The Senate rejected a cap on credit card interest rates today. The intention of the bill was to "protect consumers" from "price gouging".
Here's the thing: if you limit the price that a company can charge for a product or service, fewer companies will offer it. So if a credit card company can't charge a 30% rate to particular person, they will simply not offer them credit at all. This is progress?
This is not unlike the hollow complaints about check-cashing shops in poor neighborhoods. Outraged by the high fees? Fine, but if you eliminate those stores then the available options for poor people go from one to zero.
Guess what -- consenting adults use those stores because they choose to. The only way to justify their elimination is to believe that the gov't knows better what to do with their money. Which is to say, we declare them second class citizens.
A thought experiment: if we decide that computer companies are "gouging consumers" by charging, say, $1500 for a laptop, and we make it illegal to charge any more than $1000 for a computer, what would happen? Well, Apple wouldn't exist for one thing. Knock it down to $500 for the sake of justice -- would we have more or fewer computers?
How about declaring it illegal to charge more than $10,000 for a car? More than $5/lb for meat? Who would better off?
Jimmy Carter learned this with gas prices in 70's. Did anyone else?
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