Sunday, July 12, 2009

A Predator in Chicago

Today is Sunday, 12 July 2009.

In a letter to the editor in the Business Section of today’s The New York Times, Robert Kaestner, professor of economics at the University of Illinois at Chicago, writes:

“In “Mortgages Made Simpler” (Economic View, July 5), Richard H. Thaler uses the analogy of ski resorts with expert and novice slopes to make the point that most people should stick to novice (plain vanilla) loans like the 30-year fixed-rate mortgage.

But in the recent financial meltdown, many expert skiers — sophisticated investors and institutions alike — also ran into trees on the slopes. The problem was not concentrated among unsophisticated investors who were duped by bad sales practices. The best and brightest financiers, along with people on Main Street, engaged in a gamble that housing prices would keep rising.

When the party stopped, many institutions and people of all backgrounds lost money. This is not an argument for more regulation, as the column suggests. Human nature cannot be regulated.”

I’m reminded of those in the 1960s who denounced civil rights laws: laws can’t change how people think or feel, and should therefore not be enacted. Kaestner makes a similar argument, and a similar error.

The point of laws and regulations is not to change “human nature” (whatever that might be), or how people think or feel, but how people act. If people wish to be prejudiced in their heart of hearts, I’m sad that they’re afflicted, but they’ve chosen their own private hell, and must suffer in it. However, if they act with prejudice toward others, they’re making a social hell, and should be sanctioned by law.

Racial bigots and such as Kaestner are simply apologists for predators.

On this date in 1817, Henry David Thoreau was born.

On this date in 1904, Chilean poet and Nobelist Pablo Neruda was born.


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