk two weeks ago is worth a listen.