If anyone could understand mortgages, health insurance or credit card rules. . .Reader comment on: Racism and Taxes Submitted by benjamin Geballe (United States), Mar 10, 2010 11:29 I don't trust that anyone, poor or rich, can really understand much of what is in the fine print of a credit card, mortgage or health insurance policy. This is why we need the government to regulate these things, to make them intelligible to the average person. We cannot (and should not) expect everyone (rich or poor) to become an expert on mortgages, health care or credit cards. We need people who understand these products to make them simpler to understand so that consumer can make choices about what is best for their situation, and stand up for the interests of consumers who do not understand. One could argue that if you don't understand something, you shouldn't sign up. I would agree with this idea with many things like credit cards, but not for something like health insurance. If you can't understand the fine print, are you going to forgo signing up for coverage? And once you find out what the fine print says, it might be too late. This is why we need regulators. By making this a rich/poor, or black/white thing, we miss the larger point. Consumers of all stripe have been taken advantage of, and it is unrealistic to expect individual to be experts on everything. Instead, individuals rely on government - something this site doesn't like and isn't ideal, but is far preferable to individuals relying on insurance companies to look out for them. Note: Comments are moderated by the editor and are subject to editing. The Future of Capitalism replies: There are other ways to become experts on things other than the government. If you are looking for a restaurant, say, you check Zagats or the Michelin guide or a trusted newspaper restaurant reviewer. Or a hotel, you check tripadvisor or oyster.comor AAA or Mobil or Fodors or Frommer's or Let's Go or Lonely Planet. If you are buying a car or an appliance you check Consumer Reports. Morningstar rates mutual funds. Government regulations end up giving consumers the illusion of safety (Madoff is registered with the SEC so how bad could it be; this restaurant is inspected by the board of health so how bad could it be?) but in fact the regulators often fail, because they have little or no competition or incentive. The more government sets these regulations, the more it crowds out entrepreneurs who might profit by providing useful information to consumers. So instead of founding a Zagats for consumers to choose doctors or health insurers or credit cards, smart people end up deciding to do something else instead. Consumers don't have to be experts; they just have to be able to consult an expert (like the Times restaurant reviewer) or aggregate their own wisdom with those of others into a wisdom-of-crowds like phenomenon like Zagat. Other reader comments on this item
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