Subprime and the Commodification of Women’s Bodies
posted by Frank Pasquale
Does the free market corrode moral character? We’ve already seen the role of sex in the wreck of royalty-collection at the Department of Interior. As Mara de Hovanesian reports, it turns out the mortgage business was almost as good at this toxic mix as big oil:
[M]any . . . young women during the boom found [their] way into an obscure banking job with the clunky title “mortgage wholesaler.” [Their experiences offer] a glimpse into the recklessness and indulgence that drove the industry to ruin. . . . Wholesalers are paid on commission: the more loans they generate, the more money they make. . . . During the housing boom, lenders typically approved the loans and then packaged them into securities. That path—from mortgage brokers to wholesalers to lenders to securities—turned out to be a road to disaster.
Eventually the deal-making turned frenetic. Multiple wholesalers began inundating mortgage brokers with offers for the same applications. Some brokers chose to exercise their power by asking for something extra in exchange for their business: sex. Dozens of former brokers and wholesalers say the trading of sexual favors was so common that it came to be expected. [One who declined advances stated]: “I didn’t want to be a mortgage slut.”
At the heart of the subprime crisis was the growing cultural obsession with transforming homes from mere places of shelter to investments–their exchange value eclipsed their intrinsic value. I’m not surprised that this hypercommercial mentality would slip from individuals’ views of their homes to their views of themselves. Add in sexism in the business world and an all-too-tempting road to riches appeared.
Hopefully advocates of the prosperity gospel will realize the all-consuming greed an “ownership society” can unleash. As Lipshaw notes, religion can help moralize market participants, but can itself be overwhelmed by a wild west atmosphere of easy money.
November 22, 2008 at 12:27 pm
Posted in: Economic Analysis of Law
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Responses (4)
Jeff Lipshaw - November 23, 2008 at 9:23 am
Thanks for the link, Frank, but not quite my point.
I think morality operates independently of physical cause and effect, either because it really is independent (transcendental?) or because the process of judgment-making is so complex that it might as well be independent. Or, in other words, judgment is either irreducible, or if reducible only in such esoteric theory that it might as well be irreducible. No algorithm can substitute for judgment in any circumstance where good judgment actually means something.
The post to which you link actually was a sarcastic take on Daniel Henninger’s column in the Wall Street Journal in which he took my point to a ridiculous extreme, suggesting that Southern evangelical religion was appropriate ballast to market opportunism.
I said this:
“The challenge in 2008 is not to save boardrooms and management suites by fundamentalist appeals to Jesus before taking each decision. I’m not aware of anything in the Sermon on the Mount directly on point when I’m trying to figure out an optimal debt level. And why Southern evangelicals? My daughter and son-in-law were married at the Society for Ethical Culture on the Upper West Side of New York City, no doubt within shouting distance of a couple Northerners and atheists. Amazingly enough, there are a few of us (even here in Cambridge) who know that Adam Smith wrote both The Wealth of Nations and A Theory of Moral Sentiments.
“No, the real challenge is demonstrating the practice of wisdom, which is something different either than adherence to a risk algorithm, davening each morning and afternoon, or singing on Sunday mornings in the choir. There’s no doubt that religion can provide the source of a moral code, but I’m troubled by one that might say that God caused the Dow to fall 4,000 points to punish atheists, homosexuals, and East Coast liberals.”
For more on my views on judgment, see the following:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1163256
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1033441
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=886741
DB - November 23, 2008 at 6:42 pm
There was no sex before capitalism. Men never took advantage of women, or vice versa, before capitalism. All evil in this world can be attributed to capitalism. Before capitalism, everyone lived in peace and harmony.
Miriam Cherry - November 23, 2008 at 7:07 pm
Frank, I’m intrigued by a couple lines here that are not developed – the idea of commodifying the home, and perhaps commodifying sex (whose sphere was traditionally w/in the private sphere of the home, although alternatively existing in a market form through prostitution). Your posts are typically so clever and I was looking for some kind of link or commentary on that.
But this just has me puzzled – Sex has been commodified in much more blatant forms than what you are describing with the housing meltdown/mortgage mess, and sexual harassment (and sexism) are likely to have been prevalent in other areas.
Is there a link perhaps between bad management or incentive alignment and sexism? That might be the more interesting question lurking here.
Frank - November 25, 2008 at 1:24 pm
Miriam: Thanks for your comment here. I guess my main concern in a post like this (which may just be a collection of notes on interesting articles) is to note how the behavior that the market rewards relates to other conceptions of virtue. The lines of causation here are never simple, but I like this simultaneous description/judgment from Usha Jehudasan:
“One of the subtle forms of violence today is the tyranny of accumulation. Modern culture, based on productivity, greater profits, and pounding advertisements, keeps giving us false needs. To live well, we must have more and more. And while we have more, we must make sure that those around us don’t have more than we do.”
“Living this way makes life very complicated . . . [This] way of life . . . makes us relate to people as possessions. Just as we cling to our clothes, perfumes and handbags, we also become possessive about our relationships. Once someone has offered us friendship, affection, love or care in some way, we want more and more of the same thing. So we cling to the person who gave it to us, forgetting that they too are human with deep similar needs. When they share their goodness with others, or are unable to give us more of what we need, we become himsa people — attacking, accusing, abusing and discarding them.”
from
http://www.thehindu.com/mag/2008/11/16/stories/2008111650100400.htm
Jeff: I did understand that you were mocking the idea that the “loose morals” attacked by evangelicals led to the financial crisis. I shouldn’t have assumed that you thought there was some role for religion in moralizing market participants (just not Henninger’s kind of blunt and silly finger-pointing). I am in complete agreement with you on the problems with Henninger…and even with reviews like this:
http://www.firstthings.com/article.php3?id_article=6325
which seem obsessed with the motes in the eyes of lower and lower-middle class individuals while ignoring the planks of campaign finance corruption, vast fortunes at the top, and shy-high inequality which were the main contributors to the current collapse.
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