Libertarians, Loan Sharks, and Land Mines

by Lonnie Ray Atkinson / September 4th, 2008

Question: What?s the difference between a loan shark and a credit card company?

Answer: The loan shark wants his money on time.

Now some will claim that there are many other differences, namely blackmail and threat of violence. But exactly which entity are they referring to?

Isn?t the menace to one?s credit score or the garnishment of wages just legally dressed extortion? Moreover, the growing amount of suicides attributed to crushing debt indicates the psychological violence credit cards can most definitely inflict.

This of course is where my libertarian friends would stop the press and begin condescending to me about personal responsibility. Upon which, I?m always left scratching my head.

Why would a libertarian stand up for credit cards? If the argument is one of personal responsibility, then how responsible is it to buy something when you don?t actually possess the money to pay for it? For larger ticket items, there are loans and payment plans available. Credit cards, however, provide the ability to take out multiple loans per day for whatever item catches your eye whether or not you have a dime to your name.

Luckily, personal responsibility didn?t come to this dance alone. Ladies and gentleman, I introduce to you, personal freedom. That?s right. What would a good libertarian be without an argument for liberty?

And so it goes: As long as you acknowledge the responsibility to pay this money back, credit cards grant you the personal freedom to buy whatever your heart desires. But again, why should you be free to instantly buy anything you want when you don?t have the money. Because if you can answer me that, I know a lot of broke people waiting on a surgery right about now.

Furthermore, if the banks are just throwing around all this free money, then why not give me a million dollars? The answer of course is that I couldn?t pay it back. But that?s not exactly what the credit card companies are counting on anyway. These companies count on you paying a little bit at a time for the rest of your life. People who actually pay their balances in full are called ?deadbeats.? So if the name of the game is paying on but not paying off, then I could do the same thing with a million dollars.

College students without jobs are able to get credit lines as high as $6,000. So you tell me. How is a freshman with tuition, room, board, books, and a 16 hour class load supposed to pay anything off?

Once again, the business model has nothing at all to do with us being responsible. On the contrary, it?s about us being irresponsible. The big profits are made by special fees and inflated interest when payments are either late or missed altogether.

And forget loan sharks. The minimum payment is designed to keep you paying long enough that you could literally pay for an item ten times over. The money isn?t in the merchant fees. The money is in the trap.

Folks, this isn?t even controversial. The trap is the business model. That?s why most lawyers can?t even comprehend the standard credit card agreement.

You can talk all day long about personal responsibility and how guns don?t kill people ? people kill people. But in this context, what you?re really saying is that land mines don?t kill people ? people not watching where they?re walking kill themselves.

Seriously, their argument is that as long as someone knows there are land mines in a field, he or she should have the freedom to go play in that field. Pay no attention to the person who says that the field should be cleared of land mines before anyone goes out to play. That type of statement could only come from the staunchest enemy of liberty.

But then again, what if someone doesn?t want to play in a field full of land mines? Well, the libertarian would tell that person that he or she has the freedom not to go into the field. Never mind that in today?s growing credit card culture, it?s nearly impossible to escape going into the field. Furthermore, if the mine field keeps growing until it grows all the way around you, you can thank your lucky stars that you live in a country where you have the freedom to stand perfectly still.

Now I?m not saying that people shouldn?t be responsible. I?m not saying that at all. I?m saying look at the business model. Look at the advertising, look at the availability. Look at the anticipated consequences. We?re not talking about debit cards or old school charge cards like American Express. We?re talking about a trap set to lure people into a form of indentured servitude. And I just want to know why the trap is given priority.

What kind of a society do we live in where it is more important for there to be traps than for me to be free from traps?

Because folks, we?re not talking about a couple of people here and there making one too many stupid mistakes and falling into a hole. We?re talking about a set trap. We?re talking about a calculated nationwide campaign. We?re talking about creating a culture that will produce enormous amounts of revenue. You know as well as I do that these record profits don?t happen simply by accident. They are the fruits of a successful business plan. And if it means that a whole section of the population loses, then that?s just the price of freedom.

And don?t get me wrong. I?m not some enemy of freedom. In fact, I?m actually in favor of a system that gives people the liberty to buy whatever they want without having any money up front. It?s called layaway.

For decades layaway has taught people discipline and real responsibility while still keeping personal freedom in tact. You learn to sacrifice little by little, you learn to meet deadlines, and you can even change your mind. Unlike with credit cards, you end up with either what you need or what you really want. And best of all, you aren?t in debt.

Naturally though, such an idea must be done away with. As retail outlets get in on the credit card action (in other words, setting the trap), layaway is quickly becoming a thing of the past.

Strangely enough, so is the middle class.

So let?s ask again.

Question: What?s the difference between a loan shark and a credit card company?

Answer: A broken leg heals faster.