She Earned an F

by Don Boudreaux on September 25, 2008

in Government Intervention, Housing, Myths and Fallacies, Prices, Reality Is Not Optional, Regulation

Here’s a letter that I just sent to the Wall Street Journal:

Hillary Clinton wants
government to temporarily "freeze rate hikes in adjustable-rate
mortgages" ("Let’s Keep People In Their Homes," September 25).

The
Senator’s reasoning is akin to that of weak students who – offering
excuses such as "My grandma died" – ask me to change their grades.  I
always refuse by saying that grades are like market prices: they
reflect an underlying reality.  Were I to change a student’s grade
arbitrarily, I wouldn’t change his actual performance in my class or
his command of the material.  I would merely send to the world a false
signal about him, and encourage him to rely on such excuses in the
future.

As a teacher, I can’t make students smarter simply by
lying about the grades they’ve earned.  As a Senator, Ms. Clinton can’t
make housing more affordable simply by forcing mortgage terms to lie
about the reality of high risks and scarce credit that are reflected by
unregulated mortgage-interest rates.

Sincerely,
Donald J. Boudreaux

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