A would-be homeowner gets a mortgage from a lender. For the generations preceding her, that mortgage was likely to have come from a local bank. She’d pay it back over time, and the interest she would pay would justify the lender’s trust in her character and earning potential. It’s an example of the Church’s principle of subsidiarity at work: interactions should happen – and be governed – at the level nearest to the individual. In the case of a home loan, it’s the interaction between an individual borrower and the local bank.
Today, and for much of the last generation, that mortgage would be arranged by one company but shortly thereafter sold to another company. The mortgage application and approval might happen entirely online, with little or no interpersonal interaction. Once approved and the money lent, another company that was never involved in the vetting or loaning buys the mortgage, so that our homeowner/borrower is sending funds every month, perhaps by automatic withdrawal from her checking account, to an entity with whom she has never interacted. She lives in the house, yet the process of owning it through the years becomes an entirely impersonal process of numbers flitting through the ether.
It is a transaction with nobody.
In his bestseller The Big Short, Michael Lewis explains the 2008 financial crisis through the eyes of investors who saw through the shenanigans of trading “mortgage-backed securities.” The insightful few understood what was really happening in the impersonal process of companies approving mortgages for people who could not repay them and then selling those worthless mortgages to others who would bundle them together into securities that could be traded for great profit. Investors were buying abstractions of abstractions unmoored from reality – if reality in this case is defined as a person borrowing from a bank in a responsible, long-term financial relationship. Those investors who saw through the charade wound up making huge amounts on their wager. Most Americans, however, simply wound up picking up the pieces through the federal bailout that saved cherry-picked irresponsible financial players. (For example, Goldman Sachs got TARP money; Lehman Brothers didn’t.)
But let’s look at another kind of “transaction with nobody.”
My daughter has had more than 20 hospital stays over the years because of a chronic condition. Each year, we easily reach the maximum amount of out-of-pocket expenses required by our health insurance plan. After that, the remaining costs are first vetted by someone somewhere at the insurance company and processed over months with bills that eventually come to us through the mail requiring us to send a payment to a post office box address in some place we’ve never seen and likely never will. While the medical care is a deeply personal interaction among our family, the doctors, nurses and therapists, the financial transaction gets sucked into a bureaucracy which magically sends it through a Rube Goldberg machine of reviews, billings, inquiries, long waits on hold, transfers to different departments, and so on. Somewhere far down the line, when the treatment has become a distant memory, a payment is made to another bureaucratic address.
Again, a transaction with nobody, and we have become nobodies, too.
“Free market” solutions for the problem of medical insurance often focus on medical savings accounts, which provide tax incentives for individuals and families to set aside funds for medical purposes and have insurance only for truly catastrophic costs in excess of a high number such as $10,000. My family had a medical savings account arrangement for several years and we liked it. Like an authentic relation between homeowner and borrower, it exemplifies subsidiarity by restoring the economic reality to the face-to-face transaction between doctor and patient.
In other words, it allowed for a transaction with somebody. And we became somebodies, too.
Translate that to the insane situation that arose in the home mortgage market. A simple law could employ subsidiarity to restore sanity. Let’s require that, if a company is going to approve a homeowner for a mortgage, the lender must hold on to that mortgage for a period — say, ten years — until it can be sold to another company.
That’s a transaction with somebody — the lender — who will need to get its money back from somebody else, meaning you and me.
Applying the principles of subsidiarity to something as simple as this could help rescue us from the sinful era of anonymity we are living through. What makes it sinful is the ingrained custom of seeing God-created individuals as mere units of commerce and transaction.
Subsidiarity is a way to reacquaint ourselves with the notion that we are all human beings, imbued with dignity and living together in a common world — something that has begun to feel more like illusion than fact.
This problem isn’t isolated to healthcare and the financial world. Our government and our culture are both becoming more bureaucratic, less personal. Life is more centralized. Government becomes the repository not only of power but of personal responsibility: individuals are given a “right to healthcare” but not a responsibility to manage it prudently. Wall Street traders exercise a “right to trade freely” but are absolved from a responsibility to do so prudently.
It’s a bad trend. When we transact with nobody, we consent to become nobody.
Jay Dunlapis President of Madonna School & Community-Based Services, a Catholic outreach to people with intellectual and developmental disabilities. He is the author of several articles and the book Raising Kids in the Media Age.