Addicted to Debt Not Responsibility

“It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.”

- Josiah Charles Stamp, President of the Bank of England in the 1920′s

Obamaman says it's not your fault!

There are two kinds of consumers:

1. Those who buy something when they can afford it.
2. Those who buy something when they can’t afford it.

The Obama administration wants to save you from the results of your own bad habits of buying things you can’t afford:

White House economic adviser Lawrence Summers said the president plans to crackdown on banks and credit card companies that engage in a range of deceptive practices.

“We need to do things to stop the marketing of credit in ways that addict people to it,” Summers said. He also said Americans need to save more of their money than they do currently.

“That’s why we need to do things to stop the marketing of credit in ways that addicts people to it – so that our households are again saving, and families are again preparing to send kids to college, for their retirement, and so forth,” he said.

Let’s spend a little time analyzing this statement.  When I got my first credit card whilst in college, nobody held a gun to my head and forced me to fill out the application.  When I used my newly found “wealth” nobody forced me to buy things.  And when I was late making a payment I had nobody to blame but myself when my interest rate was increased because I put myself into a higher risk category.  Apparently the conclusion at which I arrived, that I signed up for a credit card and I bought things with it and I missed my payment so I caused my interest rate to go higher was incorrect.  Now, it seems, credit card holders do not need to be bothered by such trivialities such as upholding their end of their credit card agreement because the U.S. government will simply say that it was unfair and that consumers are being taken advantage of when they buy plasma TVs they can’t afford so they fall behind.  And who could blame us for this behavior, after all, as the director of the White House National Economic Council says that credit cards are addictive.

Maybe people would start saving again if they stopped buying things they couldn’t afford!  I know, such a quaint statement I’ve made!

As has been pointed out here before, Americans save less than 1% of their income yet how poor can we really be when 82% of us own cell phones, 99% of us own at least one television (the average household owns 2.4 televisions), and 56% of us subscribe to cable television.  89% of Americans own at least one car, and at least in 2005 64.5% of Americans were fat.  Clearly, it is not difficult to see why the savings rate for U.S. consumers is so low – we want it and we want it now.

Don't give them any credit.

But despite our apparent lack of self control it is the fault of those nasty, cunning credit card companies that we have so much debt (the average American owes $8,565.00 in debt).  It is not our fault that we violate our cardholder’s agreement and miss payments thereby raising our interest rates.  It’s not our fault that we don’t maintain a good credit score so we can move our debt to lower interest credit cards reserved for people who are responsible.  In short, nothing is our fault because we are “addicted” to those evil slivers of plastic.

Let’s look at another quote from Mr. Summers:

He’s going to be very focused, in a very near term, on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high interest rates that they wouldn’t have paid if they knew what that they were getting themselves into.

What he is really saying is that even though an adult signed a contract which is legally binding it is not their fault that their interest rates increased when they did not fulfill the obligations of that contract.  Try making that argument when you stop making payments on your car and the repo man comes to take it back.  Using Mr. Summers’ logic, no contract would ever be legally binding (how is a credit card contract different from an auto or house loan?).

If you listen to the position of the Obama administration, how could anybody ever be responsible enough to save for their children’s college or their own retirement if they’re not responsible enough to read their credit card contract?

There was a quote I heard almost 20 years ago from an engineer that will always ring true:

“If you idiot proof the world you make a world full of idiots.”  Positions like the credit card issue are just another example as to how Democrats are idiot proofing the world.

And, for the record, I cancelled my credit cards years ago and use my debit card for all purchases except for an automobile I once bought.