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May 19, 2006

Exploding Mortgages, III

Recently, the National Association of Realtors has run a series of TV ads promoting their brokers' ethics. The ads portray a series of sociodemographically diverse folks giving heart felt testimonials describing how lucky and fortunate and, well, down right life saving was the help and assistance they received from their real estate brokers whose -- well, golly, -- whose ethics saved the homeowners from any number of traps, illusions and pitfalls.

The brand promise here, of course, bears only a random relationship to the brand delivery, at least as experienced by millions of folks who now have exploding mortgages and homes they cannot and never could afford. Are there ethical real estate brokers to be found in the United States? Of course there are. But, have this nation's housing markets experienced the depradations of 'make a buck for me' real estate brokers, mortgage borkers, housing developers, predatory lenders and -- even so-called non-profit financial counselors?

Yes. For example, see this, this and this. And, for the latest update see this.

Beyond the contexts of friends and family, we live our lives in markets, networks and organizations. The organizations in those markets -- like the National Association of Realtors, the local realtor down the block, the bank, the mortgage company, the credit card company, the US Congress (see Bankruptcy Act), Fannie Mae, Freddie Mac, Citigroup, Ameriquest and on and on and on and on -- choose how to position what they really stand for in terms of brand promise as well as the extent to which the products and services they deliver match those promises.

That our life experiences with the gap between brand promise and brand delivery have taught us to be skeptical is not a surprise. Some exaggeration is a built-in corollary of the constraints posed by 30 second ads, billboards and banners. Of course there is exaggeration because companies must choose what to emphasize.

But, exaggeration need not be immoral, unethical and damaging to others. Exaggeration -- even the need to competitively exaggerate in markets -- need not be a mandated corollary of societal suicide.

The horse of unethical, sharp practices has long since left the barn of the last half decade in the housing markets. Tens of millions of folks -- of families with children, of the elderly, of young individuals and couples struggling to live what used to pass in reality not just commercials as the American Dream -- confront serious housing affordability problems -- and far too many realtors who are members of the National Association of Realtors responded to the real, human needs of these people by pushing them into higher priced homes with exploding mortgages so that the realtors could make more and higher commisions. Me. Not both me and we.

It's a sickness. A sickness infecting souls that have lost the capacity to blend concern for money and profits with concern for other values -- and to do so in real time, not hindsight; in today's real estate transaction, not on TV in some commercial.

Hey, the pursuit of profits in markets has showered humanity with untold benefits. Let us rightly celebrate the power of markets to make lives better. But, let's stop killing the life enhancing, life giving power of markets by deluding ourselves that self-interest starts and stops with profits. It does not. Adam Smith's famous butcher, baker and candlesttick maker were also interested in -- and guided by -- the values they shared with other folks with whom they were fated to live their lives. Were there butchers who sold rotten meat? Yes. But, did a majority, even a plurality, of butchers as a matter of policy and routine harm their customers -- their neighbors -- by selling hurtful products at unaffordable prices? No. And there's nothing in The Wealth of Nations -- or any economic theory or practice since then -- that suggests this is a desirable characteristic if it dominates and dictates the course and conduct of commerce. This sort of unethical conduct is meant to be a regrettable, if predictable, by product. An exception. Not the rule.

Over the past five to ten years, sharp practices in the over heated housing markets, though, have become more than exceptions. And, no amount of after-the-fact horse pucky from the National Association of Realtors waxing on about the wonderfulness of their members can hide the consequences of financial rape perpetrated by realtors who, in turn, have been abetted by other 'thick we's' known as financial service institutions, law firms, Congress, housing devleopers and so on.

The widespread habit of showing up to work from 9-to-5 and allowing our legitimate concern for value to trump our equally legitmate concern for other values (e.g. shared prosperity, family, liberty and justice for all) has infected not only the body economic -- but also the body politic. It must stop. Not by turning our backs on profits, money, wealth building and winning. But, rather, by each and every one of our thick we's -- especially the thick we's of organizations where we work -- asking and answering how the organization's particular vision, strategy and common good contributes to the greater good of our society and our planet. And, then translating the answers into performance -- into a blended, ethical scorecard that converts promise into results.

Yes, we must turn away from those, like Grover Norquist, Karl Rove and their cabal, who -- in their own maniacal pursuit of winning and value -- have fostered a popular culture that hates government and, thereby puts folks in charge of governmental organizations -- governmental thick we's -- who, it logically follows, cause those thick we's to be self-hating.

We must restore a proper and legitimate role for governmental thick we's. And that means we must learn all over again that there are situations and contexts in which government regulation -- yes regulation -- is proper and needed.

But, in a world of markets, networks, organizations, friends and families, law and regulation are necessary but not sufficient. We cannot foster a safe, sane and sustainable planet for our children and their children if we don't take shared responsibility for doing so. And, yes, that means acting individually as friends, family members, customers and investors in ways that account for more than 'me'. But, again, such is necessary, not sufficient.

The critical crucible in our new world in which we can and must take shared responsibility is the organization. Unless and until we act there to ensure a sustainable blend of value and values -- unless and until we act to ensure that our brand promise as well as our brand delivery -- honor all that is right and just including but not limited to profits, we will continue to march in darkness toward the precipice.

And, our shame will mount and we will occasionally be so shocked when we look back over our shoulders at the wreckage of human lives in our wake that, in mock preservation of our souls, we'll hire writers, directors, camera folks and actors to create the image of what can only be best described as nostalgia for our better selves.

The time has arrived for before-the-fact vision, strategies, products and services that blend all values.

And those who must -- indeed, the only ones who can -- make this happen are ourselves in our shared roles as employees and executives in the thick we's we call companies, agencies, firms and organizations that have the whip hand of the planet.

If you think for one second that what you and your colleagues at work do is "just business", then you are continuing to sleep walk toward the destruction of the planet by missing the opportunity every single day of your working lives to make a difference with others by creating and implementing businesses that are just.

And, you can start today.

Posted by Doug Smith on May 19, 2006 12:02 PM | Permalink