Friday, August 04, 2006

People forget it is also a good thing

This Story, about a documentary on debt levels in America, kind of annoys me. Don't get me wrong, I think that there are a lot of people out there that use too much credit and screw up their financial well-being for decades because they use too much of the credit available to them. Hell, I'm spending huge chunks of time at a college campus, where free credit cards are easier to get than free condoms. I just don't like the backlash it is creating. Basically, people are looking at this simplisticly, which is never a good thing:

Problem: people are getting themselves into debt and can't get out because they are offered too much credit too easily
Solution: crack down and defame the people offering the credit

Um, no. From the pamphlets and speaches and political messages that get spouted about this issue, you would think credit cards are worse for your health than cigarrettes, pollution, alcohol, and genocide combined. And yes, bankruptcy, heavy debt loads, and lack of savings are weighing down the country (can't wait to pay for my parent's generation's retirement once I get out from under my student loans), but restricting who can and cannot get credit is 1) stupid and 2) not American. Legislate who gets credit? How is that constitutional? If a company views somebody as being worthy of a credit line, that should be extended to them, and it is harmful to not give the person or the company that option. Because, really, the problem above is not the correct statement. What we really are looking at is the following:

Problem: people are not using credit responsibly, and are getting into trouble because of it, which may lead to a restriction of credit for those who actually need it or can use it responsibily.
Solution: better education on credit, more responsibility on the familial level, stricter bankruptcy laws and better regulation of debt repayments.

Legislation that attacks the issuers of credit, and removes their incentive to do so, would hurt the economy and the country (and millions of people) far worse than a small portion of people being hammered by debt. Sure, there is no easy answer, but restricting access of credit to those who may need it at a time when they need it is much worse than somebody abusing their credit. If you restrict access to credit, it makes it harder for some people to get through college (if at all), weather hardship, or basically live in a 2-period consumption framework for their lives. Just because some people make poor decisions doesn't mean you should block other people's rights.

Personally, when I have kids, you'd better believe that I'm teaching them how to use a credit card responsibly. And if one of the kids screws it up, I'm not going to stop trying to teach the others.

This whole movement smacks of easy solutions that are harmful to society as a whole. If a fox kills your chickens, you don't shoot the pig for seeing it.


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