Time To Put'em Up Against The Wall

I don't always agree with Ted Rall's black-and-white, hero-or-villain view of politics, but I like this cartoon a lot.

It puts me in mind of Canadian comedian/performance artist Sandra Shamas, who used to talk about going to the Woolworth's in Sudbury as a kid to interpret for her Lebanese-born mother and grandmother, who were under the impression that price tags were a starting point and insisted on haggling, to the mortification of their little translator.

Under contract law, the two women were correct: A price tag is an offer, and you're perfectly entitled to make a counter offer. And, if the person to whom you make the counter-offer happens to own the store, you might get somewhere.

Which brings us to the whole Bank of America debit card issue. As Ted notes, and the news has reported, BOA caved to the outrage of the public and is dropping the plan to impose a $5 monthly fee on debit cards, but experts predict they'll get their money from you another way.

The other day, I heard someone on NPR say that BOA has to find another way to make up $6 billion in lost profits, and I said, to the dog in the backseat, "The hell they do."

Well, in a way they do. They have to maintain profits to please investors and, after all, banks are in business to please their investors. It's not as ridiculous a claim as saying that JCPenney or Burger King has to replace x-amount of profit, because those companies are ostensibly in the business of selling clothing or hamburgers.

Though of course they're not. Joe's Hamburger Stand and Burger King are not in the same business. One sells hamburgers, the other sells stock.

Joe may have to swallow hard, but he can do more with less. If you want to barter for a burger, talk to Joe. He can tell you exactly what his expenses are, what his needs are, and why he charges what he charges. And you're likely to find that he's already done what he can, but, if you can find a way to make it worth his while to let you have a burger for less, you might get one.

By contrast, if you want to talk to the boss at Burger King, corporate headquarters is in Miami and the majority owner is in Brazil. Good luck.

Not that Joe is necessarily an honest individual. When I had an Irish ballad group playing bars, we often heard sad stories from bar owners on how much they lost on each beer, though we always got paid through the tears somehow.

Our whistleplayer told a story of how, when he lived in Perth, Australia, he was sitting in with the Dubliners one night when they finished their gig and the pub owner said he hadn't made enough money to pay them. Luke Kelly, who, in addition to being a brilliant musician was not a small fellow, put the pub owner up against the wall and explained that paying the band would be less expensive than repairing the damage to his establishment if he didn't, and a bargain was struck.

We're all reasonable people here.

There's little question that BOA and the others are lying through their damn teeth about the "cost" of using debit cards. Read this takedown from the New York Times by Lloyd Constantine, who notes:

When a consumer pays with a debit card instead of a check, the bank saves money. In the 1980s, Visa calculated the savings at 55 cents to $1.60 per check. The savings is much higher today. For decades, Bank of America, the founding owner and member of Visa (originally called BankAmericard) and all of the Visa and MasterCard banks, including Chase, hid the identity of their debit cards from stores by designing them to look and function like their signature authorized credit cards and by charging stores the same price for debit and credit transactions. Banks did this despite the fact that purchases made with a debit card didn’t involve a loan from the bank, posed very little fraud risk and were extravagantly profitable to banks because they eliminated the costs of processing and clearing checks.

Constantine goes on to say that he was lead attorney on an anti-trust lawsuit against Visa and Mastercard that resulted in a $3.4 billion settlement. 

For my part, I think I'd rather watch Luke Kelly shove the guy up against the pub wall than sit through months of testimony, but the bottom line is, when somebody is lying to you, it really comes down to whether they've cheated you yet or are only planning to. In both those cases, it was time to settle the tab.

You, however, still have the chance to decide who you want to deal with, and you know the megabanks are lying to you.

The community bank or credit union is Joe's Hamburger Stand. The big shiny bank down the street with handy branches in Singapore and London and Bombay is Burger King.

My debit cards are from the Bank of Joe's Hamburger Stand, which re-imburses me any ATM fees other banks may charge, anywhere in the world, and doesn't charge any other fees (except for bounced checks, which, duh), regardless of how much I have in my accounts.

They act like I'm doing them a favor by keeping my money there.

So tomorrow is being called "Bank Transfer Day" and people are being encouraged to get out of the megabanks and put their money into community banks and credit unions.

You don't have to, of course.

But you should at least know the difference between buying a burger at Joe's and being handed a whopper by those other fellows.

While you make up your mind, here's the late, much-missed Luke Kelly, with a song dedicated to those dittoheads who insist government can't create jobs.

 

 

Comments

[Dann]

You had me on my feet yelling and cheering!

Right up until that last paraphraph....

[Mike Peterson]

Ah, the old, "I'd rather be Right than right" dilemma. Well, laying hot asphalt is work, even if the government pays for it, even if the Right wing Bible says government can't create jobs. And when they re-translate to say "government can't create wealth," then I have to laugh and suggest you buy a house for $50,000 in Georgetown and see if maybe government has created a little wealth after all. But also point out that any rookie biz major who has attended a session of industrial development people has seen how highways, airports, rail lines and other publicly-funded facilities including parks, schools and libraries are used as magnets to lure industry. Colorado Springs has more than tripled in size since the Air Force Academy was built at public expense, but even a town that gained a widget factory got it because there was a way to ship the widgets out. The notion that government spending can't create jobs and value is absolute, total rubbish.

[Dann]

The carefully ignored flip side to that reductio ad absurdum is that if the government can create jobs, then why not have the government own every company and provide all of the jobs? Were it not for the plethora of 20th and 21st century examples where such an approach has dismally failed, I suppose we might give that a shot.

The reality is of course more nuanced. Building roads certainly does create jobs and (like the AF Academy) facilitates private industry in a manner that can encourage long term wealth creation. Planting flowers and installing new swing sets in public parts....not so much. Offering performance based incentives (akin to the Centennial Challenges) can foster new, wealth producing technologies. Subsidizing corporations (Solyndra and others)....not so much.

Even John Maynard Keynes thought that the economic benefit of government deficit spending in down cycles was limited by the ability of the government to repay that borrowed money during periods of economic expansion. Government spending does not flow from a bottomless well. It is constrained by the long term wealth created by private industry.

Killing the goose that lays the golden egg is never sound fiscal policy. Unfortunately, Washington has been filled with goose killers.

For decades.

Regards,
Dann