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The Importance of Being Civil

The Importance of Being Civil: The Struggle for Political Decency

Copyright Date: 2013
Pages: 280
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  • Book Info
    The Importance of Being Civil
    Book Description:

    Civility is desirable and possible, but can this fragile ideal be guaranteed?The Importance of Being Civiloffers the most comprehensive look at the nature and advantages of civility, throughout history and in our world today. Esteemed sociologist John Hall expands our understanding of civility as related to larger social forces--including revolution, imperialism, capitalism, nationalism, and war--and the ways that such elements limit the potential for civility. Combining wide-ranging historical and comparative evidence with social and moral theory, Hall examines how the nature of civility has fluctuated in the last three centuries, how it became lost, and how it was reestablished in the twentieth century following the two world wars. He also considers why civility is currently breaking down and what can be done to mitigate this threat.

    Paying particular attention to the importance of individualism, of rules allowing people to create their own identities, Hall offers a composite definition of civility. He focuses on the nature of agreeing to differ over many issues, the significance of fashion and consumption, the benefits of inclusive politics on the nature of identity, the greater ability of the United States in integrating immigrants in comparison to Europe, and the conditions likely to assure peace in international affairs. Hall factors in those who are opposed to civility, and the various methods with which states have destroyed civil and cooperative relations in society.

    The Importance of Being Civilis a decisive and sophisticated addition to the discussion of civil society in its modern cultural and historical contexts.

    eISBN: 978-1-4008-4749-5
    Subjects: Political Science, Sociology, History

Table of Contents

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  1. ONE The Emperors of Banking Have No Clothes
    (pp. 1-14)

    For the first year after the financial crisis of 2007–2009, bankers were lying low, mindful of the anger that had been caused by the crisis and by the use of taxpayers’ money to bail out banks.¹ French President Nicolas Sarkozy’s response to JPMorgan chief executive officer (CEO) Jamie Dimon in Davos in 2011 resonated widely with the media and the public.²

    At that time, most bank lobbying went on behind the scenes. Since then, however, the banking lobby has become outspoken again.³ As in the years before the crisis, bankers have been lobbying relentlessly and speaking up in public...

  2. PART I Borrowing, Banking, and Risk

    • TWO How Borrowing Magnifies Risk
      (pp. 17-31)

      Banks make loans to individuals, businesses, and governments. Banks borrow from individuals and from firms, including other banks. Understanding banks requires an understanding of borrowing. In this chapter and the next, we discuss how borrowing works and how borrowing affects risk. Our discussion applies to any private borrowing, not just to borrowing by banks.¹

      Individuals borrow to buy such things as a car or a house so they can own and enjoy these things earlier than they could if they had to pay for them on their own.² Individuals and businesses also borrow to make investments. For example, individuals may...

    • THREE The Dark Side of Borrowing
      (pp. 32-45)

      Debt is a promise. After debt is put in place, borrowers and creditors must deal with it. Sometimes the burden imposed by the promise is too difficult or impossible for the borrower to bear. This is true for the debts of individuals and businesses, and sometimes also for government debt. The burden of the debt can cause problems for both borrowers and lenders, and sometimes also for third parties.

      Consider Kate as an individual or as a business borrower. If Kate defaults on her debts, the legal consequences can be disruptive to her life and to her business. Kate might...

    • FOUR Is It Really “A Wonderful Life”?
      (pp. 46-59)

      Some who are upset about the financial turmoil since 2007 are nostalgic for the good old days, when banking was simple and bankers were serving their local communities. A model for this nostalgia is the banker George Bailey in the 1946 movieIt’s a Wonderful Life.¹ In the small town of Bedford Falls, New York, his Bailey Building and Loan Association enables working people to buy their own homes so that they no longer have to deal with Mr. Potter, the local real estate tycoon, who is thinking only about profits and is demanding extortionate rents from his tenants.


    • FIVE Banking Dominos
      (pp. 60-78)

      The global financial crisis that broke into the open in the summer of 2007 is often ascribed to excessive mortgage lending and excessive securitization of low-quality, subprime mortgages in the United States.¹ At the peak of the crisis, in October 2008, the IMF estimated that the total losses of financial institutions from subprime-mortgage-related securities amounted to $500 billion.²

      When seen by itself, $500 billion seems huge, but in the context of a global financial system in which the banking sector’s assets are on the order of $80 trillion or more, it is actually not all that large. In fact, the...

