Okay. I was listening to the Frontline podcast The episode I listened to was about the credit ccard industry.
It tracked a period of time from 1980 to the present. It discussed a credit provider named Providian. A retired big-wig of Providian described how the ads and offers were tailored to take advantage of unwary consumers. For instance, a credit card would offer 0% apr as an introductory offer, but there would be an asterisk. The asterisk would lead to the bottom of the page whoich would refer to another page. The other page described in excruciatingly small print the conditions on the introductory offer (Which most consumers would not meet,) and that they'd really get between 16 and 20% There were also rules about "universal default" where, if you default on anything you wind up paying penatly fees and higher interest. Late fees and other charges wound up meaning that someone who got sideways or had a financial problem would wind up with an ever increasing debt load. There were a couple of sob stories about people who had perssonal disasters and wound up totally upside down on these off-brand "bargain" credit cards. Reccently Tom Woods said something I really loved. "The Free Market is a tool for forcing down profit margins" Or was that Jeff Tucker? Anyway - I think this is true. In cases where the free market is operating properly, over time, you'll see the profit maargin of any given industry race to the bottom. So. In one case we see cheesy credit card companies uses hooks and crooks, deceptive advertising and other things to increase their profit margins at the expense of unwary consumers Where is the other hand here. In a free market, someone should have realized that they could undersell Bat Meat credit cards by slicing their own profit margin and capturing market share? Where was the "We won't screw yoou in the fine print" credit card provider? What prevented the profit-margin-per-unit reduction mechanism from working in the credit card industry since 1980?
