Allow People to Make Mistakes and Suffer the Consequences

Throughout life, people make mistakes. Some are small ones that have small consequences like putting salt in your coffee instead of sugar. Others are much greater, like getting an adjustable-rate mortgage to buy a house that you can barely afford. If people (and companies) are not allowed to suffer the consequences of the mistakes they make, they have no fear of making unwise decisions in the future.

Lately we hear the emotional arguments that too many people have been duped by greedy banks into getting loans for what now turns out to be more house than they can afford. Some people bet on the come--that housing prices would continue to rise and by the time their adjustable rate ended, their property would be worth so much more that they could sell it for a very nice profit. It worked for some people and for some it turned out badly.

I feel bad that so many people got into so much trouble. But, they took a risk and this time it didn't turn out. The people who got the loan, and the lending institutions are equally at fault (except in cases of lying--on either side), and now both sides are suffering the consequences of their bad decisions. But it is very wrong for the Government to try and bail people and companies out of this problem.

In most things in life, we come across the concept of risk versus reward. Most of the time, they correlate so that a little risk brings a little reward (on average) and a bigger risk has the potential for a bigger reward. The risk portion of the equation is extremely important! Without the consequences of risk, a person or company will continue to make bad decisions. There are some people who would like to spread those consequences out diluting them among a much greater number of people--the general population (through taxation).

This is wrong on several fronts. People who made mistakes end up not having to pay for the mistakes they made, so they are encouraged to make them over and over. Other people who weren't drawn into making the mistake this time see that there are no (or in some cases, reduced) consequences, so they are encouraged to give it a try. There are those who tried this before and failed, suffered the consequeces and now ask, "Where is my help?" Then there are those who didn't take a risk, but ended up paying for the mistakes of others though their taxes.

Did the people who made the poor loans make a smart decision? How about the people who took the loans? In the cases where the deal ended up in foreclosure or short-sell, you would have to say they didn't. What value do we have as a society by helping these people and companies avoid consequenses so they can go do it again? Are we not better off, in some respects, to let them fail and pay the price of failure? Either they learn how to do it better next time, or they don't get to play the game. By that I mean that a mortgage company should be allowed to go out of business if they are not smart in their business dealings, and a person who had their mortgage foreclosed on should not be able to get a mortgage leaving them to rent/lease.

It boils down to making people take responsibility for their actions. When we don't, at best people are not encouraged to learn how to make smarter decisions, but at worst we (society) encourage them to continue making bad decisions.