An Unexpected Voice Against Paternalism

Today’s Wall Street Journal contains an surprising op-ed railing against an increase in government paternalism. The author argues against government interference in the subprime mortgage market:

paternalist scrutiny has recently centered on personal economics, including calls to regulate subprime mortgages.

With liberalized credit rules, many people with limited income could access a mortgage and choose, for the first time, if they wanted to own a home. And most of those who chose to do so are hanging on to their mortgages. According to the national delinquency survey released yesterday, the vast majority of subprime, adjustable-rate mortgages are in good condition,their holders neither delinquent nor in default.

There’s no question, however, that delinquency and default rates are far too high. But some of this is due to bad investment decisions by real-estate speculators. These losses are not unlike the risks taken every day in the stock market.

And against health care mandates:

Health-care paternalism creates another problem that’s rarely mentioned: Many people can’t afford the gold-plated health plans that are the only options available in their states.

Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It’s as if states dictated that you had to buy a Mercedes or no car at all.

And against regulation of so-called “pay day” loans:

With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make. The service comes at the cost of a significant fee — usually $15 for every $100 borrowed for two weeks. But the cost seems reasonable when all your other options, such as bounced checks or skipped credit-card payments, are obviously more expensive and play havoc with your credit rating….

Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.

The op-ed ends with a rhetorical flourish about the importance of freedom and choice in people’s lives worthy of Milton Friedman:

Why do we think we are helping adult consumers by taking away their options? We don’t take away cars because we don’t like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don’t operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

Here’s the surprising part: The author of the op-ed? George McGovern.

(HT: Arnold Kling).

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  • T. Shaw

    George McGovern! Now, I’ve seen everything!

  • T. Shaw

    George McGovern! Now, I’ve seen everything!

  • Daniel H. Conway

    Most of the economic stimulus stuff, the “salvation” of the ordinary consumer, etc. is really directed to make sure wealthy investors in the credit markets do well and recover some losses. Saving the well to do is the goal, while the propaganda says something else.

  • Daniel H. Conway

    Most of the economic stimulus stuff, the “salvation” of the ordinary consumer, etc. is really directed to make sure wealthy investors in the credit markets do well and recover some losses. Saving the well to do is the goal, while the propaganda says something else.

  • Blackadder

    Daniel,

    So you think George McGovern is really only concerned about the well to do?

  • Blackadder

    Daniel,

    So you think George McGovern is really only concerned about the well to do?

  • Daniel H. Conway

    No, the comment I made had little to do with Mr. McGovern’s approach which actually represents his message of broader freedoms that he has maintained. This is far more consistent than is routine-just that he seeks increased freedoms in many realms, not just economics. (A pet peeve of mine is the economically libertarian individual who proposes draconian sodomy, a peeve on the matter of intellectual consistency.) As Mr. Forrest pointed out-most of the defaults are very middle class/upper middle class, suburban. Not those keeping their mortgages. However, the amount of money in those homes is huge, as opposed to lower income home-owners.

    No my comment is not about the whole of the article. Just that the protections and bailouts in place are very likely going to the well-to-do, in various forms. Really just a tangent.

  • Daniel H. Conway

    No, the comment I made had little to do with Mr. McGovern’s approach which actually represents his message of broader freedoms that he has maintained. This is far more consistent than is routine-just that he seeks increased freedoms in many realms, not just economics. (A pet peeve of mine is the economically libertarian individual who proposes draconian sodomy, a peeve on the matter of intellectual consistency.) As Mr. Forrest pointed out-most of the defaults are very middle class/upper middle class, suburban. Not those keeping their mortgages. However, the amount of money in those homes is huge, as opposed to lower income home-owners.

    No my comment is not about the whole of the article. Just that the protections and bailouts in place are very likely going to the well-to-do, in various forms. Really just a tangent.

  • Mark D.

    Are we in for essay postings from the Objectivist Society soon? I understand Alan Greenspan has been loosely associated, but in days a bit more past.

  • Mark D.

    Are we in for essay postings from the Objectivist Society soon? I understand Alan Greenspan has been loosely associated, but in days a bit more past.

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