From the comments: Doctors and Bankers
Jesse Ewiak writes:
If I go to a doctor and he tells me I need this procedure and it turns it out it ruins my life, it’s perfectly reasonable to blame the doctor. Yet, I say the same thing about a banker and I hear calls of personal responsibility. I guess I should’ve known medical jargon just like I’m expected to be able to parse a 60-page document.
Simple question for the gentle-persons of the league:
1. Is there in practice a difference between the doctor-patient relationship and the banker-client relationship?
2. If so, what? Is it one merely in degree or is it a more qualitative difference?
3. What is the nature of the power differentials in these relationships anyway?
4. Should there, be a difference?
5a. If there shouldn’t be a difference, then in what direction do we resolve the difference. What should the doctor-patient relationship really be like?
5b. If there should be a difference, what should the difference be like?
My own intuition on this is that doctors do tend to have more power over patients than bankers over their clients. It seems really difficult (or even impossible) to deal with sickness and secure good health without going to a doctor. By contrast I can secure wealth without going to a banker (except to start a savings account). I just have to bone up on my skills, keep myself up-to-date and upgraded to stay ahead of the changing economy in the good times so that I will not be caught up if and when the economy turns south. I don’t have to buy a single financial product to do this. As long as we remember that there isn’t really any such thing as a free lunch (which is while strictly speaking not true, but still good enough as precautionary heuristic) then most of us middle class wage earners shouldnt dabble in the financial sector. (My parents are so bad at this that almost anytime they buy a financial product, no matter how secure that product was touted to be, the bubble bursts and they lose money. It’s almost as if my parents’ purchase of said product is a leading indicator of its over-inflated value)
It seems really difficult (or even impossible) to deal with sickness and secure good health without going to a doctor. By contrast I can secure wealth without going to a banker (except to start a savings account).
I think this is a false dichotomy. It’s really difficult to deal with extreme debt without going to a financial adviser. By contrast if you exercise regularly, don’t smoke, don’t drink alcohol, and eat when you’re hungry you’ll be taking care of most general health problems.
For the record, I don’t think there’s much of a difference between the two relationships. But I think the question of personal responsibility in the financial crisis is more about (a) how many people were telling their doctor one thing and going home to do another or (b) how many doctors were forced by the government to give underrepresented minorities high marks on their physical.Report
By contrast if you exercise regularly, don’t smoke, don’t drink alcohol, and eat when you’re hungry you’ll be taking care of most general health problems.
You’re still need to go to the doctor for vaccines, sports injuries and if you’ve got a cold/flu. (And these are things that cann be expected to crop up every year) And you wouls still take your doctor’s advice seriously and rightly so.
If you work hard, keep you skills up to date, network, are always on the lookout for opportunities, be enthusiastic at work, have a great attitutde and don’t spend beyond your means you are unlikely to ever be in serious debt. Seriously if you never approach a banker for any other purpose other than to set up an account, then you just cannot be in debt. You can only be in debt if you have been borrowing money. But why the hell did you want to borrow money in the first place? And why didnt you replay your loan as soon as you could?Report
I don’t have to play sports. Vaccines can be administered by non-doctors. And the flu can be handled by bed rest, hydration, and over-the-counter decongestants.Report
People could certainly educate themselves on what vaccines they want, and receive them from a relatively (compared to a doctor). Analogous to visiting a bank teller to open a checking account.
Flus and colds can certainly be home-treated in otherwise healthy adults.
Sports injuries are a broad category. A pulled muscle is quite different from a stress fracture. But for people not seriously involved in sports, while the first might be encountered semi-routinely, the second would be a highly unusual circumstance. Especially if people use proper preventive techniques (as they’re expected to do in financial matters), the types of injuries most people encounter are unlikely to require a physician.Report
If you do the financial equivalent of exercising regularly, not smoking, not drinking alcohol, and not overeating, you probably won’t have extreme debt. Extreme debt is usually the financial equivalent of type II diabetes.Report
This is an awesome comment.Report
In more ways than one. There is a family related predisposition. However, knowing that you have this predisposition merely means you have to take extra special care. (Of course some may think that the fact that some people have to take extra special care is unfair, but I dont think that this is the case)Report
JB, Aren’t you fundamentally opposed to restrictions on eating and such? Even the suggestion that one person’s overeating is another person’s business?Report
There are two ways to look at the whole eating thing.
