A Lesson in Unnecessary Regulation

[badlydrawnjeff.livejournal.com]

By now, you've probably heard about Bank of America's plan to begin charging $5/month on the customer side for debit card usage. What you probably haven't heard of is why:

NEW YORK (Dow Jones)--Bank of America Corp. (BAC), the largest U.S. bank by assets, plans to charge customers a $5 monthly fee for making debit card purchases starting early next year, according to an internal memo sent to bank executives Thursday.

...

Bank of America is trying to cushion revenue losses it expects to incur from new caps on the fees merchants pay when a customer uses a debit card at their stores. In June, the Federal Reserve Board finalized rules capping such fees at 24 cents per transaction, compared with a current average of 44 cents.

...

Other banks have introduced or are testing new fees in response to the debit fee caps, which stem from a provision known as the Durbin amendment in last year's Dodd-Frank financial regulation overhaul legislation.

This follows many banks ending free checking in large part to the regulations in the Dodd-Frank bill limiting debit overdraft fees. This will likely not be the last time we see banks making more adjustments, either.

Regulations matter. The negative impact of regulatory action when it's not needed only ends up hurting the rest of us in the long run. In a misguided rush by the left to "protect" the population from evil, predatory banks, all you've done is now made it harder for those who you profess to represent and care about the most to use banking services. Congratulations on another job well done.

Comments

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

It isn't that The Market Can Do No Wrong, but that the Government Can Only Do Wrong (or at least, always worse than the market), when it tries to change economics.

Yes, the free market can be wrong, but it will correct. It just doesn't do it fast enough for some people and they want gov't to force the issue, which just causes more problems that they will then use gov't to try and fix, and cycle on that forever.

Re: Note to the economically ignorant:

[luvdovz.livejournal.com]

Sorry, that's not how ALL cartels form. Only those that you don't like. The rest, of course, don't matter, therefore they don't exist.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

I'm not sure how your comment relates to this thread. I don't see anything about cartels here any where.

Re: Note to the economically ignorant:

[kylinrouge.livejournal.com]

It isn't that The Market Can Do No Wrong, but that the Government Can Only Do Wrong

This is the same belief. If government intervention always makes things worse, that means the market is perfect. The thing is, the government is part of the market, you can't separate the two. Private entities enforce their will through government. You define the market as something completely separate from the government; a market is something that functions within a legal framework of society.

You're making meaningless distinctions.

Yes, the free market can be wrong, but it will correct.

These words conflict. Right/wrong and correct/incorrect are synonyms. You just agreed with my assessment of libertarians.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

First, you're using the wrong version of "correct". I used it in the sense of "fixing", not the sense of "proper". Context should have told you that.

Second, it's not a meaningless distinction. Government is not inherently part of the economic market. The fact that it enforces rights and contracts does not make it part of the market, it only makes it part of the framework. It's only when people pull it into the market by having it regulate specific things that it becomes a distorting effect on the market.

Third, having a perfectly free market does not imply a perfect market. It only implies a potentially perfect market and/or an optimally efficient one (which is not the same thing). Because the market is made up of people, it can never be perfect, no matter what you do, but the perfectly free market will be the best that we can theoretically do.

Re: Note to the economically ignorant:

[kylinrouge.livejournal.com]

Second, it's not a meaningless distinction. Government is not inherently part of the economic market. The fact that it enforces rights and contracts does not make it part of the market, it only makes it part of the framework. It's only when people pull it into the market by having it regulate specific things that it becomes a distorting effect on the market.

A market only exists within the context of the specific government it's running in. We've never had an actual free market, it's been mixed the entire time. It's strange that you adhere to a hypothetical concept and assume that it would be the best solution for everyone even though it requires completely dismantling society and the economy as we know it to even test it out, not to mention the generalizing assumptions it makes about people and their behavior. The exact same thought process that goes into libertarianism is matched in socialism.

Also, once again what you said before was pretty much, "The free market can do no wrong, but it just takes time for that to be apparent." This still fits in with what I said about libertarians.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

A market only exists within the context of the specific government it's running in.

Incorrect. Take two people on an island. As soon as they swap items, they have a market. They may have worked out an agreement on the rules they will use for swapping things, that would be their framework. No gov't required. When you add more people and it gets more complicated, you have a gov't to provide a standardized framework of those agreed on rules, but it doesn't get involved in the actual trading. That's the free market.

We don't need to get to a complete free market, just need to go in that direction.

