Monday, October 5, 2009

Shepherd Wanted

Also on Marketplace this weekend was an interview with Harvard Professor Elizabeth Warren, who was talking about her favorite cause, a proposed Consumer Financial Protection Agency.

One of the things that this new agency would do, if Professor Warren had her way, is ensure that financial products would be short, simple and easy to understand. One of her favorite stories is about the increase in the length of credit-card agreements, from about a page and a half in the nineteen-eighties, to more than 30 pages now. This is a problem, in the Professor's eyes, because credit-card issuers tend to bury "revenue enhancers" deep in the document, where the customer tends not to read it. The CFPA wouldn't outlaw this practice, but it would require that issuers offer cards that had the simple page-and-a-half agreements of yesteryear.

I understand this, but it seems to me that there's a better idea - try to break people of the habit of signing documents that they don't understand. If, back in the day, when card-issuers increased the length of agreements from two pages to four, people stopped signing on, credit-card agreements would still be two pages. Not to say that greed on the part of the issuers isn't a driving factor in things, passivity on the part of the public is also a major part of it. One which the CFPA, by simply accepting, doesn't do anything to discourage.

In many ways, Professor Warren has suggested a typical Left-leaning solution. And like many, this one seems to have a basic flaw in it. In an attempt to make the world safer for passivity, the Left seems to have embarked on a never-ending quest to find a Good Shepherd to protect us from the wolves. But shepherds eat mutton, too.

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