What started as a “Ha, do you libertarians endorse this?” dare by Mike of Rortybomb has turned into a somewhat interesting discussion between him and Megan McArdle about to what extent it’s possible to protect people who are not good at understanding complex financial products (the elderly, or people who just aren’t good at understanding complicated service agreements) from being victimized by banks without in the process hurting the people you’re trying to help. This as the new credit card legislation is going into effect, trying to crack down on banks which raise interest rates quickly if you’re late paying, have hidden fees, or move due dates around (theoretically in an attempt to keep people from paying on time.)
Mike suggests that banks should be required to offer a “plain vanilla option” of products such as credit cards or checking accounts.
And that solution would be mandating financial services to provide Vanilla Option financial products. Boring, low-reward trap-fee products you’d probably have to pay a yearly fee for.
So much of our financial services are predicated on tricks and traps but also have a lot of benefits. You get free checking, but if you overdraft you lose more than you gained. Now with a vanilla option, you could pay more upfront to not take the risk of losing later. This is banking how it used to be, boring. And this is exactly the kind of product that people with weak cognition would want to have available. Someone approaching older age, but before getting there, could opt for the “extra boring” financial services package. People buy renter’s insurance; some might view a yearly-fee on their checking account or credit card as a “trap insurance.”
Megan doesn’t think the idea would be very successful: Continue Reading
[Updates at the bottom of this article]
Though long (my solution was to download the MP3 and listen to it in the background throughout the day) this BloggingHeads discussion between Megan McArdle of the The Atlantic (libertarian) and author Michelle Goldberg (left-ish) about protesters carrying guns at townhall meetings was very interesting. Michelle takes the position (which I imagine we’ve all heard somewhere) that these open carry protesters are trying to exert political intimidation through threat of violence and are indeed likely to commit violence. Megan explains why she thinks it much more likely that they’re simply gun nuts trying to make a point about 2nd Amendment rights. (In a way, incidentally, which neither McArdle nor I support, but still almost certainly not in fact a violent threat to the nation with whose brush the entire right side of the political spectrum can be tarred by association.)
Megan McArdle links to a Financial Times piece by Clive Cook which includes the following quote:
The gap between the right of the Republican party, which is providing the angriest critics of the reforms, and the left of the Democratic party, which thinks the proposals too timid, is unbridgeable. These groups do not merely disagree. They despise each other. Their differences are only secondarily about policy. They hold each other’s values in contempt.
These snarling extremes are nonetheless somewhat alike. They have an equal and opposite penchant for conspiracy theories. Almost a third of Republicans, according to a recent poll, believe the unsupported story that Mr Obama was not born in the US (in which case he would be disqualified from serving as president). But remember that more than a third of Democrats subscribe to the even more outlandish theory that the Bush administration knew about the attacks of September 2001 in advance.
One of the annoying qualities of national debate over the last several months (which seems to increase as Democrats become more desperate about their flagship legislation) is the attempt to find the very looniest possible elements of the right and portray them as being mainstream. Continue Reading