For the last 200 or 300 years, collectivists of various stripes have been screaming that we must protect people from free markets. Well, I am beginning to see their point. Except that I turn it around: We must protect markets from people.
Consider: If we suddenly declared that minors, of any age, had to be allowed to enter into whatever bargains and contracts they wished, would we not simultaneously restrict markets severely in order to prevent those minors from hurting themselves?
But don’t we do the same today? We declare that people whose IQ wouldn’t get them into a semi-respectable community college must be free to trade financial securities that professors of economics admit they cannot understand. And then reporters write pathetic stories about hapless folk who have become victims of complex investments that they had absolutely no chance of understanding. What did we expect?
Here is the latest story in this line, from the Wall Street Journal: Kelly Greene’s “Enlisting Doctors to Screen for Financial Fraud.” “Scientists from Baylor College of Medicine in Houston developed a pilot project in 2008 to train doctors to detect victims of fraud, or individuals who might be susceptible to fraud, among their older patients. The doctors were asked to report signs of financial exploitation to the Texas State Securities Board. Six months later, more than half the 67 doctors who participated and agreed to follow-up questions had found a patient who appeared to have been victimized by, or was highly vulnerable to, such abuse.”
Are we supposed to make the financial markets safe for the senile and demented? If we did, how useful and flexible would the financial markets be when we were through?
If it were up to me, I would say: A fool and his money are soon parted. I would let people, from the age of reason (7 years old) to age 100 and beyond, invest in financial instruments that they had not the slightest hope of understanding. But then I would not lament their self-impoverishment.
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