Entreprneurial Sins: Number 1 Deception

The financial crisis was caused in great part by falling home prices, which led to defaults on loan payments. What this means is that the banks collapsed because they stopped making money off of people who shouldn’t have been given loans in the first place. Looked at from a distance, the mortgage economy was a system in which a rich few parasitized (supposedly for their own good) a poor mass.

Another prominent example of rich entrepreneurs parasitizing poor people is of course the credit card industry, with its astronomical interest rates camouflaged in jungles of fine print. Some very smart people, like libertarian and editor of Skeptic Magazine Michael Shermer, pat themselves on the back for all the credit card offers and loan offers they receive in the mail but are smart enough to realize are too risky. And shouldn’t everyone be that smart? Ironically, this is a really stupid argument, suggesting that we as a nation shouldn’t do anything about this deception because the people who fall for it should know better.

If we acknowledge a significant correlation between income and education, including education in personal finances, then the they-should-know-better argument becomes they-should-be-less-poor. It’s a tautology designed transparently to justify the exploitation of the less fortunate. Arguably, this sort of exploitation occurs whenever a business invests in marketing that effectively convinces people to buy products or services they don’t need and that won’t improve their lives.

I believe we have to accept that to some degree this dynamic of smarter people making money off of less smart people, of the advantaged taking advantage of the disadvantaged, is inevitable—even good for society as a whole. People really do need incentives to innovate and produce, but this observation need not, and should not, be taken to the extreme represented by conservative economic thinking. One good way to keep this necessary evil in check is to heavily tax those whose wealth derives from the less privileged masses and to invest in public education to help those masses be less gullible.

These basic forms of deception are serious enough, but industry-funded denialism of environmental dangers and human rights abuses is simply unconscionable. Can our sole guiding principle as a nation be the GDP? Can we allow the sole guiding principle of any individual company to be its bottom line?