Least Understood Important Ideas
By Steve GillmanI have been thinking about what I refer to as the “least understood important ideas.” These can be found in many areas of life, large and small. They are sometimes even the most important ideas in a given context, yet they are either relatively unknown by the majority of people or not explored and developed very well.
A simple example comes from the area of home loans. Most people know how a mortgage works, but there’s an often ignored idea that reveals one of the most important aspects. It’s the fact that the easier it is to lose a home to a lender, the easier it is to buy one. I’ve covered this elsewhere, pointing out that in places where borrowers are thoroughly “protected” from foreclosure there is almost no lending (who would lend if there was no way to take the collateral pledged?).
As you can imagine, if that particular idea isn’t understood, politicians could change the laws to “protect” home owners while actually making it far more difficult for people to own a home. Potential consequences like this are why I hope to cover more of theses “least understood important ideas” in future posts. Here are a few that I might write something on, along with a hint about what I may have to say.
- A philosophy of self interest does not exclude caring about others. In the end it is not a question of selfishness versus altruism - if the “self” is properly concieved.
- Insurance is often a bad bet. For example, although not seen as gambling, with an auto collision policy you make a small monthly bet which you only win if your car is wrecked.
- Shortages are almost always caused by government policy. It may seem that a shortage is caused by a lack of something, but why then are some of the rarest things (emeralds, diamonds, caviar) available at all times in all developed countries?
- In a market economy, prices are the primary way important information is conveyed. It may seem like a good idea to stop “price gouging” during emergencies, and otherwise manipulate prices, but doing so disrupts information flow.
- Raising tax rates does not automatically raise revenue for government. Is it possible that they get more when income is taxed at 20% than at 50%, and why?
- Individual rights have to be defined negatively to retain any meaningful political power. The most essential right is to be left alone, which is violated as soon as there are “positive rights” to food medicine or anything that must be provided by others.
I am sure that I’ll have a dozen more to add to the list soon. Over time I will explain each of these “least understood important ideas” more fully.
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Tags: ideas, important, least understood
January 8th, 2009 at 7:31 am
Insurance is another example of government thinking something is great, but never having the ability to enforce it. I remember when I moved to Colorado in 1999 and having to get “uninsured or underinsured car insurance.” It just about blew me away, that I, as one who follows the law, is required to pay more per month on my insurance in case someone who HITS ME doesn’t have insurance.