A Response to a Comment

In response to my last post, someone claimed that they disagreed with me saying that "poor=stupid." That hit me kind of hard, because that is not at all the message that I intended to get across. Perhaps I am not skilled enough writer, I seem to sometimes get carried away sometimes and over-stress certain points that screw up the overall message. Then again, maybe it is not the performer that is flawed, but the venue. Either way, I don't mean to say that all poor people and stupid or that stupid people deserve to be poor.

In fact, I don't see my viewpoint as disrespectful to low-income households; I find the paternalistic viewpoint of many activist organizations to be much more insulting to the working poor. To set a double-standard for low-wage earners and high-risk borrowers is to discount the achievements of those who work their way out of poverty. To say that great numbers of people are victims of "their socialization and education" often implies that only the middle and upper classes have free will; poor people are victims to their emotions and desires and can not be trusted to enter into financial contracts as adults.

My philosophy is that low-wage earners and high-risk borrowers are not society's J.V. squad, but an important, integral part of the economy and should be respected as full-fledged members of society. A natural conclusion is that this means they must also be held to the contracts they sign, just like anyone else. What people like that National Fair Housing Alliance are advocating amounts to a sort of "positive discrimination" in the housing market. It's still discrimination, artificially setting one group of people aside because of education, race, or income and telling lenders, "Ok, now you have to treat these people differently." Lenders will treat them differently all right, they'll probably stop making loans to them because regulations will make it much more expensive (compliance is time-consuming) and unprofitable (because they'll be forced to offer lower interest rates if the NFHA gets it's way - see this blog).

Also, my portrayal of NPR is intended to point out that while they often produce interesting news stories, sometimes the editorial bias can be a little heavy-handed. An example of this would be their coverage of Hurricane Katrina's aftermath. The typical tone of the man-on-the-street interview was "New Orleans is national icon, clearly a national treasure, and I was doing the country a great service by living New Orleans, so obviously you, the American taxpayer should buy me a new house." My favorite news stories were the ones where civil liberties groups would complain that although people were going to get checks from the government, it was taking too long to process the claims and this was somehow infringing on someone's natural rights.

My opinion is that if you live below sea level, in an area known to have the occasional hurricane, and you don't buy flood insurance, you should be grateful to get tent and one hot meal per day. If you excuse it and say "Oh, but those people are really poor and unable to properly assess the risk and couldn't afford flood insurance anyway, what can you expect?" you are only enabling further inefficient use of resources. Perhaps the fact that flood insurance is ridiculously expensive is a secret message from actuaries that there's a high likelihood of a terrible disaster in an area? If you set up a market to manage risk, then allow people to ignore risk with impunity because you've judged them unfit to make such decisions, how fair is that to people that did play by the rules? One of the assumptions in a market is that once the rules for something are set, they will not change drastically. If you live in a hurricane zone, why would you buy flood insurance? If something really bad happens you can probably get enough CNN cameras to extort some "disaster relief" money from the government.

People in areas of the country not prone to weather disasters (i.e. San Diego, Indianapolis, etc.) should be super-pissed about government-subsidized flood insurance much less hurricane relief. Government-subsidized flood insurance a wealth transfer program designed to encourage people to live near water. It masks the true cost of living in a hurricane zone or on a floodplain using money taken from people living on hills or plains.

Anyway, one more argument to address: socioeconomic background. I'm not discounting the phenomenal hurdles one must overcome if you're growing up in East or West Baltimore, but neither does it give someone in that situation carte blanche to explain away their actions. At some point, you have to say to someone from that background, "You're a human being, you have a faculty to reason not dissimilar from the population as a whole, you can no longer use your socioeconomic background to excuse your actions." I think that most non-profit, activist-type organizations agree with me that such a point exists, it's more of a debate as to where that point is located.

This all being said, I support the hell out of things education, especially things like low-cost community colleges and adult GED programs. Education changes behavior and improves your economic standing, something wealth transfers have been shown, again and again, to be unable to do.