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Swift on the heels of its "triumph" over those evildoers at Microsoft, our so-called Justice Department is focusing the spotlight of its beneficence on those dastardly souls at Mastercard and Visa. For exploiting the innocent American public by offering them the convenience of credit, the bankers who issue those ubiquitous tiny rectangles of plastic face the pleasant prospect of being excoriated by the lawyers and politicians in Washington.
The Justice Department claims that because Mastercard and Visa have seventy-five percent of the market, issuing banks do not offer other types of credit cards. Discover and American Express suffer because they are frozen out. Not only are the Big Two guilty of such exclusionary policies, they are supposedly preventing innovation in the credit card market. The Justice Department points to the "smart card" offered by American Express (with its embedded computer chip) and cry, "Foul!" because such an option is not offered by either Mastercard or Visa.
The gleeful relish with which the government lawyers announced their next target should make any honest person shudder. Though the suit against Mastercard and Visa was first filed in 1998, the horrible threat this issue presented to American consumers took a back seat to the greater problem of Microsoft giving away free software, i.e., bundling Internet Explorer with Windows. Now, however, the time has arrived for those gallant knights in Washington to bring these new perps to heel.
The trend of suing legitimate businesses for simply doing what is their right -- offering a valid product at certain terms for customers to accept or reject voluntarily -- is, of course, not about any real economic harms or violations of rights supposedly endured by those purchasing a product.
The government first tightened the leash around the tobacco industry. Using threats, lies, and legal extortion, the State forced the makers of cigarettes to curtail their First Amendment rights, abandon the presumption of innocence, and drive up the costs of their goods beyond all reason.
The State has sought to hold the gun industry accountable for the actions of violent criminals and negligent parents. The Feds managed to tighten the noose around the neck of Smith and Wesson, but the backlash proved so great among additional potential victims, i.e., other manufacturers and consumers, that there is a real danger the original captive might eventually wriggle free. (Already Smith and Wesson has been forced to close plants and lay off employees due to slumping sales. Boycotts can be successful.) Some state politicians have -- thankfully -- demonstrated sufficient backbone to pass laws preempting unconstitutional lawsuits against gun companies.
Now, credit card companies slip into the cross hairs of our legal system.
Businesses and individuals willingly use Windows and other Microsoft products because those goods best meet their requirements regarding price and features. Bill Gates never put a gun literally or figuratively to someone's head and said, "Buy my operating system and use Internet Explorer...or else!"
Smokers are responsible for their habit and, indeed, pay far more in taxes than they receive in medical benefits from the State. There are no excess costs to "recoup." Joe Camel never crammed a cigarette into an innocent bystander's mouth and growled, "Smoke this cigarette...or else!"
No gun ever loaded itself and discharged on its own. No gun manufacturer ever thrust a rifle or revolver into a criminal's hands and shouted, "Carry this weapon when you rob your victims...or else!"
The facts and principles detailing the absurdity of the governments' positions have been exhaustively documented. One can, however, almost hear the politicians and their lackeys as they state with righteous indignation, "Facts? We don't need no stinking facts!"
As for credit cards...
The credit card industry has undergone major changes since the days when Mastercard was known as Master Charge and Visa went by the moniker of BankAmericard. Simply getting a credit card was harder, and you usually had to pay a yearly fee for the privilege of making time payments.
Today, credit cards are readily available to anyone with a good credit rating...and sometimes even with a less than exemplary rating. College students obtain credit cards so readily that critics accuse the credit card companies of preying on these economically unsophisticated consumers. Offers for cards with low teaser rates pile up in mailboxes. Telemarketers call people at home, removing even the necessity of filling out and sending in a form.
There is little or no need actually to visit a bank to obtain a Mastercard or Visa.
What, precisely, is the Justice Department protecting us from? Don't like the rate you're getting on your Visa? Shop around. Banks across the country compete for your attention. Your card issuer slaps on an annual fee? Cancel the card and get another one. Don't like either Mastercard or Visa because they are too "monopolistic"? Open an account with Discover or American Express. Ask at the local department store or gas station. Don't like variable interest rates? Fixed rates can be yours if you establish a sterling history.
If you truly are unhappy with the choices open to you, you can garner a fist load of cards from a myriad of sources. No one is being stifled in their ability to spend money they don't have.
As officials of Mastercard and Visa point out, Discover, American Express, and other other potential competitors have open access to customers via mail, phone, and the Internet. No one is being denied anything.
Perhaps one reason American Express has trouble gathering the average citizen into its fold is the fifty dollar fee it charges on its regular green cards and its restrictions on time payments. As for its new blue card, well, perhaps some people are leery of a computer chip holding a bit too much personal information. Or maybe they see the chip as offering no benefits over the magnetic stripe decorating their current cards.
Discover Card? Department store or gas cards? High interest rates just might offer an explanation why some consumers are resistant to their allure.
Authors such as D. T. Armentano in Antitrust and Monopoly: Anatomy of a Policy Failure have analyzed the foolishness of modern antitrust laws. Ayn Rand described the immorality of such legislation in "America's Persecuted Minority: Big Business." Alan Greenspan continued her argument in "Antitrust." (Both of these two articles are available in Rand's Capitalism: The Unknown Ideal.)
Business owners -- indeed, every individual selling an economic good -- have the right to set any (noncoercive) conditions they want for exchanging their products with consumers. No matter how egregious, unfair, or extreme those requirements might be, a property owner has -- in a free society -- the final say on how he will dispose of or surrender that property.
The "good" of consumers held up by the State as justification for its rights' violating policies is only window dressing for its true agenda: expanding and consolidating its power over American business, in particular, and American society, in general. The government lawyers and their bosses are uninterested in a socialistic nationalization of industry. No, they much prefer the path of fascism, i.e., allowing owners to retain nominal title to their property while simultaneously directing what they may produce and how, when, and where those goods may be sold and to whom.
Though many of the political positions and attitudes of the average American leave one shaking one's head in frustrated wonder, in terms of their daily, practical lives, few citizens of our country are literally stupid. The vast majority of adults are quite capable of prospering -- or at least muddling through -- on their own. They can select Macintosh computers over PC's if they so desire...or not. They can choose to purchase that first pack of cigarettes and survive the lung-wracking process of becoming "addicted" to them...or not. They can decide to buy a gun and never shoot anyone with it, ever...or not. They can accept a Discover or American Express card rather than a Visa or Mastercard...or not.
Credit card companies are stumbling over themselves to latch onto new customers as they compete in a saturated credit market. They are ecstatic to establish a long-term relationship with consumers who make time payments and send them all that interest money. They are happy to extend us thousands and thousands of dollars in credit.
Now, if we can only convince the politicians to give us some credit and let us decide for ourselves how to live our lives, we'll all be better off.