The first is to say (like, me saying this, or you saying this, or anybody saying this) you really should eat more home-cooked meals from fresh ingredients that aren’t pre-packaged. Eat less red meat (not no red meat but not every day!). Eat fewer carbs and certainly fewer processed carbs. Don’t drink sugary sodas… and don’t think that diet sodas are much better. Eat leafy green vegetables, eat lots of protein, eat lots of good fats and don’t eat so much of the bad ones. Also: go for a walk every day with a loved one. It helps the bowels.
The second is to say “we are going to institute a policy whereby you will be limited to the following good choices, fatso.”
I fully support, 100%, the former. Giving people advice is one of the greatest joys anyone could have and I think that there should be more of it!
Hey, that paragraph is chock full of good advice.
The second infringes on you.
There are a great many things that are good advice that people would benefit from. I like to think that some of my comments contain this good advice. The problem comes when you, deciding to not follow my advice, decide to force me to pay for the bill. Heck, at that point, I am *INVESTED* in your lifestyle and it is reasonable for me to think that you shouldn’t smoke and you ought to exercise more (watch less television! Gah!). Suddenly, I am caring about what you do in your free time… because I am invested in it.
Forcing me to be invested in your life (and forcing all of us to be invested in each other) will have bad consequences. (Again: I think that the War on Drugs is a direct result of the War on Poverty.)Report
*snort* I know a licensed financial advisor. Nobody wants to pay his money upfront.Report
As someone who planned on being a banker, did an internship with a malpractice lawyer, and is now studying to become a doctor, I feel uniquely (if jadedly) qualified to answer this.
1. Is there in practice a difference between the doctor-patient relationship and the banker-client relationship?
Yes.
2. If so, what? Is it one merely in degree or is it a more qualitative difference?
Doctory is sciency. Investment is more or less a crap-shoot. We all know this. If you’re a doctor and you recommend a good blood-letting, you’ll be liable. If you’re an investment banker and you foster a good credit-default swap, you won’t be liable.
3. What is the nature of the power differentials in these relationships anyway?
Medicine, imperfect as it may be, is based on real, empirically-verifiable knowledge that has a lot of data in support of it. Investment is based on mostly what other people are investing in, and, in the sense that investors copy successful investors, I guess there’s some squishy empiricism there as well.
4. Should there, be a difference?
Yes. Doctors should be liable for malpractice (there are objectivey standards.). There are no standards for investment precisely because it is not scientific, nor should it be! Please, no standards!
5b. If there should be a difference, what should the difference be like?
Let rich people lose their money, and don’t bail them out when they do. As for medical malpractice, it seems like juries don’t know what they’re talking about, but I also don’t buy the argument that all doctors are innocent in all malpractice cases. Malpractice cases should be decided by juries of peers (a.k.a. other doctors or malpractice experts) and the payouts of cases shouldn’t be like – 0, 0, 0, 0, 0, 0, 0, 0, 0, $4,000,000 – which is what they are like; payouts should be more like 0, $50,000, 0, $100,000, 0, 0, $50,000, $50,000, 0, 0.Report
Are your numbers supposed to represent all malpractice suits? Or only those that go to court. Because factoring in settlements, I wouldn’t really be surprised if your “should be” is a lot closer to the reality than you indicate.Report
The lawyer I worked for was a malpractice trial specialist. He told me once: “Of every hundred cases that come across my desk, maybe one has merit; of every hundred cases that have merit, maybe one will make it to trial; of every case that makes it to trial, maybe one will win; and all the cases that win win for way more than they’re worth.” It’s kind of like the lottery. There’s little justice in it. A lotta chance. There are random winners and random losers.Report
The ones that go to trial should look like either $0 or $4,000,000, because trials shouuld be for those cases in which there are both a) genuine disputes of significant facts, and b) high enough stakes to make the time and expense of trials worthwhile. Malpractice cases that resolve in the $50,000 – $100,000 range ought to settle before trial, preferably significantly before trial. There are lots of reasons why that might not be the case and we can all have lots of fun pointing fingers at one another and blaming this or that faction for a purportedly sorry state of affairs from the public policy perspective.
As for investments, surely there are some standards we can look to, no? At least minimal ones? I’m a big believer in the business judgment rule, I’m a big believer that a professional who dispenses sound advice that doesn’t work out as was reasonably anticipated has done nothing wrong.
