Credit Controls Punish Responsible

The following article originally was published on May 24, 2009, by Colorado Daily.

Udall’s credit controls punish the responsible

by Ari Armstrong

Didn’t Sen. Mark Udall’s mama ever teach him to read contracts before signing them?

If he had learned that lesson, he wouldn’t impose new federal controls on credit cards — controls that would punish the responsible and the poor in order to reward irresponsible whiners.

Nobody is forcing you to get a credit card. If you don’t like the terms that a credit card offers, you are perfectly free to reject them.

Michael Riley writes in the Denver Post that Udall “hatched the idea in 2005 after watching a staff member’s experience with a credit-card company that boosted his interest rate to 21 percent even though he had never missed a payment.”

If you sign up for a credit card that tells you it will raise your rate whenever it wants, then why are you complaining when the company does exactly what it said it was going to do to you?

If you don’t like the deal, then pay off the card and cancel it.

What if you’re not able to pay off your card or transfer your balance elsewhere? If you can’t handle your balance, then don’t charge it in the first place.

The new controls will have two main effects. They will ensure that the young and the poor have less access to credit. And they will make it harder for responsible cardholders to negotiate good terms.

An Associated Press article summarizes the key provisions of the Senate bill. It would force credit card companies to lower rates even for people who miss payments, increasing rates for the rest of us.

It would require a “45 days notice before rates are increased,” making it harder for credit cards to lower rates for others. It “requires anyone under 21 to prove that they can repay the money before being given a card,” making it harder for young adults to build their credit.

Additional Federal Reserve controls would limit “excessive fees” charged to “people with bad credit,” limiting their ability to rebuild credit.

For a few years, my wife and I got in over our heads and faced high balances and interest charges. We made a budget, controlled our spending and steadily paid off our debts. The more debt we paid off, the better the credit terms we could negotiate.

Today credit card companies pay us to use their cards. Our American Express card charges an insanely high interest rate on balances — which is why we never carry a balance on that card. The card also pays cash back for purchases and offers free monthly interest when we pay in full.

We carry about $6,000 on a Chase MasterCard at guaranteed 0 percent interest forever (provided we make all our payments). Counting inflation, the credit card company effectively pays us to keep the balance.

Of course, if you bury high-interest charges beneath a no-interest balance, it’s not such a good deal — which is why we don’t do that.

We worked hard to earn good credit terms, and now Udall wants to punish us to buy the votes of the whiner demographic.

Udall’s scheme flows from one fundamental premise: You’re just too stupid to live your own life without the “help” of federal politicians.

Unfortunately, those who push for political control over their lives would drag the rest of us down with them.

Ari Armstrong, a guest writer for the Independence Institute, is the author of “Values of Harry Potter” and the publisher of

Political Controls Provoke Producers to Go On Strike

The following article originally was published March 2, 2009, by the Grand Junction Free Press.

Political controls provoke producers to go on strike

by Linn and Ari Armstrong

The economy has recovered from every recession so far, so it’s a good bet that, eventually, the economy will recover from the current recession as well. We can be sure that, so long as the recession lasts, Barack Obama will blame outside forces, and as soon as the recession has ended Obama will take the credit.

Assuming the economy starts growing again, it will do so in spite of, not because of, Obama’s new forced wealth transfers and political controls of the economy. The controls of Obama, the Congress, and the state legislature, on top of earlier controls promoted by both political parties, threaten economic prosperity.

Such controls violate the rights of producers — of doctors, engineers, programmers, builders — to set their own destiny, control their own business and property, and interact with others on a voluntary basis. Political controls subject producers to the whims of bureaucrats.

Controls also forcibly transfer wealth from some people to others, thereby reducing the incentive to produce wealth. Around 40 percent of each new dollar earned goes to taxes. The deficit spending of Obama and George W. Bush threatens to impose the hidden tax of inflation.

When producers face the twin threat of bureaucratic meddling and confiscation of the fruits of their labor, many throw up their hands and either quit producing or cut back. They go on strike, in part or in full, loudly or quietly.

We have talked with countless friends who have decided to invest less or work less. Many would rather work on the house or the car, where at least their labor is not taxed, than spend more time in their chosen field where they are largely directed by bureaucrats and forced to hand over much of their earnings to others.

