The world economy is in crisis, and the only thing we now produce more of seems to be new explanations for why the crisis arose. Is the crisis one of deregulation, corruption in the financial markets, the failure of incentives, or speculation? Should we seek the answer in financial innovations, misguided housing policies, or mismanaged monetary policy?

The cause of the crisis is obviously complex, but the single most important explanation for the problems that the world economy faces today is that both citizens and the state have borrowed too much; it is at least the most important direct explanation. There is also an indirect explanation that deserves to be addressed, namely the weakening of standards related to the moral character of economics.

The usual explanation is that the problems arose because American politicians in various ways encouraged – and sometimes even forced – the banks to give mortgages to people who otherwise wo...