It’s relevant if you’re going to use it justify your claim that libertarianism is “morally bankrupt”. Perhaps you don’t realize how offensive that statement can be, but it is, and I think you should retract it.
And I am criticizing the reasoning that leads to the hypothetical, which asks “How would forbidding banks to send mail affec the people who have no clue?”
I personally think a much better question to ask would be: “How would it affect those without a clue if we actually allowed their clueless life to be as difficult as it should be?”
If you prevent banks from sending out mail to the clueless, how about Franklin Mint, and 95% of the junkmail you get? I’m not cryihg for the consumers, since credit cards are one place where competition seems to work. All the cards I use give cash back and have no annual fees, and since I never carry a balance, I have no complaints. And I wish I had a card in college, even 35 years ago when they weren’t as prevalent. Would have made my life much easier. It is better for kids to learn the lesson when they don’t have much rather than when they have a family.
And there is protection for the idiot consumer in bankruptcy laws. Sure, they are going to have a hard time getting credit, but that is appropriate, right?
And I’m not crying for the banks either. They have very sophisticated models about default rates, and they set their lending policies accordingly. If they didn’t want any customers to default they could make that happen, but their volume would be down. Some have behavioral economic models that tell exactly when to cut off credit based on spending patterns. So you can spare your tears, msmith537 - no poor CEO is going to bed hungry because of consumers defaulting.
Robert D. Manning has written some interesting articles on the effects of credit card debt. Here’s one (Baltimore Sun article, pdf):
Since then, debt’s gone up, bankruptcies have continued to climb. Obviously, as a society, we’re doing something wrong with how we handle debt. Sure, blame the consumer for most of it: nobody put a gun to your head and made you buy stuff, after all. But I think there are also some factors here that aren’t the consumer’s fault:
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Basics such as housing, healthcare, cars, and education have become much more costly even as prices for lots of consumer goods have dropped. A lot of people are having more trouble paying for the big-ticket items, not just running up the bills on spending sprees at Toys R Us.
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Credit companies, as Manning notes, have started marketing more aggressively to groups that tend to be bad credit risks, and everybody else pays for it.
If the only problem really is personal irresponsibility on the part of consumers, then why are we seeing such an increase in debt and bankruptcy? Does consumer behavior spontaneously change that much over the course of a few years? Is there just a wave of financial irresponsibility going round? I suppose it’s possible, but I think we also need to check for institutional causes.
Voyager: * It is better for kids to learn the lesson when they don’t have much rather than when they have a family.*
Not necessarily: having trashed your credit at the outset of your career can blight a lot of your prospects. As Manning noted in another article,
Do so many people really need to learn the lesson of financial responsibility through crippling debt and ruined credit? Yes, we’ve all been extravagant at times and felt the pinch later and learned a lesson from it, but does it need to be to the tune of tens or hundreds of thousands of dollars? How bad does a problem like this have to get before we stop shrugging it off as sheer individual slackerism and start asking questions about possible connections to policy? Many people here seem to think it’s not bad enough now to trigger those questions; okay then, how bad would it have to get?
Geez…We’re sensitive! I don’t think I’ve asked anyone to retract even worse statements about “liberalism”.
But okay, how about I say that was over the top and we will substitute “misguided” for “morally bankrupt”? (I think I just liked the “bankruptcy” theme and sort of went with it.)
To a certain extent, we can. A simple minimum font size on legally binding paperwork would do wonders – credit card companies would have to either cut out a lot of the Old High Martian or else send out solicitations the size of a catalog.
I’m a libertarian, and have no problem whatsoever with such a regulation – at a certain point, obfuscation becomes fraud.
I interpret Neurotik’s comment as a (justified) attack on political con artists who selectively invoke libertarian rhetoric about “personal responsibility” so that it applies to other people’s responsibilities (e.g. to pay your credit card bill) but not to one’s own (e.g. to clearly and honestly set forth the terms one offers).
I have answered a special case of that question (why “call this number, read off this code key, get a card with no further ado” should be prohibited) earlier in the thread.
