A few years ago, a nameless couple signed a contract with pages of purgatorial fine print that committed them to decades of debt so they could own a home. The economy crashed, their house value plummeted, one half of the couple was laid off, and making ends meet became impossible. Those who were not so unfortunate blame these victims and sum it up to “they signed the contract, so they made a bad decision.”
Let’s roll back the clock a bit and look at the perspective of pre-crash days:
Just a couple of years ago, those of us attempting to warn friends against taking out questionable mortgages were ridiculed as conspiracy theorists. Didn’t we understand that real estate always goes up? Or that home ownership was the only way to guarantee one’s retirement? That the longer you wait to buy a house, the further out of reach that house was going to get? The question of whether to become a home owner gave way to the much more presumptive “How are we going to get you in?” While government promised to encourage home ownership as a way of improving participation by poor people in the economy, banks came up with increasingly clever mortgage products that postponed the real cost of buying a house well into the future…
“What if interest rates are higher in five years?” I asked.“The increase in the home’s value will offset it,” the mortgage broker responded.“What if the house—for some reason—doesn’t go up in value? I asked.“Houses always go up in value,” she responded.“But what if the mortgage resets to a rate I can’t pay?”“Everybody has these mortgages, now. Banks can’t set the rate so high that everyone defaults. They won’t make anything that way.”...
Because these borrowers were generally less educated and less experienced with complex banking products, they were also less likely to fully grasp the implications of adjustable rates—often buried deep in mortgage documents only presented at closing, when there’s no time to read through them. Other high-risk mortgage candidates included homeowners who could be induced to “move up” to bigger properties, and “flippers”—who bought houses with almost no money down hoping to resell them at a profit before the first payments came due.
--- Life Inc., Douglas Rushkoff
People have limited powers to predict the future, even the experts among us. Potential homeowners were thinking that houses were a solid investment, the economy was stable, and that they were getting fair and accurate information from their mortgage brokers and realtors. Is it stupid to trust someone to give you true information? Yes, in this economic paradigm! Everyone is forced to make a buck off of your ignorance or lack of skill. The more ignorant and the less skillful, even more profit can be made. But, we can’t really function in a society where we have a paranoid distrust of all workers we transact with. Imagine that at every single transaction you run through the scenarios of suspicion: Do these noodles I’m about to eat have a tummy-upsetting ingredient that will drive me over to the adjacent pharmacy that is well stocked with gastro-drugs? Is the noodle owner getting kickbacks from the pharmacy owner and from the gastro-drug manufacturer? Will my iPhone combust so I have to buy a new one and pay for the burn on my hand? Does this shirt have non-toxic fibers so I won’t get a rash? When my dentist tells me I have five cavities that need fillings, is she just trying to make a sale? (This actually happened to me and I was thankful I had a convenient opportunity to get a free second opinion that indicated my teeth had no cavities, which is what I expected since I’ve had pretty good dental hygiene.)
It’s so easy to make a bad decision, even when you have good information like picking the tastiest sandwich on the menu. It’s a lot easier to make a bad decision when factors around you conspire to get you to make that bad decision. There’s a lot of money to be made in bad decisions.
There is the other issue of how a bad decision is arrived at. When I lived in Thailand, I was aghast upon hearing impoverished people spend two to three months of their total salary (via debt) to buy a new mobile phone. Why would they make such an irrational purchase? I used to sum it up with, “Idiots!” Calling them idiots helped relieve my discomfort over figuring out why such a bad decision was made.
Someone declaring that a “bad decision was made” is a sign of a lazy thinker. It’s a bit like a child shoving the mess under their bed and declaring victory over the Untidy Monster. No more thinking required. No more following the chain of causality about the reasoning behind those bad decisions. And the sad part is not so much the laziness, but the outcome: a deep lack of compassion. Those bad decision makers should suffer for their sins bad decisions. The Westboro Baptist Church says that dead soldiers are the natural result of bad social decisions like giving gays closer-to-equal access to citizens’ rights. Kids get addicted to drugs or involved in mischief because they are “black sheep.” Problem solved, case closed. The irony is that labeling an action a bad decision is itself the bad decision because it does nothing to resolve the problem, and in fact, it enables the harmful behavior to continue. It is a reaction to one’s frustration with oneself from a lack of skill and/or intelligence to truly resolve the underlying problem(s).
SIDE NOTE: There should be a research study in which Libertarians people who liberally attribute someone's suffering to bad decisions should get offered a license to a great new software program that has in its terms agreement a statement about the right of the patent holder to procure all hardware the products of said software are housed on, including those to whom those products are distributed to (I plagiarized this idea from Monsanto). The terms should be quite lengthy, coded in legalese, and the software should be something that is a "must have." I would be interested to see how many people "agree" to those terms.
The roots are deep in decisions we make, and it is difficult to tease out all of the factors. In looking more deeply at why some Thai people overextended themselves to buy a mobile phone, a few possibilities surface. Thais have strongly interconnected social networks that advantage them (increase their access to goods/services that promote their survival and well being). Such strong social networks come with costs that relate to maintaining their membership in a peer group. If they fall too far behind, they may find themselves without access to that peer group and its resources. If having a mobile phone is part of that cost, then it may be entirely rational to make that purchase. Or what about the fact that low-income workers rarely have the opportunity to afford the things the free market is supposed to “provide:” creature comforts? These workers live austerely day in and out (while seeing extravagance in every billboard, poster, and on TV). They earn just enough to survive. If having a small piece of the technological pie makes them feel a little less like life is so dreary, then the purchase is a rational decision. This is the common advice of dieting so that the diet is sustainable. Have your cake and eat it, just not every day! Those who ruthlessly deprive themselves finally relent to their cravings and they abandon their diet.
Of late, there is a lot of new research into epigenetics, explaining how nurture affects nature. Nature (DNA) and nurture act together in a constant dynamic interplay that lead to physiological, physical, cognitive, and emotional output. One day, you are full of energy and very “productive.” The next, you can’t seem to focus and chide yourself for not being “productive.” There doesn’t seem to be a reliable pattern to these swings in energy and mental focus. Even if you think you have learned how your body systems work, there could be an unpredicted environmental upset that challenges this “reliability.”
In this study, the environment at young ages affected gene expression much later in life. Does the child born to a stressed-out parent who then has their “delayed gratification” genes turned off and battles this problem throughout life deserve to be convicted as a bad decision maker? This is oversimplified extrapolation, but the basic issue remains the same. Most humans born today are just “bad decisions” made by impoverished and/or uneducated people. Those kids are punished for simply being the product of that bad decision and now they must pay the price, which is a debt that lasts a lifetime.