Well, I know most people are more-or-less believers in the free-market system, so this is a milder approach than socialism to perhaps doing some good for the economy and the people at large: Selective nationalization. Over some period of time, the government would put forth its own company to compete, and would effectively nationalize the industry by being able to undercut the competition thanks to vastly greater resources.

My ideas on this are fairly specific and limited, so far, and are based on the credit card industry. Credit cards are a simple way of managing debt, and the way I see it, the credit card industry is one of the few that harms the consumer for every dollar of profit it makes. It simply allows for reallocation of money from the consumer to the company by extending credit loans and collects money in the form of interest and fees and such. The credit card industry creates no product, I believe, that the government couldn't match. As a government-run business, a credit card company would, simply enough, charge significantly smaller interest rates and fees, making just enough profit to keep its employees employed. By doing so, it would assist in the same reallocation of money as a private credit card company does, while allowing the consumer to keep his money and spend it on something else, boosting the living standard while keeping the money in circulation. At the same time, the government-run business can be more stringent with its rules; unlike a profit-motivated business, the government would not (ideally) try to keep you in a debt cycle, and would place the limit of what you can withdraw lower. This partially enters into the realm of banking, which I believe needs to be better regulated, but which I do not currently believe would function ideally as a government-run industry.

I'd like to extend this concept to other industries as well (banking, especially), but I cannot. Banks get their money by investing - into your house, into another bank in Kazakhstan, into that brand new Chinese computer-producing company. It seems that banks have more to compete with each other about, and the inefficiency bred by government control and reduced revenues would, in the present economic structure, render the government business uncompetitive.

TL;DR: Nationalize credit card industry, regulate banking.

Thoughts? This ties in rather well with my Privatization of Government Services topic. Now, we all know I'm not an economist, and neither are you folks, but regardless of that, any problems my theorizing hasn't forseen?

I guarantee if the government ran credit cards, our money would "float" in between transfer three times as long as they already do. A matter of fact, its scary to think of my cash flow being tied into the government's...

Most credit card fees are based on national numbers - if your's is higher by an extreme amount, fix your credit score.

If you don't want to pay interest, pay off your credit in it's entirety at the time it is due.

What about big purchases? Take out a private loan. I've never heard of anyone successfully buying a mortgage on a credit card, because the rates are so high. Can't get one? See the end of the second line.

And don't dis banks for trying to make a profit. Its their job. Just as its the job of every service industry. And none of this BS about bonuses. I'm tired of people bitching about just the principal CEOs getting bonuses.

EDIT:

Also...I don't want to be babied by the government. If I spend 800 bucks on a new computer and game, I don't want them to say, "lol SORRY." First, they just wouldn't do it: they want us to spend our money to boost the economy. Secondly, most banks - have a system worked out where they take the average of what you spend and decline you if its over $XXX.XX. It varies from person to person. All you have to do is call them ahead and tell them, and they disable it. At least that's how my bank works. I had to do that a couple of times to get books from school.

The bottom line imperative is what keeps banks running smoothly.

Sounds like you need a new bank, Centreri.

Post has been edited 1 time(s), last time on Feb 7 2010, 7:19 am by Fire_Kame.

Why?

I'm aware. At the same time, many people don't do this, and are later screwed.

Of course its their job. And if it's government-run, then the job will be to facilitate small transactions at a minimal cost to the consumer.

As for the 'babying', I don't see why being helped is a bad thing. My idea lowers interest rates and fees, allowing the consumer to spend his money on other things (I don't believe there's actually any economic gain in transfer of wealth from consumer to credit card company). While it might be inconvenient for people like you to have a slightly lower bar on purchases (again, as you said, you can always call in to release the limit even in the current system), wouldn't it help less... fiscally responsible people?

Why? I don't trust the government with my money.

