Enquiry

Liberal as Massachusetts is, sometimes I think my home state is not as bad as others when it comes to nannyism — the trend for government officials to infantilize citizens by treating them as incapable of making their own decisions.

But our attorney general Martha Coakley does have a taste for nannyism, seen in her belief that appropriate prescription drug treatment is a matter for prosecutors, not simply doctors and patients. She scratches that itch again today in her assertion that government is a better financial planner than the citizen (insert your favorite Big Dig joke here…). Her office has decided to ban “foreclosure rescues:”

Coakley said she would seek comments from the public over the next 28 days for proposals to make it illegal for lenders to inflate a borrower’s income on their mortgage application, to make mortgages that borrowers clearly cannot pay; and to provide credit when it is not in the interest of the homebuyer or an existing homeowner who is refinancing a property.

The government, or any impartial arbiter, I would argue, does have a legitimate role in defining what constitutes a legitimate contract. In addition, there’s not always a clear line between outright fraud and a fair contract that just isn’t the best deal for someone. So perhaps Coakley is doing the right thing; I haven’t researched “foreclosure rescues” and can’t say I know anything about them other than what I read in this article.

Yet it really sounds as though she is overreaching, telling citizens they are too stupid to avoid making a bad decision and can’t be held responsible if they do.

I am, however, somewhat sympathetic to her wish to ban lenders from “inflating” a borrower’s income; it’s plausible that some shady lenders would use misleading, ambiguous or obscure fine print to substantively alter the terms of a contract, for which borrowers should not be held responsible. But of course it depends on what “inflating” actually means.

Worse still is the idea of forbidding mortgages that the borrower “clearly” cannot pay. If it is “clear” to the lender that the borrower will default on the loan, the lender would not make the offer; if it is “clear” to the borrower that he or she can’t make the payments, then the borrower would not accept the loan. The strong presumption is that the government is a better judge of what someone can pay than both the lender and the borrower, each of whom knows their financial situation far more intimately than the state.

One can, of course, sympathize with someone who gets in more debt than he can handle; it happens to many well-meaning people. But that is what bankruptcy is for. We’re going down a dangerous road if we allow the government to protect us from our own decisions. It is one thing to have welfare and bankruptcy law in situations where a person is in a hopeless situation. It is another for the government to interfere in decisions that might possibly result in a hopeless situation — but might not.

Of course, the two are connected: once you decide to protect people from the consequences of their choices, you realize that paying for it (health care, welfare benefits, bankruptcy courts, etc.) can be expensive. It’s the next logical step for the government to directly interfere in people’s choices. But, of course, it’s in making bad choices, or seeing others do so, that we gain the wisdom to make better choices — including, of course, whom to elect to office.

The trend toward protecting people from bad choices will result in the population getting dumber, leading to even dumber politicians getting elected, leading to progressively dumber laws getting enacted: it’s the death spiral of the nanny state.

Technorati Tags: law, libertarianism, nannyism, welfare