900th Post

My dad was telling me the other night that the recession was (partly) caused by credit cards.  His big complaint was interchange fees.  He quoted some number ($400 Billion?) of how much money Visa/Mastercard/American Express/Discover make purely on transaction fees.  He said these fees were outrageous.  That these companies were making money for doing nothing.  He recognized some of the advantages of a "cashless" society, but he said you can't have companies making money for doing very little.  His basic point was that you can't have a society/economy built on debt, but he was also questioning the value of transaction fees.

There is definitely a negative behavioral issue concerning credit and debt that contributed to where we are today.  My generation views debt differently than my dad's generation and whole a lot different than my grandfather's generation.  I view debt and the use of credit cards much different than my dad.  Some of this has to do with financial education and where I am in my life cycle.  But I sympathize (and even listen to Dave Ramsey).  I also think that these issues are behavioral in nature and therefore correctable with training and will power.

But his transaction fee theory is more interesting.  Economics should teach that there are transaction/opportunity costs for everything.  I think that credit cards and "cashless" transactions reduce the costs of purchasing something.  My dad disagrees.  He thinks they increase costs.  He has worked in retail is whole life and he throughly understands transaction fees.  I am much more of a consumer/purchaser.

The point here is that the value of credit cards (and transaction fees) is purely subjective.  Their value aren't empirical questions.  Deciding whether to use or accept credit cards is an individual/company question/decision.  Average or statistical answers have absolutely no meaning.  None whatsoever.      

Life is about facing the consequences of individual decisions.  Problems occur when decisions and consequences are separated.

Digging deeper into this decision-consequence dynamic is complex and uncomfortable.  This is what politics and the general business of bullshit involves.  But I have come to believe that the best strategy is to ignore this general business and face life with the view that: "I, me, myself do control my decisions, and I will face the consequences of these decisions."  Yes, there are times when the connections seem suspect, but you have to forget about those times and move forward.