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April 2008

Disclosure

Bryan Caplan superbly replies to those who think more government-mandated disclosure would help us avoid another sub-prime problem (or pretty much any other problem):

Here's the thing: I've been through the whole mortgage process, and seen what government actually does. We don't have laissez-faire now. Instead, we have a grotesque web of regulations and lawsuit avoidance that already make the mortgage process ridiculously complicated. I had to hear a dozen mandatory mini-lectures and sign or initial at least twenty pages because the government wanted to "protect" me. And if I didn't understand half the stuff I was signing, how many "real human beings" did?

In short, government long ago took up the burden of helping consumers, and the result is a mess.

I'll add these comments:

I've had some health problems in the last few years, so I've been given disclosure statements by a number of medical technologists, doctors, and hospitals. (Admittedly, probably not all government-mandated, but responding, I'm sure, to the same pressure that fosters government mandates.) I believe that virtually all of that disclosure could be replaced by a single sentence: "If, as a result of our services to you, anything unpleasant should happen to you--including your dying--we are not responsible."

I've received yards of disclosures from banks, brokers, and companies I've invested in. I believe that virtually all of that disclosure could be replaced by a single sentence: "If, as a result of your leaving your money in our care, you should lose some--or all--of that money, we are not responsible."

I've also received disclosure from creditors and mortgage lenders. I believe that virtually all of that disclosure could be replaced by a single sentence: "If you should fail to pay us some or all of the money you owe us, be assured that you are responsible. (Unless you are bailed out by statute or the judicial system.)"

Finally, I have this little story to add about mortgage disclosure. At my first house closing I was handed a paper that discussed my mortgage. My 30-year, fixed-rate mortgage. The paper concluded with a list of all my required principal-plus-interest payments.

All 360 of them.

All, of course, identical.

(I remember it as a few pages of old-style, green-and-white computer printout.)

And, at the very bottom, those 360 payments were totaled. None of them were discounted, of course; they were just totaled, dollar for dollar.

To the great consternation of the lawyer or banker--I don't remember--who handed that paper to me, I just laughed.


Tracking

Peter Berger argues that academic tracking should be given another shot.

But each student comes to school with powers and abilities, as well as disadvantages and disabilities.  Schools can only start with each kid where they find him or her.  It makes no sense to skip the readiness skills he doesn't have, nor is it right to start everyone else at his lower level.  You can't teach individuals by pretending they’re all the same, even if in the short term that offends our sense of equality.