Preparing for temptation by setting our own limits

When it comes to temptations, we often fail. I'm referring to over-eating, over-drinking, procrastinating, losing one's temper, speaking out in ignorance, and many other types of temptations--there are certainly hundreds of them. Maybe we don't immediately fail, but eventually, when we are faced with an easy opportunities to fail, we tend to succumb. Removing the opportunity ahead of time tends to remove much of the temptation. That is why a good strategy for avoiding obesity is to avoid bringing sugary/fatty/salty food into the house in the first place. This strategy of not allowing such food into the house is much more effective than bringing junk food into the house, then trying to ignore its easy accessibility and trying to just say no. Richard Thaler is known as the “Father of Behavioral Economics.” At Edge.org, Thaler warns that we are not better off to have more alternatives to choose from. His reason runs parallel to the reasoning of Barry Schwartz, who warned of the “paradox of choice.” According to Thaler, “there are cases when I can make myself better off by restricting my future choices and commit myself to a specific course of action.” Thaler mentions the example of Odysseus, who instructed his crew to tie him to the mast and the decision of Cortés to burn his ships upon arriving in Mexico, thus removing retreat as an option. He then offers this general principle:

Many of society's thorniest problems, from climate change to Middle East peace could be solved if the relevant parties could only find a way to commit themselves to some future course of action.

Continue ReadingPreparing for temptation by setting our own limits

Elizabeth Warren faces fierce resistance to regulation of non-bank lenders

Elizabeth Warren is one of my heroes. Barack Obama appointed her to be Chair of the Congressional Oversight Panel created, which was established to oversee the banking bailouts. For many years, Warren has fought tough battles on behalf of consumers. [See the related posts to this post; and here's a video of Warren being interviewed by Jon Stewart that will give you an idea of what she is about (and especially consider Part II)]. Warren is now facing an incredibly tough uphill battle. Her main weapon is common sense. She wants to regulate banks and non-bank lenders, to stop them from defrauding consumers with their fine print, their outlandish fees and their arithmetical hocus-pocus. In a fair fight, her position should easily win the day. But it's not a fair fight, because the financial services industry owns much of Congress. Therefore, Warren has spent much time advocating for the need for a strong Consumer Financial Protection Agency (CFPA). Here's what Warren has to say about the need to regulate non-bank lenders:

There is more that we can do to deal with non-bank lenders, but only if Congress creates a strong CFPA. If we stick with the status quo -- which treats loans differently depending on who issues them and places consumer protection in agencies that consider it an afterthought - we know what will happen because we have seen it happen before. Lenders will continue their tricks and traps business model, the mega-banks will exploit regulatory loopholes, and the non-banks will continue to sell deceptive products. In that world, small banks will need to choose between lowering standards or losing market share, and they will still get too much attention from regulators while the non-banks and big banks get too little. Dangerous loans will destabilize both families and the economy, and we'll all remain at risk for the next trillion-dollar bailout. Regulating the non-banks hasn't been tried in any serious way. The CFPA offers a real chance to level the playing field, to add balance to the system, and to change the consumer lending landscape forever.

Continue ReadingElizabeth Warren faces fierce resistance to regulation of non-bank lenders

Police officers have epiphany: time to legalize and regulate street drugs

In the Washington Post, two police officers make the case that it's time to legalize and regulate street drugs. Why? To quit squandering tax dollars, to quit filling prisons with people who don't belong there and to protect neighborhoods and police officers.

Only after years of witnessing the ineffectiveness of drug policies -- and the disproportionate impact the drug war has on young black men -- have we and other police officers begun to question the system . . . Drug manufacturing and distribution is too dangerous to remain in the hands of unregulated criminals. Drug distribution needs to be the combined responsibility of doctors, the government, and a legal and regulated free market. This simple step would quickly eliminate the greatest threat of violence: street-corner drug dealing.

Here's the "money" quote:

Harvard economist Jeffrey Miron estimates that ending the drug war would save $44 billion annually, with taxes bringing in an additional $33 billion.

Continue ReadingPolice officers have epiphany: time to legalize and regulate street drugs

Bank Regulator William K. Black: The best way to rob a bank is to own one.

I’ve often had the thought that our massive meltdown could be figured out if we could only recruit some intelligent and well-motivated people to gather and analyze the evidence. But who would those people be? Who could serve as the template the type of character we seek out in such people? Too bad we don't have 1,000 people like William K. Black. Black is the former senior regulator who cracked down on financial institutions during the savings and loan crisis of the 1980s, pointing fingers at five congressmen including John McCain. Black went about his work with such vigor that he even drew a death threat from Charles Keating. Have you ever gotten excited listening to anyone talking about the economy? In this breath-taking interview with Bill Moyers, Black offers his own carefully studied analysis regarding the "bailout." This is not the intentionally abstruse financial jargon that you usually hear when pundits discuss the meltdown. The theme of the Black’s interview is this: "The best way to rob a bank is to own one," which is also the title to a book he wrote in 2005. Black teaches economics and law at the University of Missouri — Kansas City (UMKC). He was the Executive Director of the Institute for Fraud Prevention from 2005-2007. This video is required viewing for anyone who is convinced that we are not getting the straight scoop from the corporate media or from our government.

Continue ReadingBank Regulator William K. Black: The best way to rob a bank is to own one.