I was responding to a comment about one of my posts ("Our Rude Behavior"), when it struck me that we often have a hard time discerning whether a particular aspect of a problem is the cause or a symptom. For instance, in the current financial debacle, the CRA was clearly a cause, but were escalating housing costs a cause or a symptom? The CRA, as well as inflation in general, and low interest rate sin particular, drove the rising prices, but at the same time, the inflating prices also drove speculative investing and increased the debt load of CRA borrowers, exacerbating the situation. Similarly, in the comment to which I responded, the commenter was assigning blame to lawyers, while I argued that lawyers were only potent because they had been assigned such a prominent role by those who hoped to use liability law to fuel their quest for "social justice". On the other hand, the commenter was right, because, having been put in that prominent position, lawyer now are driving changes on their own.

In some ways it is unimportant, as, despite common beliefs, knowing the original cause is not always essential to finding a solution. (Though there are cases where it is.) On the other hand, it is sometimes a very important question, as knowing the root cause of a problem can be very useful in avoiding a repetition of the same problem. But, whether it is important or not in a given situation, we do have a tendency to ask for causes when confronted with a problem, and many times our debate gets bogged down because of this very confusion.

The problem, in many of these cases, is that we approach a problem with three bad assumptions. First, the rather legalistic assumption that the proximate cause, the one immediately preceding the event, is the cause. Second, we make the reductive assumption that there is a single cause. And finally, we assume that the problem is both acute and narrowly defined in time, that it is not simply an aspect of a longer term chronic issue.

The recent crash is perhaps the best example to illustrate this.

The best examples of the "proximate cause" and reductive fallacies are found in the debates between right and left over whether the problem was caused by the Bush era laws allowing banks to engage in various investment activities, or by the Community Reinvestment Act and the Clinton-era loosening of the CRA rules. Both sides are not only looking for a singular cause in a recent event, but they imagine that there must be but one cause, a singular issue which brought the entire crisis down upon us. In addition, both are engaging in the third error by assuming the present crash is of recent provenance, that it is an isolated event, and not part of a larger pattern of crises.

Anyone who has read my blog knows that I think all three assumptions lead us into error in this case. As I have argued again and again, the current crash is not an isolated event, but just another in the cycle of rapid boom-bust crashes caused, in the long term, by our managed currency with the Fed as a single point of inflation, but exacerbated in the short term by Nixon's closure of the gold window. Yes, individual incidents both made it worse and directed the crash into particular avenues. The CRA created a new source of inflation by allowing banks to essentially create credit backed by overvalues houses (which got even worse as the escalating housing prices created a "feedback loop" making it possible to create even more credit), but the CRA is one of those events I am discussing, which is both a symptom at some stage and a cause at another. Likewise, one could argue that the current crisis was "caused" by Bush's decision to effectively inflate us out of the 2000-2001 recession, though that was itself brought about by Clinton's decision to inflate us out fot he dot-com bust, which eventually led to the 2000 bust. And I could go on and on, digging ever farther back in time.

And that is the problem with trying to look for causes. All too often the cause is just not satisfying. Either it is too diffuse, or too far back in time, or too much a part of the political landscape we take for granted. For example, there is very little chance we will eliminate the Federal Reserve and return to gold currency, yet that is the only protection against these sort of crashes. Nor is it likely the government will stop massive deficit spending, which would be the second best solution, not preventing the cycle, but ameliorating it. And finally, since the architects of the Federal Reserve have been gone for decades or longer, and since even those who convinced Nixon to close the gold window are largely no longer with us, there is simply no villain about to blame. (And people do seem to need a villain to blame - see "Life Without Villains", "Evil and Greed", "Enemies Into Villains " and "Rethinking My Earlier Position", as well as "In Defense of Civil Debate" and parts of "Greed Versus Evil") Nor does the argument over inflation and the Fed give us a way to score many political points in modern debates.

And so, rather than addressing the real cause, we end up pointing fingers at individuals involved in what were essentially side issues. The people who opened the taps on their sink while the Titanic was going down. Barney Frank, Bill Clinton and so on. Yes, they did enact stupid laws, and deserve blame for those, but only because they were stupid laws, not because they somehow caused a crash that was in the cards all the way back in 1973, or maybe 1934 or even 1913. Had there never been a Bill Clinton or a Barney Frank, had there never been a Fannie or Freddie or FHA, we would still have had this collapse. Maybe not today, and maybe not starting in the economic sectors it did, but you cannot continue inflating currency, backed by nothing, rescuing yourself from every slump with even more inflation, and expect to avoid a crash. It was, as I said, in the cards from the moment we adopted an unsupported fiat currency with unlimited governmental power to inflate the money supply. When and where can be changed by stupid laws, but the crashes themselves are as inevitable as, well, death and taxes.

And the example of our crash seems to fit many other ills. As I wrote in "The Nature of Evil" and elsewhere, a lot of our ills come from philosophies, not from particular villains. Keynes, Marx, Hegel, and their ilk are to blame for a lot of the problems we face, perhaps with some blame falling upon those who chose to implement their ideas. But, while that knowledge is probably the most useful for preventing a repeat, it is hardly satisfying. We want a real, live, modern culprit, someone to blame, and we want a cause we can comprehend, something immediate, close and palpable. And so we very often forget the quest for useful information, for ways to prevent the problem, and instead cast about for someone to blame, whether that helps us prevent a repeat or not.

POSTSCRIPT

By the way, a lot of what I wrote, though inspired by Gray Ghost's comment, does not apply to him at all. Just want to make clear, I don't think he is doing what I described in the final paragraphs. In accusing lawyers, he was quite rightly pointing out their very visible role in many of our ills, not looking for an easy victim. (At least I assume that is the case.) When writing this post, I may have started with his post as inspiration, but my final complaints arose from a host of other incidents, many of which have been mentioned befor ein this blog. Our quest for villains to blame, or points which are more politically useful, is very evident in a lot of our debates. And, while I am as conscious of the needs of politics as anyone, I think at times the needs of political point scoring keep us from really examining the origins fo these problems.

POSTSCRIPT II

As I don't want to fill this page with endless links to all my previous articles on this topic, for those interested in my thoughts on one of the examples mentioned above (our economic collapse) I will reproduce the postscript to "Partial Solutions", my last article on the topic:

I have written countless posts on this subject, as the links above show. However, for those looking for a simple explanation, I recommend "Monetary Issues Made Simple Part I" and "Monetary Issues Made Simple Part II" as good starting points. If you want a more comprehensive view of my writing on this topic, then I would suggest reading  "Inflation and Uncertainty", "Explaining Past Crashes", "Not Entirely to Blame", "The Inflation Engine", "A Thought on the Clinton Surpluses",  "The Importance of Error", "Cash For Clunkers Revisited", "The Cost of Big Government", "Economic Resistance to Recovery", "A Strange Wish" and "Interesting Article" and following the links to find most of my posts on the topic.