Signature Significance: Bernie Sanders’ Ignorant Tweet

Bernie tweet

Yesterday, the Democratic candidate for President of the United States, a long-time member of the United States Senate, tweeted this message to his “followers,” and also, given the nature of Twitter, the nation:

“You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?”

Now, if you don’t instantly recognize why this is an astoundingly ignorant statement, especially for a Presidential candidate running on a platform of economic restructuring, that’s okay. Don’t feel badly. It’s a weekend, you’re probably groggy from all the holiday cheer, and most important of all, you aren’t presuming to hold yourself out as qualified to be President, or constantly lecturing about the evils of capitalism. Sanders is, however, and this cretinous statement is signature significance. Nobody who understands loans, interest, collateral, banking, or economics would say, write or publish such a fatuous statement, even once. This is signature significance: an informed, logical, attentive, competent individual will not make such a bone-headed mistake…never. Sanders, however, has said this at least twice; in October, he tweeted a variation on the same economically ignorant theme:

“It makes no sense that students and their parents pay higher interest rates for college than they pay for car loans or housing mortgages.”

Actually, it does, Senator; it makes perfect sense, unless you are twelve. The concept is called “collateral.” That is something of value that  a lender can take if a borrower defaults on the loan. The deal is interest, plus security, the collateral. A house or a car are tangible collateral, so the interest rate can be lower. When the loan is for college tuition, however, there is no collateral. If the borrower defaults on the loan, the bank can’t take the student’s diploma, or education, or download all of the alleged knowledge the loan paid for from brain to laptop. Of course the interest rate is higher. That is, “of course” if you know anything at all about finance.

The unavoidable and shocking conclusion: Sanders is holding himself out as the leader to revolutionize how the U.S. economy works, stimulate growth and jobs, and show the way to a fairer and more just financial system, yet he is stunningly uninformed about the basics of finance, hasn’t learned a thing in all his years in the Senate, and worse, lacks the diligence to learn what he has an obligation to understand in order to justify having a vote on economic matters in the U.S. Senate, never mind setting policy as President.

This is bad.

Is there any excuse or defense for that tweet? No. Should anyone trust an elected official this ignorant and so lazy and arrogant that he makes no effort to disabuse himself of financial illiteracy? No. Does such a bone-brained misunderstanding mean that no intelligent person should listen to or take seriously any of his pronouncements about the economy? Yes.

To be fair to the Senator, let’s try to find some explanation for this that doesn’t prove that he couldn’t pass Economics 101 at a community college: Continue reading

Comment of the Day and Ferguson Thread Highlight: Chris Marschner On The Elusive Equal Treatment Problem

Doesn't seem right, somehow...

Doesn’t seem right, somehow…

At least one good thing has out of the Ferguson Ethics Train Wreck, anyway: several unusually intense, frank and thought-provoking threads about race, “privilege” and poverty led by Ethics Alarms All-Stars Chris Marschner, deery, and urbanregor, with trenchant contributions by others as well. The most vigorous thread emerged here, in response to Marschner’s Comment of the Day on this post, on the unfolding Ferguson situation.

I could have chosen any number of comments to highlight by a separate post, but decided on this one, by Chris. First of all, it is remarkably thoughtful. Second, it transcends Ferguson and addresses the larger, related issues of poverty and perceived inequality of opportunity in the U.S. Third, it constitutes a first: a Comment of the Day, by the author of a Comment of the Day, commenting on his own piece. Guinness has been notified.

Here is Chris Marschner’s Comment of the Day on his previous post, Comment of the Day: “Ethics Train Wrecks Collide, As The Redskins And Trayvon Martin’s Mother Board The Ferguson Express”: Continue reading

Comment of the Day: “Ethics Quiz: The Home as Billboard…”

Jeff Hibbert sets a record for pithy and concise with his comment on the Ethics Quiz about the company that will pay your mortgage if you’ll let them turn your home into a billboard. Besides, it made me laugh, and I needed a laugh.

“Eventually, everything flat will have advertising on it. This is why I think a flat stomach is overrated.”


			

Ethics Quiz: The Home As Billboard—“Ick!” or Unethical?

The Ad firm Adzookie will make their monthly mortgage payments for people willing to turn their homes into billboards. According to the company’s  CEO, it has received over 1,000 applications from people willing to have their houses turned into something like the eye-sore in the photo.

Your Ethics Quiz: Is this unethical conduct by the company, or merely disgusting, provoking our “Ick!” reflex?

For the Unethical side, consider: Continue reading

The Ethics of Voluntary Mortgage Default

Friend and reader Loren Platzman alerted me to the article, “Walk Away From Your Mortgage!” in the Sunday Times Magazine ( the magazine was, in fact, sitting unopened by my desk at the time. Some days, I just know that reading Randy Cohen’s “The Ethicist” column is going to ruin my weekend.) The thrust of the article, an installment in the “The Way We Live Now” series, is that American cultural tradition has reinforced the belief that there is something unethical and shameful about voluntarily letting the bank foreclose on a property when falling property values have placed the mortgage “under water,” meaning that the home is worth less than the amount still owed on it. Continue reading