HARM

A Little Financial Knowledge Is a Dangerous Thing

(quote:) "Consumers generally do not serve as their own doctors and lawyers and for reasons of efficient division of labor alone, generally should not serve as their own financial experts. The search for effective financial literacy education should be replaced by a search for policies more conducive to good consumer financial outcomes." (end quote)


There is some merit to the second idea, but little to the first.

There is no reason why your average investor cannot learn enough about basic finance to create a budget, calculate mortgage payments and invest in his/her own 401k/IRA. I disagree with equating retail investing with performing surgery or practicing law. Medicine is (more or less) applied science, even though it evolves constantly. Practicing law takes years to learn and perfect, given the complexity of the legal system. OTOH, Basic finance is something that can be taught in a few days, assuming the person can perform simple arithmetic. There is also a HUGE difference between being a professional Quant or FT daytrader vs. just learning enough to *not* get screwed on a subprime mortgage.

However, I do agree that current mortgage market regulations (or to be more accurate, mortgage market *subsisdies*) are wholly inadequate to the task of protecting consumers from the worst sort of abuses that took place --virtually unchecked-- over the past several years.