You mean this one?
I assume you mean a card that contains your name and address, and a call number? I haven’t seen such an offer. What do they ask you when you call the number?
are credit card companies to blame for consumer debt?
Not always. In fact I know some people who are making a profit and free vacations by using credit cards. Here is the scenario:
1- You get yourself 50 or more credit cards, making sure you do not pay any annual fee on any of them. If the CCC sends you a bill for an annual fee, simply call them and ask them to waive the fee. They generally do, except if they offer airline mile for every dollar charged.
2- You find trusted friends who have started a business, and they need to finance for 90 – 180 days their inventory purchases, before they turn around and sell their value-added goods. If they go to the bank, they have to pay 10% on short term business loan, requiring collateral.
3- You make a deal with your friend that he would borrow from you at 6%, saving him 4% compared to him going to the bank. Rather than asking for collateral, you ask to see the his customer’s purchase order (PO) and the quote for the goods from his supplier. If you want to reduce your risk, you independently check both the customer PO and the supplier quote.
4- Next, you give your friend the credit card number of those cards that have a 0% interest on purchases for the next 180 days with no transaction fees.
5- Your friend uses your credit card to purchase the goods and sends you an IOU. Meanwhile, you accumulate the airline mileage on those purchases.
6- Prior to expiry of the 180 days 0% offer, your friend sends you a check for the amount charged to the credit card + 6% interest.
7- You turn around and pay the CCC the balance before they hit you with any interest.
8- Voila, You just made some money off the CCC and you got the airline mileage. Now. Keep on repeating this several times a year with several friends. You have a win-win situation with your friend – all at the cost to the Credit Card Companies.
Ahh. The sweet revenge…
JM: It’s relevant if you’re going to use it justify your claim that libertarianism is “morally bankrupt”. Perhaps you don’t realize how offensive that statement can be, but it is, and I think you should retract it.
Sorry to continue the hijack, but are you sure you really mean that it’s offensive to say such a thing about libertarianism? Because I’d have to say that I consider hard-core libertarianism more or less “morally bankrupt” myself. And that’s solely on the grounds that it fails to recognize any moral responsibilities in society other than the “beating and cheating” no-nos (what libertarians call “force or fraud”).
IMO, members of a society have a crucial responsibility to cooperate with and care for one another (“promote the general welfare”) beyond simply refraining from outright beating and cheating one another. A political philosophy that doesn’t acknowledge such a responsibility is, if not entirely morally bankrupt, at least morally dirt-poor.
Note that I’m not calling individual libertarians morally bankrupt. All the libertarians I know seem to agree that people should help one another; they just don’t want anything in the government to require it. To my thinking, that just means that they want to build a moral society with a morally bankrupt political philosophy, and I don’t think it would work. But that’s certainly not a criticism of the morals of the libertarians who hold such views.
I hope I haven’t offended you, and I certainly don’t intend to, but that really is pretty much what I think about it: sorry if it’s offensive. Anyway, you and jshore now seem to agree that whether or not libertarianism can be called “morally bankrupt”, nothing in the libertarian position on bankruptcy laws makes it so, which is all that’s really relevant to this thread, I guess.
Nobody under the age of 65 seems to understand the concept of the time value of money! Teenagers sign up for credit cards, and immediately are caught in a trap…and the banks LOVE it!
Or take the (booming) “Rent-to-Own” business…imagine, you can have new furniture, appliances, TVs.etc., for ONLY $25.00/week! And, after 3 years of payments, you OWN the stuff!
What these outfits do is effectively replace the old-time loan sharks…these people wind up paying interest rates as high as 36%/annum…what a way to make money!
The catch is that getting a large number of credit cards turns your credit rating into a pumpkin (even if you don’t use them).
The problem with your argument is that it fails to distinguish between the society and the state.
They don’t want to build a society with a political philosophy any more than they want to drive nails with a screwdriver. The two fields of human organization work in fundamentally different ways, and need fundamentally different approaches.
