Thursday, May 21, 2009

Economics 101 - Why I Am Not A Fascist - A Defensive Tirade

My mother and I have been having a very harmless back and forth about if I actually did live on 17,000$ a year.

So let me be clear, at any level of my earning - I have never had to want for anything, I have never had to fear that if there was a real problem that I would not have sources of cash, I have never had to "pick myself up by the bootstraps". And when I lived at $17,000 my parents were very generous with presents including helping with my wardrobe, and my Hanuka present was a gym membership. They were also very generous with my friends as well, providing a place to stay and more meals than I can count.

But, I have also paid off all my bills on time, declined a lot of credit offered to me, and I bought a reasonable apartment that I could afford - erring on the side of a safe neighborhood and less than I was told I could afford (with a 30 year fixed). I also rented until I was 35 because that was what I could afford and was a better solution. In addition, by most standards, I have "performed" like the show pony I was raised to be (without a husband or grand kids, but I can't control everything!).

Enough of my very personal tirade - my point is that if the government needs to help people who cannot afford to live without food, shelter and medical care - they should not make the credit card industry pay for that - especially when that industry is very clear about the ramifications of late payment. They should provide a subsidy. That would be, and is the least distortive to whole economy. In fact, if my interest rates go up as a result, I would rather have the appropriate taxes levied on me to help the people who actually need help. I recognize that someone has to help and someone has to pay, and that I, as a very very lucky person may have to help subsidize that.

I am happy to help pay for what people need, not what they want, and in the form of a less distortive mechanism. And that, I learned with all that fancy education my parents helped me get so graciously.

Once last thing - this does not take away from the culpability of the very greedy people who helped get us into this mess. Life is more nuanced than that, as we all know......

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