There's A Sucker Born...
My political views are informed (skewed?) usually by two competing mindsets.
I grew up in a conservative household. We went to church where there was a God of Fire who pointed you to a Saviour who, despite your basic cussedness, could redeem you. I took away the thought that people were basically bad and needed rules to follow and some one or thing to enforce the rules. Mix in my parents' Depression era, big government backround influencing me and you have government as your rule giver and enforcer to protect us from ourselves.
Then I read Heinlein, Rand, and others, discovering the charm of the rugged individualist. In the books, unfettered by messy reality, the individualist prevailed against the collective. We were all good. Rules and Rulers should be kept to a minimum.
Yesterday morning I had to drive south of Atlanta to McDonough in Henry County, Georgia for a hearing on a motion. Nice little town with a square on which the Courthouse sat. Gridlocked traffic for a mile around the square evidenced McDonough's inclusion in Metro Atlanta's problems.
In Georgia courts, motions are heard by the Judge on periodic "non-jury trial calendars." Anything and everything that doesn't involve a jury appears on these cattle-call mornings. As a result of my attendance at these events over the years, I am fully qualified to practice all kinds of law that I wouldn't touch on my worst day. Divorce, restraining orders, arraignments for non-payment of child support. I once saw a guy banished from all counties in Georgia but one (a fascinating Georgia practice for discussion in another post).
Yesterday, though my case was in the second position, I wasn't excused until about an hour and a half into the session. While there, I saw five hearings on motions to "Confirm Settlement." In Georgia in some cases, when a person gets a structured settlement (payout over time) of a judgment, the settlement has to be approved by a judge. Any change to the settlement later also has to be approved. These people had "sold" their income streams under the settlements to an investor. Kind of like taking an annuity when you win the lottery and selling it, after another discount for a lump sum later.
But here's the twist.
The amounts they were getting for their annuities ranged from a high of 75% to a low of 20% of the current, already discounted, present value. Without laying out all the math, this is a terrible deal. The people doing it were stupid. They needed someone to beat up the side of their head and knock some sense into them.
Instead, in turn, they marched up to the podium in front of the Judge with the lawyer who represented the investor buying the annuity. The lawyer asked them "questions." Did you read the agreement. Of course they did. Did you understand the agreement. Ditto. Did you consult with a lawyer or understand that you have a right to consult with a lawyer and decided not to. Why yes, I did. Is that your signature on the agreement. Yep.
The Judge then asked them two questions. What is your educational backround? It ranged from GED to college degree. Do you have any mental problems? None admitted to any.
The Judge then signed the Consent Order and wished them luck. Yes, to each he said "good luck."
So, am I P.T. Barnum, with a smile pointing them to the "egress" and wishing them luck like the Judge? Or Heinlein, Rand or anyone of a bunch of current talk show hosts? Or, do I lobby for laws to protect the idiots? If so, what kind of laws?
I got in my car, shaking my head, and drove back to the City.
5 comments:
Much as I feel bad for the poor schmucks who are getting ripped off in the sale of their annuity streams, I oppose laws to further protect "the idiots".
The current law is already intrusive. A judge asks the right questions, and the seller answers them. Can you name another transaction where this is required? Selling a home? Selling a stock? Why should anyone have to go before the court to sell something? I wouldn't repeal this law, but I wouldn't add to it.
We get a free education in this country, and we can choose our own advisors if we don't feel smart enough to decide any issue. That should be enough.
However, sometimes I think people's thought processes should be carefully evaluated by professionals before they say "I do!" A 50% hit rate on marriage is way too low, and the stakes are awfully high.
Dave, our backgrounds are very similar. For me, a United Presbyterian upbringing (sin=hell, grace=heaven,(don't think too much about "election" or you'll go crazy). My depression era mom, now rather well-to-do, still thinks she's poor. I read Ayn Rand, love Heinlein and good SF in general.
Now I'm a religious libertarian liberal, which means I'm constantly trying to sort out all kinds of contradictions. It's great to know I'm not the only one!
I really enjoy your blog.
Life Hiker,
Thanks for both comments. Our philosophical "mutt" status makes for an interesting passage through life. I mostly identify with my liberal side. I desperately want to see life improve for everyone. Then I look at how liberals go about achieving that goal, or more accurately, how they fail, and say what's the use? This view is reinforced by my libertarian leanings: If I could make my way, why can't they? Liberal voice: Well, you had a stable upbringing, you're white, you had a good education. I'll quit now because the debate is too predictable. I'll also probably keep tilting against windmills and regreting it.
Some interesting work by Jacques, a now deceased Canadian management consultant, categorizes people by their time horizon. He says that fair-felt pay (most folks agree that it "feels fair" to pay this guy 5X what that guy makes, etc.) is a function of whether one has the capacity and disposition to think about consequences two weeks into the future or ten years into the future.
Why mention it? Because the ability to properly appreciate the value of an annuity seems to depend on more than just IQ or mathematical ability - it seems to depend on this time horizon. And according to Jacques, this perspective is randomly distributed, meaning that one isn't either able or unable to consider the future.
This does complicate policy because it suggests that there are a group of people who are competent but who, nonetheless, are vulnerable to making these kinds of bad deals.
They chose a small, instant gratification over a larger, deferred gratification. I'd say they are typical Americans.
That's the guiding principle behind everything from credit card (ab)use to the national deficit.
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