Sean Olender

When Banks Try to Defend Credit Cards

Yes, Mr. Salmon delivers a surprisingly politically even handed analysis of these issues. Congratulations.

As for the argument from "six" about "consumers" ought to look out for themselves is so irritatingly stupid that you have to wonder if this comment is from an ideologue, or some PR hack on the payroll of the American Bankers Association.

Corporations are so enormous and wield such legal power, retain the top talent in law, psychology, psycho-marketing, media, etc. They shape the environment. You can't negotiate crap with them. You take it as it is or leave. They design the maze and we're the rats. "Just don't play in the maze then." Oh really? Well, how do you get out of the maze then? I mean can you please show me where the exit is? Right. I thought so.

Oh, yes, I know, the "consumer" is free to refuse and then "free enterprise" will come up with an alternative that these "sophisticated consumers" with "perfect knowledge" can then patronize. Be real, man.

The fact is that people are overworked and not terribly too bright about the hypertechnical nature of their exploitation. I bet if I quizzed you on your real liability and obligations under your credit card contracts, you'd score less than a 70% in your understanding of what your rights and liabilities are. The agreements are complicated on purpose and the idea that one party, the bank, can unilaterally change the contract terms at any time, but the consumer can't, is an example of how ridiculous this is.

Many suggest the same "caveat emptor" should apply to food and chemicals. Consumers should just buy giant chemical toxicity kits to analyze the carcinogenicity of the chemicals in their food, water and consumer products. Then the savvy consumer can make decisions about which products to use and which not and this will result in a market decision that is equivalent to freedom. If most people would rather a 20% discount on their goods in exchange for a 50% lifetime risk of being diagnosed with cancer (for women it is 33%), then the market should be free to choose that.

But the problem with contracts and chemicals and all manner of other things is that you're lucky to find 1 in 500 people who really understands what's going on and then it's only in their field. I have a friend who is a toxicologist with a Ph.D. and highly respected in his field, but I don't doubt that he'd be clueless as to the carcinogenicity of the consumer products in his house. It's outside of his narrow area of expertise.

So maybe we can set up systems where all Americans will get an MBA and a Ph.D. in chemistry (just for starters) so that they can be informed and play on a level field with the corporations that tap very talented experts to design products and to design the marketing campaigns that often distract consumers from the truth of what they are getting into. We can encourage all Americans to be rich so that they can have very talented lawyers on retainer to provide them with advice when they sign all manner of contracts and engage in all sorts of binding relations with large companies.

Some of the philosophical underpinnings of capitalist theory like the rational consumer, perfect information, etc. need to be assisted through government regulation (from a less corrupt government than the one we have, because we're still not getting even a discussion of meaningful regulation, nor a single big conviction in any of the mortgage fraud Wall Street horrors - it's like a bank junta took over the government) lest the entire system be so discredited that it eventually fails. Robert Schiller is doing some things with behavioral economics theories that are a promising way to avoid pushing capitalism down the path of an extremist ideology that eventually bears such scant relationship to what is real and obvious to everyone that it is dismissed forever. That risk is deeper and more persistent than many pushing the most extreme versions of the theory would like.