A letter to the editor in this morning’s Washington Post reminds us that when government treats citizens as though they’re incapable of making basic decisions about their own lives, you get plenty of citizens who decide they can’t be expected to make basic decisions about their own lives:
In his March 12 letter, Edward Yingling of the American Bankers Association asserted that only a “small minority” of Americans are unable to manage their credit card debt. [….]The federal government seems mostly to take the position of “let the buyer beware.” So although lawmakers are busy legislating trans fat and cigarette smoke, they are doing nothing to prevent credit card companies from ruining a “small minority” of lives.
People need government help to manage their health, but apparently should be able to manage their debt wisely all by themselves. Go figure.
A stellar combination of reductio creep and save me from myself syndrome.
3 responses so far ↓
1 Lindsay Beyerstein // Mar 17, 2007 at 9:54 pm
The real problem is that American credit card companies aren’t expected to take their lumps in the market! These are multi-billion dollar corporations that are allowed to dangle temporarily free money in front of the average American. That’s fine if it’s a real business risk. Loaning money should be like any other investment: high return, high risk.
If I buy shares in a company and the company goes bust, I’m out the money. Nobody’s going to cry over my shoulder or demand my money back. It’s understood that I gambled and lost. Whereas, if a credit card company takes stupid risks with its money, it’s understood that the state will force ordinary Americans to pay for the rest of their lives and call it “personal responsibility.”
In countries like Canada and Japan, credit is relatively expensive, and credit default rates are very low. That’s partly because there are reasonable bankruptcy laws that will cause a credit card company lose a little money if someone gets in so far over their head that they declare bankruptcy. It’s not like Canadian credit companies are going belly-up. Far from it. High interest rates and low default rates still equal handsome profits, perhaps especially because bankruptcy laws give rational actors the incentive not to lend individuals more than they can realistically pay back.
2 Ryan // Mar 18, 2007 at 5:11 am
Lindsay,
AFAIK, there’s nothing stopping you from negotiating a loan with terms that allow you to legally default under X conditions. What’s unclear to me is why you want to stop me from securing a loan with more stringent default requirements. If you’re going to make this sort of argument, you need to explain what justifies destroying the surplus created by my bank transactions.
3 c // Mar 18, 2007 at 7:18 pm
Hey, just so you know, the term “parentalism” has already been taken; cf., Stephen G. Gilles, On Educating Children: A Parentalist Manifesto, 63 U. CHI. L. REV. 937, 995 & n.i86 (1996)