But if you tell me “I’m looking for a low-risk, low-return investment, in things like government and municipal bonds; I fear the volatility of the foreign market,” and I put your money in Flybynight Medium Industrial Concern of Hokkaido, I’ve not followed your instructions and there ought to be some liability for that. There is a degree of subjectivity in evaluating the risk inherent in Flybynight Medium Industrial Concern of Hokkaido, which might have been a perfectly reasonable sort of investment for a different investor — but my simply not following your instructions is a problem and there should be some policing mechanism there. Particularly if Flybynight is actually a risky sort of venture, you’re at minimum breaching your contract with me by way of misrepresentation, a phrase that is starting to skirt close to the word “fraud.”
Nor is it much of an excuse in my mind that you say, “Well, we had a prospectus available of that lettuce mine that you lost money on, so you should have read it and known what you were doing. So sorry the investment didn’t work out.” All prospectuses contain disclosures to the effect of:
The problem is, despite whatever was in the prospectus, you still gave me advice to invest in the lettuce mine, and I acted based on your advice. The information in that prospectus is more complex than I can reasonably be expected to digest and understand, particularly given that there is no choice I can make that is free of risk. Just as I can read the MSDS on a drug which my doctor prescribes, but still sue her if she advises me to take it, so too ought I be able to read a prospectus and still sue my investment advisor for giving me (really) bad advice. The whole reason people hire professionals of any kind is because we represent ourselves to be able to sort through all of the risks, uncertainties, and complexities of a specialized area of knowledge with good judgment, intelligence, and to then autonomously act to advance the best interests of our clients within those complex, uncertain situations.
If investment advisors are professionals, they get to be held to professional standards, and that includes ultimately having to answer malpractice claims, like any other kind of professional service provider.Report
So, do you think not settling out of court should be worth zero if your case does not have 4,000,000 dollars worth of merit, then? Not caving to insurance company and hospital pressure should mean you and your family should get nothing for the doctor’s possible mistake? All or nothing. Totally black or white?Report
I think the should is carrying a lot of weight in the formulation, for all parties involved, not just the plaintiff.Report
Wow, that’s not even close to what I said.
Settling out of court is a decision to select certainty over risk, a compromise instead of a gamble, a decision to end the dispute amongst the parties rather than to insist on strangers deciding your fate.
Settlement is inherently gray because it involves making a calculated decision in the midst of uncertainty. Trials are about black or white, win or lose. Settlements are about compromise, about selecting the least bad reasonable alternative instead of gambling.Report
“Trials are about black or white, win or lose. ”
Why aren’t they about “Justice”?Report
Christopher, they only call it the “Justice Department” to be ironic. This is similar in concept to getting a “not guilty” verdict from a jury. It by no means indicates that you are an “innocent” just that you’ve been found “not guilty” in a court of law.
BTW my working definition of the acronym known as LAW is “Logic Against Wisdom”. Chew on it for awhile, it grows on you. 🙂Report
Clearly.Report
“Most of us middle class wage earners shouldnt dabble in the financial sector.”
This seems to be exactly the problem. For the first part, most of us middle-class wage earners shouldn’t dabble in medicine either. For the second part, why shouldn’t us middle-class wage earners be allowed to participate in society’s main institution for the mediation of property ownership?Report
For the second part, why shouldn’t us middle-class wage earners be allowed to participate in society’s main institution for the mediation of property ownership
Its not shouldnt be allowed. Its more, it is not prudent to do so unless youve got money that you can afford to lose. Do I really need to conduct a prudence 101 course?Report
Are you saying that, in practice, people should not own investment property unless they are already financially secure?
On an unrelated topic, a lot of people are focusing on incidents of actual fraud or other identifiable wrongdoing. Tis seems misguided to me.
The same issue came up in another comment thread here. Individual libertarians seem to focus only on ‘systematic’ wrongdoing, meaning that to be considered unjust, there have to be a large number of incidents that are demonstrably illegal/fraudulent.
What I argued for there is a shift to consideration of ‘systemic’ wrongdoing, meaning that very few individual cases are in violation of the law, but the majority of them clearly favor the interests of one party at the expense of the other.
