Gruver’s article on the OPM addiction reminded much of the game of monopoly. The whole time I was reading, I could only think of how exciting and fun it was. But in the end the fun part of the game is taking the risks. It’s exciting to take on a big mortgage and honestly not know whether you will be able to pay it off (as you can tell I’m not very good at monopoly because of this). This is not the case with real life, and because of this I agree with Gruver.
The problems with OPM arise in the risk profile. The people making the decisions seem to have less personal invested and therefore have little self-imposed restrictions. Private ownership might have been a better option because the risks then were born by participants and the risk tolerance was restrained. Now it seems that a combination of complex financial instruments, massive corporations, creative accounting, and increased leverage have the public being lost and confused.
I agree with Gruver’s views that using other people’s money does create additional complications; however, I’m not sure eliminating public ownership is the best approach. I think regulation has helped a lot to keep decision makers true to the people whose money they are using. We’ve learned a lot from financial crisis like Enron, AIG, and the housing bubble. For the most, I’d say the public is starting to ask more questions. Before Enron’s fall, people didn’t feel comfortable questioning their complex business plan and strange financial reporting. Now, people realize that if they don’t understand something it is probably because there is something wrong. A business should be able to fully, confidently, and accurately explain why things are the way they are (especially to the people whose money is at stake).