I can't help but think that it is advantageous for a general population to have government regulate currencies, be they physical objects, promissory notes, or digital representations.<p>If you follow the history of currency from a piece of gold of unknown purity, to gold coins produced by governments, to the establishment of central banks, to outlawing privately issued banknotes, to fiat currencies...<p>...you'll notice that all of these are created to keep up with the demands of a technologically driven advancement in the state of economic affairs.<p>If I showed up to your store with a lump of gold for trade, we would have to go find someone we both trusted to figure out how pure it was. That takes time and money. That inhibits commerce from taking place.<p>Having the government get involved and eventually come to manage the digital exchange of currency would be no different than these analogous historical transitions.<p>It doesn't make sense to completely rely on private companies for a type of economic transaction that has already become the dominant way that value is exchanged. Especially when those private companies require the full backing of nation-states and their currencies to even have any sort of business model to begin with. Why else would Visa and MasterCard have not yet created their own currencies?<p>You can't have a free market if you don't have a viable marketplace to begin with.
Finance is one of the most heavily regulated industries in existence. To hold it up as an example of the pitfalls of unregulated free-markets goes way beyond dishonesty and into the realm of outright stupidity.
This doesn't make sense to me. It's not the behavior of the credit card company that's a problem here. It's the behavior of the merchant. He's quoting the same price to people who pay with cash and people who pay with credit, even though he makes more money on the people who pay with cash.<p>Why is he doing that? He should be offering them a discount or something. Heck, why is he absorbing the transaction fees and folding them into prices in the first place? Doesn't that just make his prices look bad? Shouldn't he pass the fees on transparently?<p>That's all that would be needed for competition. Not regulation. The people doing the paying just need to see the price.
As an American, I remember back when the Republicans passed the "Personal Accountability Act" or some such. The gist was that credit card debt was going to be even harder to get out of when a person goes bankrupt. The spin? People need to be responsible. When they make debts, they have a moral obligation to pay them. Therefore, the government shouldn't help them do something immoral.<p>Never mind the fact that <i>the entire business model of credit is based on assuming a risk the borrower doesn't pay</i>. If government takes away that risk, well, it's like printing money. Which is exactly what the credit card companies are doing.<p>I was with the author until this point: <i>That’s what should happen in a healthy market. Credit and debit cards aren’t a healthy market. That’s why regulation is necessary.</i><p>Whoa. Hold on a minute. <i>Regulation is the tool of the monopolist, not his enemy</i>. I told the story about the Republicans to make a point: the game is for special interests like PACs to write legislation that then makes their members more powerful. The best (sometimes the only) way to do this is to pretend like you're regulating or cleaning up the industry in question.<p>So the Congressman who's all about cleaning up the finance industry? His staff is the one writing the 2,000 page bill that nobody understands yet somehow will be a boon to the finance industry in the next five years or so. When folks figure out that the bill actually made matters worse, he'll be the guy on TV telling us that what we need is actually <i>another</i> bill, much better than the first one, and the cycle continues. (Just got through reading a great article on just this process from an HN link: <a href="http://www.theatlantic.com/magazine/print/2009/05/the-quiet-coup/7364/" rel="nofollow">http://www.theatlantic.com/magazine/print/2009/05/the-quiet-...</a>)<p>The answer, I think, is that government has a critical role in defining things. How about defining what a life insurance policy is? Make seven different levels. If you sell life insurance, you have to meet one of the levels. Or in this case creating a standardized P2P clearing process for payments? Nobody needs to force people to use it, heck, if you can standardize the way payments are made between parties such that the banks are mostly out of the picture? Visa and MasterCard just go away.<p>Not that this will happen. Too many connections and powerful people involved. But the point is that there is a spot between chaos and total regulation where government can and should do a lot of good. That point, in a lot of cases, is just in making definitions and forcing market players to use them. These choices are presented almost always as false dichotomies: one extreme or the other. That's because arguments sell newspapers and make people watch TV shows. It's also because in most cases politicians get more votes from the argument than from the solution (another reason why the regulatory bills that create new problems will come forth ad infinitum)
<i>The ultimate goal for any capitalist worth his pinstripes is not to compete in a free market, it’s to get control over a market. Merge. Acquire. Consolidate. Squeeze. Fewer competitors means less competition.</i><p>I'd argue that this is not capitalism he's describing. Capitalism, as Smith described it, involved relatively small businesses competing with each other -- not the quasi-fascism that the author describes.