This seems to be the situation here as well. We can ague all we want about the specifics of the law and whether it is being broken, but the fact is that there is always a sneaking suspicion that banks and bankers are inherently advantaged in these deals. It’s their job to now where the loopholes are. The average investor or homebuyer probably doesn’t have the time or knowledge to accurately evaluate a full contract – or even to pursue legal action if something is mishandled.
My suspicion is that retail investors are systemically denied the opportunity to borrow or invest at fair rates, and when things do go wrong, banks are systemically favored in rescue deals while homeowners and other borrowers are left out in the cold.Report
I think that the term “risk” is one that is misunderstood.
For example, I think that people who just want to invest ought to have an exceptionally diversified portfolio and they should avoid investing in, for example, individual stocks. They should also avoid the futures market.
This is not to say that they should be prevented from investing in such things, of course… but that they are a lot more likely to take a bath than get rich like that baby in those commercials.Report
Are you saying that, in practice, people should not own investment property unless they are already financially secure?
Yes. Of course, as with jaybird, I dont think that they should be prevented from doing so, but I would consider it to be inadvisable.
I dont know that they shouldnt hold any investment property, but the most I would recommend is a basket of low risk low yield stuff like government bonds, gold (the actual stuff, not GLD). But since i am not an investor, I do not know how well these hedge against inflation. Remember, all of this is to protect your nest egg. If you cannot even afford to save for your retirement, then don’t invest. (Of course if you cannot afford to save for your retirement, get a new job or spend less)Report
Murali, now against home ownership! What? don’t look at me like that! Buying a house is JUST as much of an investment as stock market — and it’s MUCH more dicey, as it’s leveraged much more than is legal for stock market accounts.
So, tell me, did you really think people ought to have $10,000 to burn before buying a house? The government certainly disagrees, judging by FHA standardsReport
and it’s MUCH more dicey, as it’s leveraged much more than is legal for stock market accounts.
1. You can always stay at your parent’s place until you get married.
2. Get a loan only if you are certain you can do what it takes to pay it back within a reasonable time frame. (not more than 10 years) And do so only if youre sure of a support network (i.e. your parents, siblings, friends etc) Of course, somtimes people dont have much of a choice. But if you are forced to take risks in one area, find ways to mitigate that risk in other areas by keeping a larger margin of error in your other areas of life. (like maybe getting to work earlier than everyone else and staying longer and working harder than everyone else or maybe allowing yourself fewer luxuries)Report
Incidentally, any financial professional would laugh their ass off at the notion that investing is some kind of anything-goes Wild West deal. They get fined and sued all the time for transgressions both real and perceived.Report
fuck off. Do you even know what a fine runs for an investment? Far less than a penny per dollar.
Do you know what it’s like to have to watch your investments so they don’t get scalped, as the big cheeses bump five percent off just to trigger a short?
Lastly, private small time investors don’t exist anymore because of the current regulatory environment. and the fact that wallstreet is getting more sharky by the minute.
Cant even trust insurance anymore…Report
Language! There’s a commenting policy ’round these parts; please take a moment to review it and a second moment before commenting to make sure that you’re abiding by it.Report
surprisingly, I’d have been much less informative had I been abiding by said policy (and my comment would have referenced more pornography).Report
Calm and cheerful will serve you and your arguements better than this language my dear Kimmie.Report
while that may be true, it still doesn’t pay cold hard cash.Report
“If I go to a doctor and he tells me I need this procedure and it turns it out it ruins my life, it’s perfectly reasonable to blame the doctor”
Is it? Why? You have cancer. Your doctor prescribes chemo. It goes poorly.
In that case, it’s perfectly reasonable to blame the doctor?Report
I think that there’s an implied “because the doctor knew, or should have known, that it was the wrong thing to do” in there.Report
OK. Say I have had three breast implants in the past year, going from B to C to D. I decide I want to go to DDD. The doctor tells me all about the substantial risks. I opt for the surgery because I WANT triple-Ds.
Or, I make $40,000 a year. I live in a $120,000 house. I want a house twice that big. With granite countertops. It costs $450,000. The banker tells me what the monthly nut would be. He tells me what happens if I fail to pay. I sign the papers because I want the house.
In neither case does it strike me as perfectly reasonable to blame anyone but myself if it goes wrong.Report
On the other hand, if the doctor downplays the risks of more surgery because he wants your money, we can recognize that as irresponsible.