We have heard of doctors leaving medicine or certain specialties to avoid the associated bureaucratic nightmares.

We have heard of entrepreneurs who would rather sell their dreams to safe corporations than risk opening a new business under the regulatory nightmare of Sarbanes-Oxley and other controls.

We have heard the outrage of working-class families, who are struggling to make their ends meet even as they are forced to subsidize the irresponsible, such as the woman in California who added octuplets to her six prior children. We hear, “Why am I working so hard?”

This idea of a strike of producers is hardly new. In 1937, Harold Ickes, FDR’s Secretary of the Interior, “gave a radio speech assailing America’s wealthy, charging that sixty families who ran the nation were on strike against the rest of the country,” writes Amity Shlaes in The Forgotten Man.

The next year, Wendell Willkie fired back at a similar claim made by Assistant Attorney General Robert Jackson. Willkie said, “Mr. Jackson has previously spoken of a ‘strike of capital’ against the government. If there is any strike of capital it comes from these millions of small investors, not from the wealthy few… The main problem is to restore the confidence of investors in American business, and to do this will require more than pleasant speaking on the part of government. For several years the government has taken definite action to show its hostility to business.” [See This Is Wendell Willkie (New York: Dodd, Mead and Company, 1940), p. 70.]

Ayn Rand, who lived through both the Russian Revolution and the Great Depression, made the idea of the productive strike the theme of her 1957 novel, Atlas Shrugged. For many years the working title was “The Strike.” Rand described the theme as “what happens to the world when the Prime Movers go on strike.”

Rand wrote of her “fantastic premise,” a “hypothetical case” in which the world’s top producers disappear, one by one. (Much of the drama takes place in a fictional valley near Ouray.) But the truth behind Rand’s literary device remains: political economic controls discourage the producers from creating the wealth necessary for our lives.

Today the fantastic pushes through reality. In a touching YouTube video called “My Strike,” a man begins his address by quoting Atlas Shrugged. He explains how friends of his have left their fields. He says, “Now I’m on strike… I woke up one morning and could not think of a single reason to come to work… We live in a time when billions of dollars of market capitalization can be wiped out by a single political speech, statutory command, or regulatory decree. And those politicians consume our lives as much as our dollars.”

It’s no wonder that sales of Atlas Shrugged have tripled over the same period last year, reports the Ayn Rand Institute.

Perhaps it’s time for you to fold up this paper, roll up your sleeves, and get back to work. Because that’s what we always do, right? We go back to work, no matter what the politicians do to us or how much they take from us. Until they cross that line and we the producers say, “No more.”

The Bulb Ban

Paul Hsieh wrote an especially good (if depressing) post December 19 titled, “Outlawing the Traditional Incandescent Light Bulb.” He quotes four news articles and offers his own comments:

The new energy bill (passed by Congress and just signed into law by President Bush) will outlaw the traditional incandescent light bulbs over the next several years, requiring instead more expensive “energy efficient” bulbs as part of the fight against global warming. Of course, if these new bulbs are more cost-effective in the long run, then there’s no need to mandate their use. And if they aren’t, then this is just another burden on consumers. Either way, it’s a violation of the individual rights of producers and consumers of those products.

This is on top of the recent shameful capitulation by the US on global warming policy at the recent international Bali conference, in which the US gave into the demands of the rest of the world.

Those who think that the Republicans and/or the religious conservatives will provide any kind of principled defense against the anti-reason and anti-human views of the environmentalists are in for a rude awakening. …

Although I’m sure it’s unintentional, I find it ironic that the environmentalists and the evangelicals are teaming up to extinguish Thomas Edison’s incandescent light bulb, the long-time symbol of reason and thought.

By the way, I have purchased the energy-efficient bulbs for my house. Costco sells them for a reasonable price, and I believe that they cost me a little less to operate. But the idea of the federal government dictating to us what sort of light bulbs we may buy is ridiculous and offensive. If the federal government can force us to buy the bulbs that politicians decide are good for us, then there is, in principle, hardly anything that the federal government cannot force us to do.