Friday, January 25, 2008

An interesting contrast.

A thought has just struck me. On the one hand, take a US military deserter, who has left because of an unwillingness (for whatever reason) to fight in Iraq. This person signed a contract with clear penalties for failing to fulfill it and is now trying to evade those penalties by deserting. While I'm sympathetic to the claims that many volunteers do so because they don't have a lot of other options, the fact is that they freely agreed to serve in the military, under certain conditions laid out in their agreement. Unless there was coercion or deception involved, that contract has to be binding.

On the other hand, take someone who's walking away from their mortgage given the current collapse of the housing market in much of the US. This person also signed a contract with clear penalties for failing to fulfill it, but is perfectly willing to accept the penalties (i.e., foreclosure and, in some states, being sued for the difference between the debt and the sale price of the house). I have some sympathy with this person, too: they may have believed the pie-in-the-sky promises of their mortgage broker, after all, and may not be that financially sophisticated. And, there's still the cultural belief that home-ownership is a mark of adulthood and maturity.

In my view, the deserter deserves little consideration (unless, again, there was coercion or deception). A contract is a contract and you don't get to break it just because it didn't turn out the way you thought. So, the deserter is doing something wrong. The mortgage-abandoner also deserves little consideration, but is doing something right: that is, accepting the penalties spelled out in the contract. And yet, reading around the web, opinion seems to be precisely reversed: the person who abandons their mortgage is evil and the deserter is innocent.

The funniest reason I've seen for the former has to be: "because that's going to screw up the housing market for everyone else!". Clearly, that remark was given by someone with less than no understanding of markets: the whole point is to only worry about how things affect yourself, and not worry more generally. If the market is so fucked up that you have to worry about others in your own individual economic decisions, then the problem lies in the regulation. As for the deserter, I really haven't seen any clear reasons as to why the deserter is innocent. Because the Iraq war is bad? Granted; but that's irrelevant. The military are obligated to fight in bad wars, just as the police are obligated to enforce bad laws. That's what they signed up for. If they don't like it, they need to exercise whatever contractual procedures they have to leave their jobs and find something else to do. Or, alternately, protest as private citizens. But running away from responsibilities is nothing to respect.