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How do people have such a strong opinion on what level of profit is reasonable if they don't know the default rate? The average person thinks companies make ov

How do people have such a strong opinion on what level of profit is reasonable if they don't know the default rate? The average person thinks companies make over 5x the profit they actually make, and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). What profit people begrudge is likely not particularly relevant, given how uneducated those opinions generally are.

bumby 6y ago
I’m pretty agnostic in my opinion on this personally because I don’t know their profit margin, default rate etc. I also think these lenders fulfill a worthwhile service in some cases. Note that I didn’t actually define what reasonable should be. People do get a say in the policies of their society in a democracy, whether educated or not. People also think NASAs budget is 50x what it is, but it doesn’t mean we should strip away their right to vote, it means they need to be educated (or their representatives, by proxy). Otherwise it’s just advocating for a technocracy
- nitrogen 6y ago
  Otherwise it’s just advocating for a technocracy A technocratic republic, maybe where we got to pick who ends up on legislative subcommittees ourselves[0], might actually be a good thing. [0] Obviously we can imagine many other forms for a technocratic republic to take; this is just the most similar to the current system, and thus maybe least unreasonable in a path-dependency sense.
akira2501 6y ago
> if they don't know the default rate? It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value. > and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). Sure, you just have to be willing to ignore "fairness, consumer protection, environmental protection satisfaction, and employee satisfaction" when considering "corporate social responsibility." > given how uneducated those opinions generally are So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?
- Matticus_Rex 6y ago
  > It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value. Citation on ~5%? I've seen occasional claims that it's that low, but I've often seen it quoted in the ~20-25% range as well. And that ignores the money spent on trying to get borrowers to make good, as well. > you just have to be willing to ignore fairness, consumer protection, environmental protection satisfaction, and employee satisfaction Nah, some of the most profitable corporations score really well there. High profit is not well-correlated with bad behavior, even though some bad behaviors can bring high profits. It often just means the company is really good at bringing people things they find useful. > So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system? The people are often educated -- they're merely uneducated on the relevant info for that particular question. Most people don't know how the major systems they interact with work; we should expect them to misplace blame.

bumby 6y ago

I’m pretty agnostic in my opinion on this personally because I don’t know their profit margin, default rate etc. I also think these lenders fulfill a worthwhile service in some cases. Note that I didn’t actually define what reasonable should be. People do get a say in the policies of their society in a democracy, whether educated or not. People also think NASAs budget is 50x what it is, but it doesn’t mean we should strip away their right to vote, it means they need to be educated (or their representatives, by proxy). Otherwise it’s just advocating for a technocracy

nitrogen 6y ago
Otherwise it’s just advocating for a technocracy A technocratic republic, maybe where we got to pick who ends up on legislative subcommittees ourselves[0], might actually be a good thing. [0] Obviously we can imagine many other forms for a technocratic republic to take; this is just the most similar to the current system, and thus maybe least unreasonable in a path-dependency sense.

akira2501 6y ago

> if they don't know the default rate? It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value. > and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). Sure, you just have to be willing to ignore "fairness, consumer protection, environmental protection satisfaction, and employee satisfaction" when considering "corporate social responsibility." > given how uneducated those opinions generally are So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?

Matticus_Rex 6y ago
> It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value. Citation on ~5%? I've seen occasional claims that it's that low, but I've often seen it quoted in the ~20-25% range as well. And that ignores the money spent on trying to get borrowers to make good, as well. > you just have to be willing to ignore fairness, consumer protection, environmental protection satisfaction, and employee satisfaction Nah, some of the most profitable corporations score really well there. High profit is not well-correlated with bad behavior, even though some bad behaviors can bring high profits. It often just means the company is really good at bringing people things they find useful. > So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system? The people are often educated -- they're merely uneducated on the relevant info for that particular question. Most people don't know how the major systems they interact with work; we should expect them to misplace blame.