Via Instapundit comes a worthy midday economics lesson from Megan McArdle. Starting with Socialist-Democrat Presidential Candidate Bernie Sanders’s ignorant talking point about the loan rates for refinancing a home being lower than the rates for college loans, McArdle asks readers to think about those from whom the loan money comes and exercise a little empathy:
Let’s say you had $150 that you really needed to have at the end of the month, say to pay your rent. Would you want to lend it to the single mother whose income is stretched so tight that she needs to borrow money for Christmas presents, or would you want to lend it to some heartless leech of a securities litigator with an 800 credit rating who happens to have left his wallet at home? C’mon. You know the answer; you just don’t want to say it. If you really need the money — if you cannot afford to turn your loan into a gift — then you lend it to the better credit risk with the higher income, not the person who may find themselves too short to pay you when the loan comes due.
For those susceptible to facile talking points, though, even this plain argument will only go so far. Who loans money and why is an intricate question with plenty of room to pretend we can tighten the net just so in order to catch only those greedy profiteers who can afford to lose $150 to desperate present-buying mothers from time to time. It doesn’t work that way, in large part because greedy profiteers have the incentive, savvy, and power to hide themselves and pass the buck.
At that point, the public’s imagination has to continue along. To stop bad actors from being able to act badly, somebody has to be empowered to define them and regulate them or to confiscate their ill-gotten gains, and the officials thus empowered are going to come with their own incentives and tendency to be captured by the powerful, in one way or another. (After all, even the straightforward task of enforcing parking meters slips to corruption.)
McArdle’s right, though, that we shouldn’t simply scoff at those who don’t understand (or care to contemplate) this tangle of complexity. The more of them who can be persuaded to take a few steps down the path of considering others’ pressures and points of view, the more they’ll come to the correct conclusion: that is, only a fool would trust a political system to resolve these complex issues. Not only do we need to imagine ourselves in others’ positions, but we also need to take personal responsibility to interact with each other as unique individuals.