Sunday, 20 March 2011

Lawfulness/Lawlessness

Lawlessness and lawfulness lie at the heart of the rebellion in the Arab world. Aside from the many economic and structural issues spurring people to revolt, it’s amazing to witness how often the cries that go up from the crowds that gather to risk their lives include ‘Freedom!’ along with ‘Allahu akbar’. We need the insights of literature to fully understand how the police states of the Middle East have sapped the life out of whole generations and how Arab youth aren’t willing to submit to them the way their parents did.

The Egyptian revolution began when two policeman—who are famously petty thieves and extortionists in Egypt—beat a young fellow to death in his cybercaf√© because he refused to pay them a bribe. So not only did people have to fear the usual horrors if they dared to act politically, neither could they escape brutality and harassment in their search for everyday survival.

Now watch this video about a completely unconnected topic:



Economics blogs have been banging away at this issue ever since the housing market turned south. I could not competently recapitulate the technical details, but suffice it to say that the situation they describe is not merely bad behavior by a bank here or there. It is the complete meltdown of the rule of law. People forced to deal with the mortgage industry are now at the mercy of financial behemoths that are not only Too Big To Fail but also completely unbound by their own contractual obligations.

Because the securitization of mortgage loans exploded into a mass grab for the quick cash, the all-important chain of title was mishandled fatally and cannot be repaired. That means that hundreds of thousands of homes were bought from parties that did not have the right to sell them and further that many, many foreclosed properties now coming onto the market in an accelerating flood will never have undisputed title histories and in some states already cannot obtain title insurance for new owners.

This is not about accidentally buying a stolen car from someone in a parking lot that turns out to have phony papers. Rather, it goes to the heart of our capitalist economy and the safeguards that are supposed to establish the ownership of property and the fulfillment of contracts. A solution is unlikely even if Obama were not entirely obedient to the banks and showed any inclination to make them swallow the losses that would be required to fix what they broke. Which, needless to say, he does not.

The rule of law is not a pretty abstraction that only Egyptians have to worry about. It is the basis of our freedom too, and it’s no wonder that a society that could blithely endorse the permanent imprisonment of people neither charged with nor convicted of any crime is now facing the destruction of its own right to be protected by a set of rules that everyone—even Goldman Sachs—must obey. In coming years I believe we will see more and more examples of business affairs experiencing a paradigm shift in which well-connected mafiosi play by one set of rules, and the rest of us get another, i.e., a system that Hosni Mubarak’s accountants would have gazed upon with placid contentment. We can’t say we weren’t warned.

1 comment:

Dan Kowalski said...

“With laws shall our land be built up, but with lawlessness laid waste.”

-Njal Thorgeirsson, Njal's Saga