A banker says you don’t need to worry about the monthly payments because you can just refinance later, isn’t that the same thing?Report
Isn’t this about implied risk given reliable evidence of probably outcomes? Sometimes doctors make mistakes, sometimes the correct prescription isn’t a remedy for the problem. In the case of the doctor, if things go radically wrong, people aren’t inclined to blame the patient for the outcome. Similarly, bankers – or what I think Jesse is getting at is investment bankers or loan originators – are presenting themselves as making objective decisions and presenting evidence to their clients. But when things go radically wrong, people are inclined to blame the investor all the while fully understanding that the evidence presented may not be objective and may in fact be falsely presented.
Objective advice on investments is one thing. Misleading or uneducated advice on investments is another. Why blame the investor in latter case?Report
“I’m expected to be able to parse a 60-page document” strikes me as a gross exaggeration for rhetorical effect. I simply don’t believe that the key facts about the mortgages were buried deep in the loan papers. If I’m wrong about this, I’d be interested in seeing actual loan papers, but I strongly suspect that the important terms were prominently featured on the front page. In fact, I believe that there are regulations requiring this. I think that borrowers were very much complicit in these loans in ways that the victims of medical malpractice are not.
Also, another relevant difference is that when someone gives you a loan you can’t pay, he gets punished by not getting the money back. No one who’s preaching personal responsibility is saying that people who issued bad loans should be bailed out by taxpayers (well, maybe for macroeconomic reasons, but rewarding irresponsible lending is seen as an undesirable side effect rather than the purpose of the bailouts). And your damages are mitigated by defaulting. We have medical malpractice law because there’s no analogous automatic mechanism to punish bad doctors or mitigate the damages to patients.Report
Note that for the note and deed of trust forms (not filled out) one can go to fannie or freddies web site and down load them by state and read at their leisure, not with some closing agent breathing down their neck so they can get their next appointment in.Report
Lyle, do you dispute the assertion that Countrywide targeted loan origination independently of the qualifications of the borrower for the express purpose of selling them off?
Are you saying that since prospective mortgage holders had the ability to view the details of agreements online that the obligations his obligations as an agent representing the underwriter were circumvented?Report
… bullfucking shit. Do you know what portion of your loan allows you to be charged 3x the normal mortgage amount by the bank who holds your title, for a maximum of a year, without warning?
Just a little line buried in a deep page — look up escrow account on consumerist.Report
IN general since until recently bankers were not licensed and do not have any more in general than a duty to recommend appropriate investments, not a duty to be a fiduciary, one must assume that all folks in financial services are used car sales people in disguise, with no better ethics than the stereotypical used car salesperson. One must know what one wants and demand it and if not offered just say no thanks and walk out the door. Now if you can get in a fiduciary relationship, such as a trust, then the issue is a bit different because only then does the finance persons responsibility approach that of a physician.
A fiduciary relationship does enable the potential equivalent of malpractice in the financial space.Report
Let me modify to say that mortgage brokers were not licensed. The broker is supposed to have passed a series of tests, but explicitly does not have a fiduciary duty to the client. This was discussed during Dodd Frank times, but the industry ran screaming in horror from the client. It would likely reduce retail brokers to order takers only, no recommendations allowed due to the threat of suit. (Note that some brokers already work this way, the low cost ones, where as the traditional ones take their garbage and put in in a pretty package and sell it off.Report
Can we really fault people for not assuming that their bankers were out to screw them over on a deal?
Isn’t something inherently wrong when a commercial relationship starts with the assumption of mistrust?Report
How many people were actually screwed deliberately? As far as I can see the prevailing problem was an excess of optimism that led to brokers recommending loans that would have actually worked out well if their unrealistic assumptions about house prices had proven true.Report
Doctors generally don’t set out to screw over their patients, but thy doesn’t protect them from malpractice suits.Report
I was responding to a suggestion of bad faith specifically.Report
Ditto, JamesK. Evil mortgage-lenders is a great storyline, but it smacks more of a fictional account than non-fiction.Report
Is that not what the old rule of let the buyer beware says? Don’t trust the other guy? Anyway its possible to check in advance to see what the guidelines say you could qualify for. The issue becomes when the gift horse has no teeth left what do you do? In essence know what is typical and be ware of things that appear to good to be true.