  3. PART II The Case for More Bank Equity

    • SIX What Can Be Done?
      (pp. 81-99)

      Do we have to resign ourselves to having a fragile and dangerous banking system, one that harms the economy and requires government support when the risks turn out badly? As we have seen, there is not much prospect of dealing with failures of large and interconnected banks, particularly those that are active internationally, without imposing large costs on the economy. The economy is also harmed when many banks are distressed at the same time and do not make sufficient loans because of their overhanging debts. It is therefore important to focus on preventing banks and other financial institutions from running...

    • SEVEN Is Equity Expensive?
      (pp. 100-114)

      The conversation reported by Merton Miller and quoted above focuses on a key question for banking regulation.¹ To bankers it seems obvious that equity is expensive.² But what does this statement refer to, and what are the costs of having banks fund their assets and investments with more equity? The banker in the conversation is suggesting that because capital regulation forces banks to have some equity funding of loans, and because “equity is expensive,” the banks must pass up lending opportunities that would be attractive if they could just fund them with debt. Why should funding with equity be expensive?...

    • EIGHT Paid to Gamble
      (pp. 115-128)

      When arguing against higher capital requirements, bankers and others routinely claim that having more capital would “lower returns on equity” (ROE).¹ These lower returns, they claim, would harm their shareholders and could “make investment into the banking sector unattractive relative to other business sectors.”²

      Arguments against higher capital requirements that are based on such reasoning are fundamentally flawed. Such arguments ignore the basic connection between borrowing and risk, discussed in Chapter 2, and the basic connection between risk and required returns, discussed in Chapter 7. The arguments also say little to the policy issue because they neglect the need to...

    • NINE Sweet Subsidies
      (pp. 129-147)

      Yogi Berra’s suggestion that the content of a pizza might depend on how it is cut is absurd. Yet when banks borrow excessively and economize on equity, the total “pie” available to their investors grows.¹ When banks borrow, they benefit from subsidies that they would not enjoy if they relied more on equity. The more banks borrow, the larger are the subsidies, as if the pizza chef added more cheese when the pizza was cut into more slices.

      The main source of subsidies for banks is the support the government provides to protect banks, their depositors, and sometimes their other...

    • TEN Must Banks Borrow So Much?
      (pp. 148-166)

      As we saw in Chapter 4, banks benefit the economy by taking deposits and making loans. Of these two activities, deposit taking is unique to banks. Loans can also be made by any other institution that has the capacity to assess the loan applicants’ creditworthiness and to monitor their performance. The concentration of banks on lending is due to the ready availability of funds from deposits.¹

      As we also saw in Chapter 4, banks provide depositors with important services, such as making payments and standing ready to provide cash at any moment. Because deposits are a form of debt, borrowing...

  4. PART III Moving Forward

    • ELEVEN If Not Now, When?
      (pp. 169-191)

      We have argued that if banks have much more equity, the financial system will be safer, healthier, and less distorted. From society’s perspective, the benefits are large and the costs are hard to find; there are virtually no trade-offs. Yet the claim is often made that this reform would be costly to realize in practice. Banks are said to be unable to raise equity by issuing new shares, implying that higher equity requirements would reduce bank lending. Reduced lending, it is claimed, would hurt the economy, which has yet to recover fully from the sharp downturn in 2008.¹

      Because of...

    • TWELVE The Politics of Banking
      (pp. 192-207)

      We opened Chapter 1 by quoting French President Nicolas Sarkozy angrily chastising U.S. bankers who had lost their “common sense.” From that quote one might assume that French banks are so tightly supervised that French bankers do not have a chance to lose their common sense.

      In fact, French banks have been a major focus of concern in the European crisis. Throughout, they have had very little equity and a lot of short-term funding, in particular from U.S. money market funds. In 2011 the money market funds were worried about the sovereign debt crisis in Europe and withdrew their money....

    • THIRTEEN Other People’s Money
      (pp. 208-228)

      The above quote is taken from a letter to the employees of Barclays, the giant U.K. bank.¹ The letter concerns Barclays’ involvement in a scheme whereby traders of several large banks allegedly conspired to manipulate reporting for LIBOR, a key index for interest rates, whose value affects trillions of contracts around the globe.² A few days earlier, Barclays had agreed to pay more than $450 million to U.S. and U.K. authorities to settle allegations that Barclays had manipulated LIBOR. The chairman of the board of Barclays had just resigned, and Mr. Diamond was forced out as CEO the next day.³...

  5. NOTES
    (pp. 229-336)
    (pp. 337-362)
  7. INDEX
    (pp. 363-398)