Our current housing debacle is made by people who bought homes they could not afford. Now they want the world to bail them out! Is this the type of person who makes for a wonderful neighborhood? Is this the type of person who actively supports their children’s education? Is this the type of person who cares about improving their community? We really do need to take an axe to our tax code and get rid of so many of the deductions that no longer make any sense. We cannot legislate morality or wonderful neighbors through our tax code.

The present crisis can only be cured through a process of debt reduction, savings, and capital accumulation to make up for 15 years of non-stop spending at the expense of all else. A decline in homeownership is an important part of this process.

But not everyone in the top 1% earns their money as Steve Jobs did and LeBron James does by making other people’s lives better. As I have said many times, and will continue to say, the financial sector has made lots of money for executives in that sector because of government policies bailing out creditor which allows leverage to grow artificially large. That in turn, makes it easier for investment banks to profit and justifies large salaries for executives. That in turn, ratchets up earnings of people in related fields–hedge fund managers and even professors of economics who must be paid more now to keep them in academia and away from Wall Street. Some of those gains to the financial sector are literally zero sum–bonuses paid for with my money and yours. If we stop bailing out creditors–socializing the losses of the financial sector–the top 1% numbers will become “healthier.” If we fail to distinguish between ill-begotten gains and those gains that enrich all of us, we are headed down a very dangerous path.

How dark will social mood become? I don’t know, nor does anyone else. Much depends on protectionism, tariffs, and other misguided policy decisions by Congress and the Fed. If Congress adopts misguided protectionist legislation on the Yuan (which in my opinion would raise prices and cost up to 2 million jobs), then social mood can get much darker than it already is.

It is conservatism, not liberalism, that takes society seriously. Liberalism preaches confident social engineering by the regulatory state. Conservatism urges government humility in the face of society’s creative complexity. Society — hundreds of millions of people making billions of decisions daily — is a marvel of spontaneous order among individuals in voluntary cooperation. Government facilitates this cooperation with roads, schools, police, etc. — and by getting out of its way. This is a sensible, dynamic, prosperous society’s “underlying social contract.”

It is amazing how quickly we move from “aggressive” interrogation techniques and rendition to secret death panels approving the targeted assassinations of US citizens abroad. Who would have predicted this trajectory a decade ago? Who can imagine what will seem commonplace a decade or two from now?