(Getting older has convinced me that paranoia in things financial makes sense, it applies from the top to the bottom of the financial services industry. Read F.I.A.S.C.O. on derivatives sales at Morgan Stanley for up market examples. Or see the Goldman package that got it in trouble. If you are willing to screw counterparties at that level,lower levels are a breeze to extract money from.Report
There are ttwo models of banking being discussed, one is the caveat empotr model, the other the fiduciary model.
They both have upsides and downsides- the downside of the caveat emptor model is what I am thinking about currently.
There used to be (pre-1998) a division between merchant banking, like what we do with our checking accounts, and investment banking.
I guess you could say that we should have a wariness about merchant banking, and take responsibility for which checking plan we choose, at which bank. athe downside of that is that people choose poorly, and end up paying extra checking fees and charges from time to time, but aside from a nuisance, its not existential a threat.
If we go around saying thatinvestment banking is a business just like any other, and investment advisors are pretty much like used car salesmen, what impact would that have on small investors? We’ve already seen how big investment houses steer the most favorable deals to their biggest clients, and offer the crappy deals to folks like you and me.
One of the main goals of the New Deal banking regulations was to restore the public’s trust and confidence in the banking system;
At what point, does Charles Schwab become Crazy Charlie’s House of Mega Deals? At what point do the 99% of us decide- strike that- REALIZE that investment in 401K and IRAs is all just a rigged casino game, and we are the pidgeons?
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What would you do if you found out your doctor was pulling a “Goldman-Sachs” on you and had taken out a high value life insurance policy on you, while at the same time telling you how safe and effective the medical procedure is that he has prescribed for you?Report
I don’t know. What would you do if you discovered that your employed physician had a RVU-based contract which awarded him more money based on the number of tests he ordered and procedures that he performed? Or your independent physician made more money for his own practice by doing more tests and procedures?
Wait a second. Turns out that your doctor does have one of these contracts. Your mechanic also gets paid more for doing more work. As does your plumber.
A test like a mammogram has certain risks. So do immunizations. So do… everything. And yet, your physician very likely has a contract that incentivizes him to do more and more of these tests. I guess that’s problematic in a way. But every professional you deal with has certain incentives. Can you think of any way to counter this?
Your baker wants you to buy more donuts. It’s up to you to decide when enough is enough.Report
? Or your independent physician made more money for his own practice by doing more tests and procedures
Incidentally, this (fee for service) coupled with your healthcare costs being paid like a buffet (eat/test as much as you like for a fixed cost) through insurance is why american healthcare costs are so high.Report
Fraud should be punishable regardless of who commits it and in what industry. If a banker says, “I believe this is a great investment that is likely to increase in value over the next 10 years,” while planning to inflate its value so he can short it on the other end, that should be punishable. If a doctor says, “Research indicates this treatment has the greatest chance of success,” while knowing that another cheaper and safer treatment really has a greater chance, that should be punishable.
Mistakes will happen. If these mistakes are unforeseeable, that is the cost of doing business. If the are foreseeable and the consumer has been properly made aware of them but choose to proceed anyway, they should assume the entirety or near entirety of that risk. If a professional deliberately misleads a consumer, they should be liable for the results of that.
Proving intent is difficult. However, many of these actions lead a pretty evident paper trail.
What would also be helpful is a better ability for consumers to share information about these professionals. The internet provides great opportunities to do so. However, I seem to remember doctors pushing for legislation to make illegal websites that rate and evaluate doctors. I don’t know if that came to be and, in my experience, I haven’t really found anything reliable out there. But a consumer based evaluation system coupled with expert oversight (think CNet for doctors and financial professional) would go a long way towards addressing this issue.Report
Yes. Intent is difficult to prove.
Let’s say I am an investment advisor and I have an opinion counter to the conventional wisdom. If people follow my advice and lose, I suppose they could come up with some studies indicating I screwed them over.
What if, in addition to having this counter-intuitive position, I make a hedge against the possiblity that I am wrong? This sounds an awful lot like “shorting on the other end.” It is also a very good idea.
What if my heart surgeon was adamant that I needed heart surgery which would make him a lot of money. What if he told me he was very good at doing this surgery. What if, despite his claims that he was very good, he hedged his bets by arranging to have someone settle any lawsuits I might aim at him in case he made a terrible botch of it? I mean, if he were really as good as he claimed, there would be no need for him to enter into an arrangement like this, correct?
