Saturday, May 9, 2009

Big Credit and Big Government

"Send me a bill that stops credit card companies from taking advantage of consumers, and do it by month's end, President Barack Obama is demanding of Congress" - AP

Yet again, the US Government is regulating voluntary actions between individuals through the use of coercive force. And, yet again, it is doing so under the false and self-defeating pretenses of "protection" and "fairness." Obama has taken it upon himself to protect every American by relinquishing them of their adult responsibilities and is in fact punishing credit providers for an offense his own organization is much more guilty of committing.

The purpose of Obama's regulation du jour is to prevent Americans from "being scammed" or "tricked" by manipulative credit card companies (I'm still awaiting the imminent moniker "Big Credit" to spew out of some populist Senator's mouth). Surely, nobody wants to be tricked, and for this reason it is likely Obama's scheme will have substantial support. After all, who wouldn't want to be absolved of their obligations to fulfill burdensome credit card contracts?

Let me first say this: If the credit card companies are actually tricking or manipulating their customers, then let the victims bring suit against these fraudulent actions. This is the way a lawful society works... upon breach of a law, the victim has the right to claim reparation.

Instead, Obama - with the full faith and encouragement of the US population, no doubt - is deciding that adults are not capable of being responsible for themselves because they have the possibility of misreading their mail and misunderstanding advertisements. I wonder if this will become a precedent for new avenues of Government intervention. I wonder if the same argument will soon be used to legislate peoples' mortgage contracts (given the recent issues associated with mortgage repayment). I wonder if Obama will be surprised when these policies make debt more expensive for the consumer (and the lender) and thus more burdensome and costly for society in aggregate.

Obama continues...
"Americans know that they have a responsibility to live within their means and pay what they owe, but they also have a right to not get ripped off by the sudden rate hikes, unfair penalties, and hidden fees that have become all too common."

From this statement, Obama clearly wants to uphold the illusion of personal responsibility while in the very same breath demolishing the concept completely.

Further Obama states...
"You shouldn't have to fear that any new credit card is going to come with strings attached..."

What is an "attached string?" Could that refer to a "term" or a "condition?"
Translation: you shouldn't have to understand finance in order to obtain it.

Apparently, Obama has now mandated that Americans have the right to avoid "unfair penalties." Of course, one might consider that having 40% of his wealth seized from him by the IRS is an unfair penalty on his earned income, but it is unlikely Obama will include that obvious injustice within the scope of this new legislation.

"nor should you need a magnifying class and a reference book to read a credit card application."

How can Obama bash credit card companies for their complicated contracts when the US Tax Code is by far the most convoluted document in all of existence (is this an exaggeration?). Most people can understand credit card contracts if they actually read them. Most people cannot understand the Tax Code, if for no other reason than that its intricacies have required volumes of books to detail and its practice has become a full-time profession for thousands of people throughout the country. An entire industry has sprung up to help people navigate the tax code (or are they just profiteering?). The same cannot be said of credit card contracts. Now, it is true that these contracts may require some "thinking," but if one can't understand them, one doesn't have to sign up for the card in the first place. The same cannot be said of the tax code.

Obama is thus going to punish credit card companies for a crime that his own organization is most guilty of committing. The outlawing of "sudden rate hikes, unfair penalties, and hidden fees," is almost criminally ironic, for this description is utterly more applicable to US tax policy.

What is the real scam? Who is a bigger threat to Americans- credit card companies or the Internal Revenue Service? Who siphons off more money? Who provides a better service for the debts? Whose policy is easier to understand? Who's subjected to the competitive marketplace and who hides behind a coercive monopoly? Most importantly, whose service is voluntary?

All Americans are coercively forced to pay income taxes, subjected perpetually to sudden rate hikes, unfair penalties, and hidden fees. All Americans have the choice to take advantage of debt from credit card companies, subjected only to rate hikes, penalties, and fees which were stipulated upfront in their contracts (failing this the individual is entitled to sue).

So, really, is Obama’s latest cry for change directed at the right thing?

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