In a reprise of that old Trojan Horse trick the Greeks played, Yale Economist Robert J. Shiller suggests we reduce this country's wealth imbalance by educating the man on the street to not get fooled by Wall Streeters by paying Wall Street to teach him. Say what?
Shiller writes that the United States needs to close the income distribution gap. The trick comes in 'how.'
According to Mr. Shiller:
"Financial theory is all about incentives for people to work effectively...Enhanced financial institutions could serve the real purpose that financial theory proposes: serving the people...It is only through [existing financial] institutions that inequality reduction can really work well in a capitalist economy."
Gee, that sounds nice. But wasn't the economic crisis largely their fault?
"The crisis we are in is largely due to investor ignorance."
So, let me get this straight. To reduce the wealth gap, we need to strengthen the financial institutions, whose goal it is to serve the people. To do that, we need to educate the ignorant common man. But isn't that expensive?
"We need to subsidize financial advice for the common man...we need permanent subsidies to get the full scope of financial advice out to the people."
Golly, Mr. Shiller, who would actually do the educating? Wait, don't tell me, I know this one... uh, lemme see... I'm gonna go with Goldman Stanley, Morgan Sachs and Yale. Yup, final answer.
For a Yale economist to play "blame the consumer" is incredible enough at this juncture. To use that argument ostensibly in support of "bridging the wealth gap" is disingenuous at the least. And to propose a self-serving solution like permanent federal funding for the education of the masses about a product set that has baffled PhDs and Wall Street is, well, you pick a word, I'm out of them.
Now, where have I heard this argument before?
Ah yes, I remember. Two years ago, the National Association of Mortgage Brokers used the same "it's-the-ignorant-customers'-fault" argument:
"Education is key...NAMB supports federal legislation that includes provisions to address financial literacy...NAMB urges increased enforcement of existing abusive lending prevention laws."
"MBA believes that borrower education to help consumers navigate the home buying and mortgage finance process is extremely important...MBA and its members have developed a number of strategies to educate consumers about their options in the mortgage marketplace."
Except even the mortgage brokers' industry never had the chutzpah to suggest a federally-funded permanent transfer of wealth to the foxes to teach the chickens how not to get caught by foxes.
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As far as I understand the NYT article Shiller main points are (each with a dedicated paragraph):
- we need to subsidize financial advice for the common man
- broaden financial markets to improve risk management
- change retail financial institutions, notably those that grant and service mortgages
- index the tax system to income inequality
The author of the Huffington article has taken the elaboration of the first point where there was some speculation by Shiller of the future role of the banking industry and twisted it around and painted Shiller as a different person than he is.
I highly recommend checking out the original NYT article and other work Shiller has done.
Simply put we have been graduating large numbers of losers taught by losers who's shoulders the current crop of derivative sub geniuses are standing on.