Of course, that arrangement is called malpractice insurance. Not poor-results insurance. Malpractice insurance.Report
Sam-
I don’t think people should be liable for advice that proved to be bad. Mistakes happen. People are wrong. There are few guarantees in life. But advice that they know to be wrong or believe to be much worse than they are indicating? That is fraud as far as I’m concerned. I can’t sell a product that claims to prevent cancer without evidence to support that claim. Should financial advisers be allowed to sell or promote products they tout have an expected rate of return that is impossible or unreasonable to really expect? I realize that this isn’t an apples-to-apples comparison because of the issues of objectivity versus subjectivity and the inherent vagaries of the market, but surely a line can be drawn somewhere, no? Perhaps financial advisers should have to make available their own investment portfolio on request of paying clients…? I’m sure there are unintended consequences to that I am completely ignoring…Report
I think that, to be accurate, the analogy shouldn’t be “physician malpractice” and more like prescribing Vioxx for home use as needed (rather than in a hospital administered in a controlled way.) Technically not unapproved, but subject to high risk, and the risks weren’t made clear to the patient (even though they were, technically, available. If you knew who to ask and what to ask for.)Report
I guess one just has to wonder how aligned one’s interests as a patient are with the interests of the doctor. Same goes for borrower and lender.
We like to assume that the doctor, through good will or malpractice penalties is concerned with doing best by the patient. We don’t assume that the lender is doing best by the borrower.
To the extent that doctors order me unnecessary procedures, I think it’s fair to say I’m minimally responsible. To the degree that lenders don’t make good faith efforts to fully enlighten me as to the consequences of the ultra-long piece of legalese I’m signing, I think I’m also minimally responsible. In almost all cases, the bank has you on the line for something, and bankruptcy (house is still lost) has it’s own ongoing consequences, which while it may allow single individuals to get away with something, it keeps the aggregate behavior of borrowers in line.
Mal-lender penalties would probably go a long way toward both tightening up consumer credit (a good thing) and also giving more benefit of the doubt to people who borrowed in good faith but with out full awareness of just how bad things could become (missed payments/skyrocketing interest rates/continually getting hit with late fees).Report
“To the extent that doctors order me unnecessary procedures, I think it’s fair to
say I’m minimally responsible.”
I don’t think is fair to say at all, given the current environment. Right now, the payment system is set up in such a way that patients pay little or no portion of additional procedures. As such, they typically want and demand every test to be done, regardless of cost. They want their doctor to “do something.” So do lots of other people. A good example of this was the recent dust-up over mammograms. The recommendation, i believe, was for annual test for women over the age of 40. Someone looked at the data and realized 50 might be a better age.
Of course… some women might die because of this. Because the tests do detect cancer in some women prior to 50. Of course, we would catch even more of we moved the number down to 30. Or 15. But at what cost? if you are one of the women saved, it’s a great trade.
Your kid has cancer. There is a $20,000 procedure that has a 5 percent chance of success. Do you want the test done? Do you want your insurance to pay for it?
How many people want their doctor to tell them not to get the mammogram. Or not to get that cancer treatment? How many would sue their doctor of they listened to such advice and the results ended up bad?
Doctors order tons of unnecessary tests to cover their behinds. And to make patients happy.
That is, you are maximally responsible for the unnecessary tests your doctor is ordering. Especially once you agree to them.Report
To the extent that doctors order me unnecessary procedures, I think it’s fair to say I’m minimally responsible.
There are two ways to read this and I don’t know which way you mean it.
1) Procedures that s/he thinks are unnecessary
2) Procedures that turn out to have been unnecessary after the fact
There’s also the problem of assuming a level of competence on the part of the medical profession that isn’t necessarily merited. Now, I’m not saying that doctors suck (though I’m sure that some do) but that there is an expectation on the part of people (perhaps even most people) that medical science can fix anything and that everything is curable given enough attention and/or resources. This has the result of people feeling like if only they had better insurance, more money, doctors like the ones that Bill Gates has access to… their loved one wouldn’t have died.
To make this worse, there are cases on the margin where this is true.Report
Worse still, there seems to be agreement in some quarters that people have a “right” to the same level of care that Bill Gates gets. Anything else is inhumane.
That is the problem with talking about health care in terms of rights. There is an infinite amount of money you can spend. But at the margins, most of that spending is ineffective. But if you are the one with the disease, any amount of spending is justified.