If someone doesn't pay on time...that sounds like their problem. I'm not very proud of my credit card balance, the interest rate is a little high for what I want, but it is what I have until I can prove I deserve better. Right now, I'm not proving a damn thing to the bank. Sure, my credit score is decent, but my interest could be a couple percent lower if I wanted to be.

I don't want the government's help...the bank gives you different limits, different interest rates and different card programs for different credit scores. For example, my mom cosigned my credit card when I opened it three years ago. That way, my limit was at $1100...enough if I got in trouble and needed to come home immediately. As time went on, I no longer needed her cosign, because my credit score proved itself. Now my available balance is at $4800, and it is *my* balance: not my mother's. On the flip side, my friend had a credit card that *required* him to pay off the balance at the end of every month, or else they closed the account. The difference in that case was that he didn't require a cosign.

I don't want there to be a spending limit ever on my credit card again. There's the whole, "what if someone steals your card?" scenario, but I'm confident my bank would catch it before I did, because I have an identity protection package. Its nice: they even mail me a credit score and summary once every four months. They call me if I make a large out of character purchase - like when I bought our Wii. The programs for less fiscally responsible people are out there. If a higher interest rate doesn't drive them - then what will? A gentle slap on the rest? Ha. Yea right.

I do see why credit cards have an interest rate. Its like a friend coming up to you and saying: 'hey, I need to spend one thousand dollars within the next four years. It won't be all at once, but I won't know when I need the money. I don't have any proof that I won't go blow it, but you can trust me that I'll only use it when I absolutely need to.' So you say okay, you'll set aside 1000 dollars for him to use, and to come ask for it when he needs it. You setting aside 1000 bucks is enough to keep you on your toes on how he's going to use it. You don't want him to take the money and run. You also don't want him giving you a ton of excuses as to why the money isn't back yet. And you definitely do not want him pulling some legal action to excuse him of the debt after he uses up your money. So how do you make sure he uses it responsibly? Write into the contract what the money can be used for (for example, student loans really don't require a certain credit rating. But if you use it on bullshit you owe a lot more), or make the interest rate just high enough to make sure that your friend knows you are *not* kidding about getting paid back.

Now, if your friend approaches you and says, 'I would like to open up a car repair shop. This is how I'm going to do it, and this is my competitive advantage. I plan to take your money and invest it here here and here. On the other side, I plan to invest my money, and this is how much I plan to invest. If you invest xxx.xx, then I will give you xx.xx% of my profit for five years, or x.xx% for the end of time, or x.xx% interest on your principal with the amount paid back at xxxx time. Here's my credit score (which keeps track of all activity, including any loans you take out).' Well, you might be more willing to go into business with him, and for quite a bit less. It depends on how much risk you think you are taking. That's why interest rates on business loans are lower.

In my opinion, the government already babies people. If you get into too much debt, you can declare bankruptcy - and rather easily, too. I know of only a couple people who declared bankruptcy responsibly. I also know many people who go out and buy a lot of expensive things, rack up debt, and then spend more under the idea "oh, I can spend as much as I want. I'm going to declare bankruptcy next year." Think of that scenario...only amplified. If the interest rates weren't there, there would be no fiscally responsible people. It looks like at my bank their lowest interest rate is 10.65%, which is their platinum card like I have. Well, my rate is closer to 12% I believe. The only fee I pay is for my optional rewards package and optional identity protection package. Moving on...as the risk gets higher, their interest rates increase. That appears to be quite lower than a lot of local banks...and my bank posted profits right after the crash. This is a good bank. I like them.

IM NOT AN ECONOMIST!!!? But like I am totally majoring in math/econ.
You should try to nationalize the black market instead. Government control on credit kills incentive.

Eh. Kame kind of convinced me. I still think my idea could work nicely, but it's hard to think of an argument to 'I don't trust the government with my money' - and I don't believe I'll be amoung those who'll really take advantage of a low interest rate (or maybe I'm wrong, and everyone plans to pay back their credit card debts ).

Johnny, are you... err... trolling?