To an individualist, and thereby a radical advocate of political and economic liberty, there are few things uglier than the spectacle of the executives of leading credit card companies being called into a meeting with the President of the United States for the moral equivalent of a trip to the Principal’s office. Like misbehaved children they received a scolding and instructions for comporting themselves better in the future. Perhaps this thinly veiled threat was accompanied by an actual “or else”.
What was this populist show supposed to accomplish? With the help of the media the Great Man was congratulated for taking on the “gouging” credit card companies and admonishing them to mend their evil ways. They are an easy target. Most of us would find the high interest rates, various fees and other conditions of credit card contracts onerous if not incomprehensible. Leaving aside for the moment that there exist practical reasons for these features, having to do with the much wider use of consumer credit across the strata of creditworthiness of the borrowers, the only reason for this show was politics. Above all other things the view that the government can actually control or run the economy has been reinforced among the ignorant populace. The stupid and complicit media unwittingly reinforces that erroneous view.
If the threat to the credit card companies is that interest rate caps may be set it will be instructive to remember that this would be a price control. The one thing that price controls accomplish most effectively is to guarantee a shortage of that which is being supplied. In this case it would translate into fewer people qualifying for credit cards and/or the introduction of new charges and conditions.
Like the Grand Inquisitor persecuting “heretics” the US has its own “Torquebama” to confront the modern heretics (private enterprise) who do not toe the line of collectivism and the omnipotent state.
Copyright 2009 Edward Podritske