Life is Not Fair from Planck's Constant

I would like to live just like the Sultan of Brunei in the world's largest palace with 1,788 rooms, 257 bathrooms, and a floor area of 2,152,782 square feet but life is not fair. Senior citizens have to pay more annually for the same amount of life insurance than 20 year-olds and to some people that is unfair. But if liberal community activists pushed our government to force insurance companies to be "fair" to the riskiest of their customers the same way they forced banks to lend to credit-unworthy customers we would also be looking at an insurance crisis in the country.

Insurance cannot be fair, it has to be actuarially accurate, otherwise it will not work. For example, insurance companies would soon go bankrupt if they charged less to unhealthy people than healthy people in order to be fair. In the same manner we today see the result when we give mortgages to poor people and those with bad credit. Interest rates should not be fair, they should reflect the reality of the risk. Making political something that should strictly be mathematical is like trying to add wings to pigs so that they too can be like birds, after all, isn't it unfair of God not to let pigs fly?

Here is the reality: blacks who make $75,000 a year on average have a worse credit rating than whites who make $25,000 a year. So bringing up statistics that banks give more mortgages percentage-wise to whites who earn less than blacks is not proof of redlining. It may not be fair, but that is the mathematics of it. Try to engineer a society that is fair and all you end up with is a financial system on the brink of total collapse.

In the end, by being fair, we ended up foreclosing not on just those who did not deserve (credit-wise) to have a home, but on those who did. Being fair to the lowest 20% means being unfair to the rest of society. And that is really unfair.

Some of the above was discussed with Bryan Del Monte on BlogTalkRadio this afternoon. Click on the play button below to listen in.

If the icon does not appear click here