Wrong End of the Telescope

A short and to-the-point article entitled "Greater Fools" in the July 5 New Yorker should be read by anyone in education, who has children in school, or who participates in the money economy. Yes, everyone.
I remember feeling a little queasy, that feeling that a scam and a pervasive threat is in the works, when Dubya was mouthing his handlers' "ownership society" theme. More home ownership would "give people more control over their financial lives." For a second you'd say, yes, few things develop responsibility, stability and spending on manufactured goods more than owning a home with a mortgage. But all little girls want to be princesses, and in the natural distribution there are only a certain number of openings for minor royalty. The maximum figure for home ownership in societies like the U.S., Canada, and the United Kingdom is no more than the mid-60% range. Aim higher than that, and you're mining people who won't be able to handle it, mentally or financially, and after deregulation (dereg = giving the fox unsupervised access to the henhouse) a pack of predators will be let loose to fleece the sheep and leave them to die of exposure. After the overinflated housing bubble inevitably burst, the conservative noise machine instantly blamed the Community Reinvestment Act, which was developed to help up those who were employed and stable but who lacked the lengthy and sterling credit history which allowed the more fortunate to sail into mortgages with favorable terms. In fact, the working class and nonwhite citizens who benefitted from the act have a few percentage points better record avoiding foreclosure than the white, middle-class mortgagees who didn't need it. You can figure out what the screaming critics' real beef was: helping anyone not exactly like you to become productive and rise from a lower stratum is un-American. The Marshall Plan and the GI Bill and Social Security were ripped up one side and down the other by conservative critics equally, but that was before think tank columnists and Fake News.
Study after study has shown that people think they are more financially savvy than they are, by a long shot. Many, for example, who thought they had fixed-rate mortgages actually had adjustable-rate ones. How could they miss that? "And the less people know, the more overconfident in their knowledge and abilities they tend to be." This has been identified as the Dunning-Kruger effect, that people who don't know much tend not to recognize their ignorance. How many people believe they are superior drivers (most, according to studies)? How many actually are (few, based on my own lifelong experience)? They then tend to come to erroneous conclusions, make poor decisions, and their ignorance "denies them the ability to realize their mistakes." The exploding financial industry is, however, keenly adept, knows the legal loopholes and can write legalese obfuscation in documents that, once signed, will wring their trusting and ill-informed victims dry. One of the most appallingly evil schemes they came up with was to target minority homeowners in older neighborhoods who had solid equity or complete ownership, selling them on refinancing which in short order sent them into deep debt and foreclosure. Nice.
Zach and I had a discussion a few weeks ago that had us agreeing that financial education must have a place in every level of schooling. Unlike calculus, what else other than English do you need grounding in to deal with life every day? In states where this is the case, it has a surprisingly great impact on savings rates. I remember taking an economics class at VCU, and mid way through, decided not to pursue it any further despite my intense interest; there was no real-world information, no relation to the individual, only the main contemporary terminology and theories, sketchily described. So it can be done badly, but that would do no harm while not doing it at all causes great harm. Would the financial industry lobby against money management education? Actually, they do, spinning a claim that it would make people overconfident (when the reverse is true). They would tell the businessmen on the local school board that it was socialism, un-American or some other scare-tactic B.S.
Without knowing the term "Dunning - Kruger Effect," I observed the same aspect of human nature again and again while working in the "redneck world" (my politically incorrect but accurate term). Most were willfully ignorant and based action and opinion solely on feeling and half-baked received opinion and yet were paradoxically (to me) brimming with confidence and overestimated their competence to a dangerous extreme. One person who had enough years in to know better was once trying to drill through an iron roof hatch with a large diameter masonry bit and got livid when I politely suggested using progressively larger diameters of steel twist bits (just try drilling a 5/8" hole through iron otherwise). Another dismissed my warning that there was nothing below us except inadequate 2x4 joists and drywall just before he fell through that ceiling, shearing loaded shelves off the walls on his way down.
You can only work around, not change, human nature; the vast majority will continue on as they always have. The bewildering complexity of life today will continue to be used against us very effectively by fast and clever predators (lulling us into complacency through their shills, pundits and propaganda); even if we did have education focused on realities it would be almost impossible to keep up. One of the lessons of history you will never hear in a school is that the oligarchy/aristocracy/established church top strata of society figured out long ago that the real money is to be made from fleecing the poor and powerless (your peers will assassinate you if you try it with them). Knowledge and perception is all you've got to defend yourself. Be careful out there.