Comment by thegrimmest
2 years ago
Can't this be rewritten in plain English as "unsophisticated (dumb) people don't know how to use credit cards in their own interest?". Isn't that just the free in free market?
Why is a principled objection to a paternalistic state intervening to protect dumb people from making bad decisions seen as unethical? What entitles dumb people to such protection?
What’s dumb is the statement or implication, which is made constantly, that the typical person is dumb. I don’t mean to pick on you personally, who I have no grievance with, but rather to heap scorn on an idea both illogical and presented in bad faith frequently, a practice I always aspire to.
The typical person is the result of ruthless selection pressures over millions or billions of years depending on how one sets their watch, a chain of the fittest, savviest, toughest, and hardest to kill members of the most dangerous life form we know about.
Most people, more than half, are unsophisticated by the definitions implied, which would make people of above average intelligence “dumb”. Dubious, to put it mildly.
A much more plausible theory, and one not laden with all the trim and tackle of a bigoted agenda, is that the typical person receives a poor education, leaving them ill-equipped to outmaneuver operations research PhDs whose entire job is to use the very efficient frontier of mechanism design, dark patterns writ large, to outfox individuals who (in the typical case) didn’t have wealthy parents or some other greased path into an advanced degree.
And the real kicker to me, as someone who has spent serious time with seriously high-profile people in technology, is that for whatever combination of reasons (one watches out for post hoc ergo propter hoc type fallacies, cause and effect are nuanced in human affairs), I’ve found that the higher someone’s station in life is, the less formidable they seem. I don’t know if power corrodes the necessity to stay sharp, or if privileged positions emphasize some other set of traits at the expense of basic competencies, but if half the big shots I’ve met started from scratch in my neighborhood, they’d have been an easy mark for the unscrupulous and/or hungry.
Being ill-served by an education system that is broken by design, and being outfoxed by fraudsters with sophisticated mathematics who all but write their own laws doesn’t make someone stupid.
> that the typical person is dumb
The typical person is typical, and from the perspective of an atypically smart person that's dumb(er). I'm not saying I am such a person, only that they inevitably exist.
> is that the typical person receives a poor education
Uneducated, unsophisticated, and dumb are interchangeable for the purposes of this argument. People should navigate the world on their own merits, not have the state intervene on their behalf. That's the point of a free market and society.
Whether or not you're of "above average intelligence", if you use your credit card like a bank account, you deserve every bit of "wealth transfer" to people who know better that entails.
Understanding the difference between borrowing and earning doesn't require any sophisticated mathematics. Neither does understanding compounding interest payments. The only skill required is basic arithmetic. I don't see why folks feel the need to defend plainly bad decisions made by others, or advocate that they be protected from the full extent of their obvious consequences.
If you’re not saying that you’re an atypically smart person, then how would you know what such a person would think about this?
Understanding modern finance at any level of sophistication sufficient to even speculate about the incentives and constraints and therefore the implied utility payoff structure for anyone requires a great deal more than simple arithmetic: even your example of calculating compound interest in the most charitable interpretation of how you could have meant that, which is a stationary risk-free return discounting a zero-coupon bond with neither default nor prepayment risk (because now we’re into IO and PO strips and that’s a TED talk all by itself) is a differential equation.
Its big brother, the Black-Scholes-Merton equation, is wildly more complicated under any faux-realistic “risk neutral expectation”: that’s Ito calculus. And it’s all but useless (arguably worse than useless in times of significant pressure in repo markets among other stresses): it’s basically a security blanket that Mandelbrot had demolished conclusively in the 1970s, it was all but conclusively discredited in “interesting times” in markets the moment it was posed. And we can do VAR, and all that, I’ll make time for this.
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The average person is average. 50M Americans (16%) have IQs below 85.
In general, whatever their station in life, smarter people are going to locally optimize their situation better than someone who is dumb. As a society, we tend to overemphasize social class — we assume rich people are smart and poor people are dumb.
You make good points. Many high status people are good at manipulating the levers of power and influence, just as a machinist is good with wielding his tools. Money is just a tool. Fancy clothes or whatever is just a tool. Both people may possess a poor understanding of how their tools actually work.
Truly successful people know themselves and their limits. Rich people get to hire smarter people to do stuff for them. Poor people have to find a niche to maximize their value and minimize their faults.
Example of lack of sharpness? You could also work on being more concise.
You put me in an awkward position because I’m describing an observed trend of people I’ve known personally, and while I’ll call out flagrant malfeasance by name, I try to not just call people soft or incompetent by name without an adjacent example of serious wrongdoing.
I don’t think it takes hard hitting investigative journalism to find catastrophic fuckup after catastrophic fuckup among the elite in the last month alone.
That’s a Google search away, if your objection is made in good faith, Google it.