this is a generic principle that we sometimes have trouble with in the US. we tend to want to leave choices to the individual, giving them that freedom to make a choice, and count on them to choose right or suffer the consequences.
an example from another area is in investing. many years ago we had very limited regulation regarding investments. some people invested in private companies, not on a stock exchange, and in some cases they were not sophisticated enough to understand the business and made poor investments, and in other cases they were outright swindled. so legislation and regulations were put in to prevent this, and it certainly had to be changed. but you have some unintended consequences, and today to make investments in private firms, private equity, venture capitalists, one has to be able to prove his financial sophistication, and prove he has quite a bit of money--I think it's $5 million in financial (not including your home) assets. Now this legislation was needed and solved a serious problem. but it does mean that for some of these risky, but potentially very lucrative, private investments, you have to be rich to participate. and i would say that if you look at the big picture, it is the right thing to have done.
carry this down to home ownership. a reaction to all of this might be something like requiring a 20% downpayment to by a house, and make that a law. years ago banks wouldn't take less than 20%, so obviously it can be done. but, other side of the coin, there are young families, upwardly mobile, from middle class or lower class backgrounds, that will find that they will have to wait longer than they might like to get their first home. today they can decide that they are going to work their tails off now, and hope they don't get real bad luck, and just make it work with a new home and 5% or less down. so we may end up taking away from them that ability to decide on their own, and take the risk if they want.
and this may be the better decision from a society viewpoint. if anywhere near 2.4 million people lose their home, I would think it should be changed.
but just trying to point out the two edged sword aspect of this, and in conjunction with what I perceive as American ideals of one should be able to make their own choices, one should be able to decide to take risks.
Their choices are made in a media environment that does little to encourage savings, and a business environment that is only interested in fufilling quotas regardless of the consequences to their clients.
I agree on th two-edged sword, but the blade is very dull on one side.
I think you would agree that offering a crate of whiskey or a box of bottled water to a teenage party, and expecting them to make the right choice or suffer the consequences, is hardly Freedom of Choice.
There is an ideal world of freedom in which people make rational judgements, but in the real world it is intersected by marketing. Marketing, by its very nature, is against Freedom of Choice. Marketing wants to limit your choice. Marketing wants you to buy 'this one' not any other one.
This - to me - is one of the great paradoxes of Capitalism. You can't be me, I'm taken
I actually see, in the broader picture, marketing differently. Marketing is the tool that gives me the consumer all of the choices that I have. So take cars for example. Magazine and TV ads make me aware of all the choices I have. and it's up to me to choose from amongst them.
in sub prime, marketing keeps the consumer aware of the competitive offers among vendors of subprime--who might have the best terms.
but then again, to your point, on subprime it probably makes the overall prospects of owning your own home more appealling, and keeps that thought in your head. so in that sense it's negative, and your parallel to the case of whiskey for a teenage party is a good one.
One could say the same about war. Armies are manipulated as a group to achieve strategic and tactical ends, but the immediate consequences are individual - if you are one of the inevitable casualties. You can't be me, I'm taken