The ones I keep getting (and shredding and sending back in the postpaid envelopes) have a number with instructions to call and read off the “invitation code” (under whatever name) to have the card that is WAITING FOR YOU conveniently MAILED TO YOUR DOOR.
I strongly resent the fact that these companies have, in effect, created a one-stop-shopping package with which to steal my identity and befoul my good credit. :mad:
I think, according to some posts here, that it is your fault that you are receiving these invitations. If you had enough personal responsibility to ruin your credit rating and live under a bridge, instead of being a recklessly financially responsible individual who has the poor judgment to live in a house with a mailbox, you wouldn’t be at risk for identity theft from these mailings.
It is only your fault if someone gets their hands on one of these mailings and uses it to run up charges in your name. Corporations cannot possibly be responsible for who gets their hands on these fantastic offers for low, low introductory rates, because all they are doing is using the US Post Office to send out millions of these great deals. If you had one shred of personal responsibility, you would hire a lawyer to write to every single credit card company and demand that you be removed from their databases for future incredible offers for credit lines of up to $100,000.
The bottom line is that large corporations cannot possibly be wrong in their marketing schemes. It’s all the fault of the little people. Like you. Stop blaming the innocent bankers for your problems.
Oh yeah, and it is also your fault that you receive spam.
Yes, I am being sarcastic.
I probably flew off the handle over that partially because it was you who posted it. You are one of the more honest debaters around here, and I didn’t think it was like you to post something so dismissive. We generally take differrent sides in the debates, and I enjoy debating with you, but if you start off with the assumption that “libertarianism is morally bankrupt”, what’s the point? You’ve already dismissed the point of view of lots of posters here who call themselves libertarians.
It’s certainly true that libertarian philosophy is based on a different set of moral principles than your political philosophy, but it’s not based on “no morality”.
Anyway, I won’t continue this hijack.
I’ve read that the more cards you have that you don’t use, the better you look on your credit report. Having a bunch of credit available to you that you don’t touch shows that you have self control and you’re stable, which means you’d be a good risk for a major loan.
I imagine 50 cards would be a bad idea but would 10 or so really be all that unusual?
If what I’ve read is wrong, please correct me. I’m no economist.
Please read the useful link about your FICO score I posted earlier.
In order to approve you for a credit card, a company will make inquiries into your credit history. Some inquiries are “soft” and others are “hard”, depending on how the credit card company conducts its credit analysis.
While open lines of credit are a good thing, lots of soft and hard inquiries can be very bad. If your credit history received 50 or even 10 inquiries over the course of a year or three, this would have an adverse affect on your FICO score. The magnitude of the effect is dependent on many other factors.
I think the problem is that many of you see the contract between a consumer and a credit card company as an “old fashioned” agreement, i.e. Farmer Jones lends Farmer Petersen 500 pounds.
The reality is somewhat different. In one side you have a consumer with little or no power of decission about the contract he is about to sign. In most cases the only decissions he makes are minimal or else the only freedom he has is to sign or not sign.
On the other side we have a multimillion (at least) corporation, with an army of lawyers and all the power in it’s side. If you add to this that every other company operates in this way, you´ll realize that the consumer has little or no freedom.-
Everyone in this board has signed one of this contracts most of them are already printed and has blank spaces for your personal data and your signature. Everything else is regulated by the company.
The solution? it’s really simple. The corporations can regulate by themselves the contracts to be signed BUT in the event of a dispute that contract will be interpreted against them. That means that if there is an obscure clause it will be interpreted in favour of the consumer, if a clause, (without adecuate compensation) limits the rights of the consumer that clause it’s considered to be not written, etc.-
In that way corporations are obliged to write the contracts in the simplest term possible. Of course this is only one step but a necessary one.-
Another possible way to stop the abuse is litigation. Not of those consumers that can’t pay their debts but of those who pay and still have huge interest rates. Why do they have to pay for the mistakes of the credit companies?
Another way is state intervention. I belive, to a certain point, in freedom of markets but when companies and consumers do not behave responsably the state has the obligation to intervene.-