A Battle For the Ages

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Paved With Good Intentions

Heralded as a win for the consumer, the new federal rules governing credit cards will no doubt have many unintended consequences. Lenders have already begun to raise introductory rates. With other rates capped, it stands to reason that yearly fees for more consumers will be implemented or increased to offset risk. Those who are deemed less creditworthy can certainly expect to have less credit extended in their direction. I would think the individual would like to make the determination if he is charged 25% or unable to get credit at all, not to have that determination made for him. This, along with extra regulation on payday lenders, leads me to believe more people will be driven to even more unscrupulous lenders - perhaps the local loanshark can still fulfill their needs.

Covered here at mises.org:

But our governments — instead of viewing the supposed consumer crisis in terms of the question of why such potential card holders are, in fact, a risk, or from the reference point of moral hazard (via Federal Reserve protection) — have become duped into thinking that they can change market fundamentals.

The fact remains that deserving creditors demand to be rewarded for such reliability, and competition (via low interest rates, cash-back rewards, etc.) is the vehicle that delivers these rewards. Likewise, uncreditworthy recipients carry with them a liability that can only be compensated by higher yearly fees or rates of interest.

There is no hidden racial agenda or vast conspiracy on the behalf of the bourgeoisie. There are simply lenders and borrowers engaging in what they deem to be mutually beneficial transactions. Whether these transactions are, in actuality, beneficial or not is not a political question at all. Instead, it is an educational question, and a function of time.

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On Haiti

- From mises.org, some thoughts on charity and aid: Helping Haiti.

Those folks need our charity. Consider finding a suitable private organization and give, if only a little. Rest assured that charity and liberty go together. And realizing a psychic profit through helping others does add value to your world.

- A concise history of Haiti and some insight into their crushing poverty, from Degrees of Freedom:

Degrees of Freedom: A Brief History Of Haiti: Politics, Philosophy and Economics from a libertarian point of view.

- I also recall a chapter in Jared Diamond's Collapse that covered Haiti and the Dominican Republic. The picture above clearly shows the border between the two nations, and highlights the deforestation that exacerbates poverty and intensifies devastation from natural disasters.

From Collapse:

The Dominican Republic is also a developing country sharing Haiti's problems, but it is more developed and the problems are less acute, per capita income is five times higher, and the population density and population growth rates are lower. For the past 38 years the Dominican Republic has been at least nominally a democracy without any military coup, and with some presidential elections from 1978 onwards resulting in the defeat of the incumbent and the inauguration of a challenger, along with others marred by fraud and intimidation. Within the booming economy, industries earning foreign exchange include an iron and nickel mine, until recently a gold mine, and formerly a bauxite mine; industrial free trade zones that employ 200,000 workers and export overseas; agricultural exports that include coffee, cacao, tobacco, cigars, fresh flowers, and avocados (the Dominican Republic is the world's third largest exporter of avocados); telecommunications; and a large tourist industry. Several dozen dams generate hydroelectric power. As American sports fans know, the Dominican Republic also produces and exports great baseball players.

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