Don't Hate the Player, Hate the Game

Washington and Lee's 2012 Republican Mock Convention came to a close this weekend after the school selected Mitt Romney as the republican nominee for the 2012 presidential election. Political pundits James Carville and Ann Coulter kicked off the convention with the first ever Mock Con political debate.

In the debate Coulter criticized President Obama for his inability to transcend above “Washington politics.” Carville responded, "Are we supposed to blame Obama for not doing what no one else has been able to do?" Debate moderator Mike Allen then asserted that outlook “removes all responsibility” from everyone in Washington and assumes they have “no control” over what occurs.

In the 2011 film Margin Call, Jeremy Irons’ character shared a similar sentiment by saying “there will always be winners and losers” in the financial sector. In essence, arguing there was nothing he could do to stop the coming financial crisis.

As an economics major, I agree that there will always be winners and losers in a free market. Economic principles rely on a number of assumptions, many of which we economists know do not accurately reflect the world we live in. As a result, scarce resources (like money) are not always allocated efficiently.

One key economic assumption is that there is perfect information in a free market. As shown in Margin Call, the firm decided to sell all of their troubled assets once they learned about the likely value of those assets. That highly valuable information was not available to all the other financial firms.

As Irons’ character asserted, his company sold those assets at “fair market value” in a “fair market place.” Irons and his company acted in their best interest under the constraints of the market, which is precisely what everyone does in a capitalist society. Many would argue that Irons’ company should not have sold those troublesome assets, but I do not believe Irons acted dishonorably by doing so. If someone would classify Irons as immoral, the same would have to be said about every person who willingly participates in our capitalist society.

I am not sure whether I would classify “Washington politics” as moral or immoral. However, I believe that question can be answered by looking at the constraints of our political system and the behavior that is incentivized under our system. Again, if the behavior is seen as immoral I would argue the system that incentives and awards that behavior should be seen as much more immoral.

- Jarrett W. Smith