Credit Card Reform Is Elitist

Coincidental to this country’s pro-poor political environment is an undercurrent of ironic elitism.

Washington’s got a new way to save the poor, this time going straight to the root of the problem: The poor are their own worst enemies, which must mean they need saving from themselves.

It’s all very “help us help you,” and cruel-to-be-kind.

And so today, President Barack Obama will sign into law sweeping reform of the credit card industry. Among the changes are tighter restrictions on when (and by how much) creditors can increase interest rates, prescribed lenience for borrowers who default, and a halt to ”surprise” fees.

The fine print, in other words, will be regulated.

The credit card industry, naturally, has said that it will be forced to respond by extending less credit, especially to “risky” (read: poor) applicants.

On that everyone agrees.

It’s not rocket science.

Naturally, you’d think liberals would be going against the grain of basic market structure and arguing that greedy lenders are “just saying that,” i.e. they won’t be forced to offer less credit.

Actually, liberals not only realize the implications, they embrace them. At long last there is a cure for, if not debt – at least deeper debt.

The idea behind the reform legislation is that the poor, left to their own devices, will tangle themselves inextricably in debt.

Helpless, hopeless, and hapless, poor people must be stopped from spending. Of course, they can’t be expected to be responsible for their own finances, particularly with all the shiny offers of credit that tantalize.

It’s unthinkable that they might simply say no, turn down credit and at long last finally refuse to spend money they don’t have. So naturally, the government must “do something” about the poor and their gluttonous poverty.

You see, presentation is key, in politics, pop and everything else.

Here, the credit card reform bill is being presented as a panacea for the poor. It’ll stop the cycle of poverty, proponents claim, finally providing the most vulnerable with an excuse to be prudent.

The flip-side of that particular presentation?

For the poor to prosper, the rich must suffer.

The upper classes, for their part, will bear the costs of credit reform. Faced with less opportunity to profit from the poor, credit card issuers will turn to the rich. Annual fees will make a comeback; rewards programs will disappear.

Or so they say.

That these are flatly fallacious predictions doesn’t matter. What matters, in post-capitalist America, is that it’s framed as being good for the poor and bad for the rich.

Regardless of its populist presentation, and irrespective of this or that socioeconomic result, the most striking aspect of this issue is how much Democrats sound like Republicans.

Of this, the most concise example comes from syndicated columnist Froma Harrop, a near-contender for my annual list of “Liberals Mande Loves.”

About the credit card reform legislation Harrop writes:

But what about poor credit risks? They won’t have access to credit anymore.

So they won’t.

We heard similar excuses for subprime mortgages, which helped people with little savings buy houses. Such loans have almost disappeared, forcing more prospective homebuyers to amass money for a decent down payment and maintain a respectable credit rating. If that means they can’t buy houses this year, so be it.

Card companies say that many consumers get behind on their credit-card payments because they have lost jobs or are saddled with unexpected medical bills. They are good people who need the money.

Well, all these things happened to good people before there were credit cards. That’s why folks saved for a rainy day. Remember the ancient advice to stash away six months’ worth of income?

Everyone has to shape up . . . Irresponsible [borrowers] and non-savers will have to med their profligate ways.

By gosh, that sounds positively conservative . . . all bootstraps and tough love.

It also sounds quaintly elitist and faintly aristocratic. For all the talk of self-reliance, there’s not an ounce of empowerment in forcefully saving whole groups of people from themselves.

At best it is oppressive; at worst it’s a foray into eugenics.

It amounts to, in liberal-speak, disenfranchising the disenfranchised.

Like a lot of things the government does to “help” the poor and the weak, the vulnerable end up becoming all the more so . . . and that’s why poverty is cyclic.

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