I didn't say the free market can do no wrong. I just said that when someone in it does wrong, the rest of the market adjusts around it, and it will get fixed eventually.

Re: Note to the economically ignorant:

[kylinrouge.livejournal.com]

None of our markets are two people on an island.

I didn't say the free market can do no wrong. I just said that when someone in it does wrong, the rest of the market adjusts around it, and it will get fixed eventually.

So if the market fixes its own problems, in the long run it does no wrong. Got it.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

You seem to keep refusing to understand.

Re: Note to the economically ignorant:

[kylinrouge.livejournal.com]

Apparently. I look at your weird unrealistic claims about the market, then I look at history, then I look back at your claims, and I'm just not seeing the connection unless a) I'm right about libertarians having an unwavering trust in the free market despite its status as pure conjecture or b) history happened differently than described in the history books.

The absolutely main problem of libertarians is the refusal to admit that the "free market" can have monopolizing tendencies and can support bad business practices indefinitely. The almost unregulated early 1900s had food producers almost universally had unsafe practices, and there is absolutely zero evidence to support that they would have stopped without government intervention. In fact, companies like Heinz had safe production of food, advertised their food as being mold-free, organic, prepared safely and ethically, but they still lost out to moldy food producers until regulation.

To make the claim that not only would food quality make a reverse and start going up instead of down despite very few people making use of the decades-old methods of ethical and safe food production is basically pure conjecture. It's projecting a fantasy and not using the kind of evidence-based reasoning that explains history.

I'm not seeing in yours, or any other libertarian's comments that tells me they can admit ANY fault in their hypothetical free market. They don't see ANY unintended consequences and assume exact behaviors for people participating in the market. It's extremely idealistic and has zero chance of ever happening, so why do they cling to this fantasy instead of pursuing realistic changes to the market? Why do both libertarians and socialists think that their dreams will ever come true? That governments will go 'Yeah, your unsupported hypothetical theories are worth a shot' and dismantle the entire current economy to prop up this grand experiment.

If you think the free market can somehow be attained gradually, that's a complete pipe dream. There is no reason, ever, for the government to stop being a very real and tangible part of what makes up the modern market. Especially in this age of globalization. Nations have nothing to gain from dismantling their regulatory structures and sending their fates to the wolves, so to speak.

It's like getting rid of traffic laws and expecting everyone to universally continue practicing safe driving standards.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

I'm not even referring to all that. I'm saying that aren't understanding the very simple distinction I've explained to you several times in this thread.

I'm not seeing in yours, or any other libertarian's comments that tells me they can admit ANY fault in their hypothetical free market.

Right, that's the problem, you don't see what's being said, you're stuck with your idea of what's being said.

They don't see ANY unintended consequences and assume exact behaviors for people participating in the market.

Same here, that's what you see, not what's said.

If you think the free market can somehow be attained gradually, that's a complete pipe dream.

I agree, it will only happen when the revolution comes. People with power don't willingly give it up.

It's like getting rid of traffic laws and expecting everyone to universally continue practicing safe driving standards.

And yet, that's exactly what's happened when it's been tried.

Re: Note to the economically ignorant:

[kylinrouge.livejournal.com]

Yes yes, once again when confronted to espouse your beliefs, you rely on vagueness and claims that I just don't understand what you're talking about. Either you're incapable of saying it in a simple way or you're just refusing to accept there's no fundamental difference between what I said and what you said.

And yet, that's exactly what's happened when it's been tried.

In bumfuck nowhere or NYC?

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

I've been as clear as I can be in this thread and you just continue to translate what I've said into something else. Espousing my beliefs is way beyond the scope of this thread. I'm trying to focus on one little concept, that libertarians do not say that the market is perfect and never wrong, only that it is optimal and self-correcting, and that you won't accept/understand that there's a difference. You appear to believe that libertarians believe a particular way and you refuse to be corrected.

Re: Note to the economically ignorant:

[gunslnger.livejournal.com]

In bumfuck nowhere or NYC?

http://www.dw-world.de/dw/article/0,,2143663,00.html
http://www.spiegel.de/international/spiegel/0,1518,448747,00.html
http://www.scientificamerican.com/article.cfm?id=removing-roads-and-traffic-lights
http://www.wired.com/wired/archive/12.12/traffic.html
http://wheels.blogs.nytimes.com/2009/09/02/london-seeks-to-reduce-congestion-by-eliminating-traffic-lights/
http://www.thisislondon.co.uk/standard/article-23740921-boris-johnson-plans-to-remove-traffic-lights-to-make-roads-safer.do