What we need is… death panels. Someone to decide when to say no. Health care rationing. Of course, when the HMOs tried this in the 90s, people screamed bloody murder because Bill Gates was getting more tests than they got.
Something has to give.Report
Sometimes you need a doctor, sometimes a shaman or priest will do. You never need a banker, …buy land, they ain’t making anymore and the price isn’t going down unless the commie-dems screw the whole thing up.Report
Prices can fall if there is a change in policy suddenly reduces the population growth of the US. i.e. suddenly tightening immigration restrictions, deporting illegal immigrants etc will cause land prices to fall.
Also you just had a bubble in property prices bursting. Its not clear that land prices will continue increasing over a medium term. Of course if you have a 50 year time horizon, property becomes a much safer bet. I am not an economist, but current consumption patterns seem to point in that direction. However, it is an open question (at least at my level of inexpertise) as to whether property is merely a hedge against inflation or whether we can peg property prices to growth in GDP.Report
I think everyone is focusing too much on the service aspects of both careers; the real difference between doctors and bankers is the mission of each. A banker exists to make a profit; a doctor to heal the sick. One is inherently self-serving, the other not.
Russell and I each wrote recently about the movement to stop inducing early births. The movement has everything to do with patient health; the old way was more profitable. What’s more, inducing early births led to complications, which led to more items a doctor could bill his patients for over time. The movement to eliminate non-medicaly necessary early birth has not been brought about by lawsuits, of government fines, or really anything that was damaging doctors financially. It is being done because it is better for the patient.
Bankers would not make a decision to improve the lives of their clients at the expense of their own profits. In fact, if they did they would be summarily fired – and we would all agree that this was proper and correct.
That is the difference between doctors and bankers.
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Focusing on “intentions” is a quick way to get all weedy.Report
“A banker exists to make a profit; a doctor to heal the sick. One is inherently
self-serving, the other not.”
This oversimplifies thigns a great deal. Many doctors work for for-profit hospitals or physician groups. And you will notice that many doctors… make a living being doctors. Some of them do things like refusing to serve Medicare patients because it does not fit their business model.
Yes. The oath. But bankers have various versions of the same thing. I do happen to know bankers who have held off on foreclosures, or extended a loan to someone who might have been a risk on paper but needed a break. Etc.
The idea that one of these professions is self-serving while the other is selfless,in my experience, explains exactly nothing about the way the two industries actually operate.Report
I like and endorse this comment.Report
PS: Ever see one of those reality TV shows featuring plastic surgeons who operate on rich Hollywood types? You think selflessness and service is what’s motivating these guys?
Ever been to a small-town bank? You think the bottom line is the only thing that motivates these folks?Report
See? Weedy.
The first thing I thought of was one of my more political classroom arguments where it was pointed out that at least Communism cares about people while Capitalism doesn’t.
Insofar as it is true, I do not see how it is relevant. Insofar as it is false, it seems downright vicious.Report
1. Is there in practice a difference between the doctor-patient relationship and the banker-client relationship?
Most definitely yes.
2. If so, what? Is it one merely in degree or is it a more qualitative difference?
It’s more than degree, though I see the similarities. The difference between your health/life and your financial assets are way beyond trivial, however and makes it a difference in kind. You can always earn more money but you’re not coming back from the dead.
3. What is the nature of the power differentials in these relationships anyway?
Customers of both doctors and bankers put extremely important things in their hands Most people have little choice but to trust their judgement and have little real ability to discern if the service is any good or even properly assess the risk/reward balance with any courses of actions recommended.
4. Should there, be a difference?
I don’t know how one would eliminate the gap. It’s really not a reasonable suggestion that people become high-level experts in every field they need to come into contact with. Specialization and trust are some of the core features of the modern capitalist economy – I can focus on becoming a great professional in my industry and spend my free time raising my daughter and getting really good at TF2 because I don’t have to grow my food, practice medicine for the family, prepare all my legal paperwork or build and repair my possessions.
5b. If there should be a difference, what should the difference be like?
The difference should be one where we can reasonably trust them to not swindle or take advantage of their customers lack of expertise. I’ve long believed we should have bankers and financial advisers that have fiduciary obligations to their customers – ones where customers can be assured that they are getting honest assesments of the services offered. I don’t think everyone in finance should be required to participate but to have a regulated class of service providers that have a banking equivalent to the Hippocratic Oath with real liability for hurtful service would be a significant improvement.Report