The dark side of knowledge

We heap praises on our knowledge economy but we must not forget that in some circumstances not knowing might be blissful for the society, or at least easier for it to handle. Let me briefly illustrate what I mean by referring to health insurance and credits. 

If we all share the same health insurance plan then we do all, in solidarity, share in our respective good or bad health. But if insurance companies are allowed to discriminate between us then little by little we will be divided in many groups depending on our health prospects, as determined by what we could call the health-rating agencies. 

When the health market limits itself to segment for instance between smoking and not smoking this does not have any serious implications since smoking is (supposedly) a voluntary decision and so the deterrent effect of having to pay a higher insurance premium because you smoke might not be that bad. Of course the volunteerism argument can also become exaggerated as currently there are insurance companies that offer even hefty discounts depending on how many hours you work out at the gym. 

But, if the health insures would be allowed to use all those genetically mapping discoveries that are just around the corner, then we might dangerously end up with some citizens insurable at very low rates, some at higher and some not insurable at all. And the question we will then have to answer as a society, is how to counteract the logical desperation of the latter. 

Something of the same happens with credits, like mortgages. It used to be that depending on your income, as a potential home buyer you could classify for more or less of borrowings, but the interest rate to be paid on the loan did not differ much or even anything at all between a “good” borrower and a “not so good” one. Not any longer. The knowledge economy now classifies the market in many different type of credit risks and although this is has been sold as something that creates more opportunities for poor buyers it might not necessarily be so. 

A thousand dollars paid each month servicing a mortgage during 15 years, when discounted at 11 percent per year, because the borrower is deemed “risky”, is worth 88.000 dollars today. Exactly the same payments, discounted at only 6 percent because the borrower is deemed creditworthy, are worth 118.500…35 percent more! And here lies one of the real problems of the subprime debtors… not only do they have less money, but the little money they have is also worth less. 

Now add to the above that the credit ratings might not even reflect correctly the repayment capacity of the borrowers and we can see how as a society we might be drawn into a totally unsustainable structure. 

And so what are we to do about this fact that knowledge in some cases works as a regressive tax in our society? Are we better off going back into obscurity? Of course not! What we need to do though is to arm us with a lot more with the humility we need to be able to recognize that handling all this new found knowledge requires a lot of wisdom…of that sort that can not easily be purchased in any databank or by accessing any experts with a PhD.

PS. Human genetics made inhuman
PS. If knowledge suffices then wisdom is worthless