Unintended consequences

It's one thing to say you care about helping people, another thing to actually do something to help people, and yet another thing to do something that actually does help people in the long run. We should all rebuke the man who says he cares for the poor, but never offers them a loaf of bread. He's a hypocrite. But, don't forget that we should also rebuke the man who says he cares for the poor and then invents programs that will guarantee that they will always be so. This man is also a hypocrite, perhaps even more so because he likes to remind us all of how cold and calloused we are for not jumping on his programs-for-the-poor bandwagon.

Borrowing heavily from Doug Wilson's thoughts, we need to not only care about the needs of the poor, but we need to care enough to offer solutions that will actually help them. It's one thing to have good intentions, but what if the measures we take to "help the poor" actually make things worse? In such a case, everyone would be better off if we had done nothing at all. To borrow again from Wilson, what if our shipments of "relief" to an impoverished community in Africa are diverted to the local dictator and his armies, keeping him in power and assuring that the people under his tyranny will continue to starve? Are these people better off because of the so-called aid we've provided? What if sending out government checks to those "less fortunate than us" encourages them to not get married, not find a job, and to have more illegitimate children? Are they better off because of it? Judging by the progress in the War on Poverty (which, I should mention, has gone on much longer, and at much greater cost, than the war in Iraq), I would say that we're teaching people to be less responsible, and more dependent on their governmental ATM, which will most certainly run out of cash at some point.

While this shouldn't be misconstrued as an excuse to not do anything, it should serve as a warning that we should evaluate the potential consequences (intentional and otherwise) of any governmental (or social, for that matter) intervention before we launch the latest and greatest new program to solve everyone's problems for them. I say we employ this novel approach before the proposed legislation bailing out mortgage lenders and "distressed" home owners gets through Congress. The legislation is "meant to save hundreds of thousands of troubled homeowners from foreclosure. The legislation would create a government-backed mortgage insurance program with the power to refinance as much as $300 billion worth of failing home loans."

Hey, that sounds great. I mean, think of the CHILDREN! Think of their PETS! Don't we have a responsibility–nay, a duty–to protect people from the consequences of their decisions?

After all, that's what this proposed bill really is. Nobody forced these lenders to make these loans. They loaned money (usually someone else's money) to people who weren't credit worthy in exchange for higher interest rates, pre-payment penalties, and so on. Think of it as the difference between investing in Coca Cola versus a bio-tech company in Southeast Asia. With Coke, you're not going to make a whole lot of money, but it isn't very likely that you'll lose your money either. When you bet on the bio-tech stock, you could double your money overnight. Or, you could lose it all when they go out of business. The lenders were glad to loan the money to a "sub-prime" borrower in exchange for a higher payout. Should we really bail them out now that their risky investment didn't work out?

Of course, nobody forced these borrowers into these sub-prime loans, either. You fill out less paperwork getting a four year degree than you do getting a home loan. There's the note, which details what your payments and interest rate will be, including whether or not there is a time when the rate will become variable and whether or not there is a pre-payment penalty attached to the loan. Then there's the deed that says, to quote a title agency closer I used to work with, "If you pay you stay, if you don't you won't." Go 90 days without making a payment, and the bank becomes the proud owner of your humble abode. It's that simple.

I won't get into why a person would need a sub-prime loan in the first place, but suffice it to say that if you make good decisions (like paying your bills and holding down a job), you'll never need a sub-prime loan.

If we (i.e. the tax payers, represented by our government) stay out of this fight, a fair amount of folks will learn a good hands-on lesson about balancing risks and rewards. Yes, it will be ugly, but when has "growing up" been anything but? But if Government rides in on a big white horse, with check book in hand, we all are reminded once again that "somebody else" will always be there to solve our problems for us. You can't make your house payment? No problem, your good Uncle Sam's got you covered. You made a bad business decision and loaned other people's money to borrowers with a track record of making bad financial decisions? Don't sweat it. This ATM's open 24 hrs. a day. And so goes another chapter of the American people being trained to be more dependent on The Government, who will always be there to bail them out.

If this bill goes through, maybe I'll jump on board myself. I mean, 90 days without a house payment sounds kind of nice…