Realizing that a fool and his money are soon parted, our friends at Cracked want to make it harder for the fool to lose it all. This is a bold step, and at first glance is a valid solution to at least a piece of the puzzle. The flood of idiots with credit card debt would possibly be reduced to a trickle.
This is all very unKeynesian, of course. The Keynseians believe that spending, any spending, is what we need in a recession. To quote their foolish mouthpiece Krugman:
Normally we want to be careful that public funds are spent wisely; right now the crucial thing is that they be spent fast.
And to quote Keynes:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise ... to dig the notes up again ... there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.
Now that one is so ridiculous even Krugman is ashamed of it. He writes that is was not a real proposal. Uh huh.
So that, to a Keynesian, Cracked has it all wrong. We should be giving credit cards to everyone, more so to the insane and feeble minded, who are sure to use it more recklessly than an intelligent person. This comes as a bit of a surprise, because Cracked is usually leftist in its economics.
Now here is an even bigger surprise. I agree with the Keynesians here, but for a totally different reason. What they write about spending being a cure for anything is ridiculous nonsense, of course, as I have shown here.
My argument is that a fool and his money are soon parted, and that's a good thing for everyone but the fool.
Now don't get me wrong. If the fool has his money, it probably means his Dad worked hard to earn it, and so earned the right to spend it. If the Dad wanted to leave it to his fool son to do as he please, that is his perfect right, and certainly the right of his fool son.
But though he has the right to spend it foolishly, the economy as a whole would be better off if he spent it wisely, say by underconsumption and investing in capital formation. Remember Hazlitt's famous line:
The rate of true "economic growth" is in effect the rate of capital formation. But of course, the fool probably won't do that. He'll probably blow it on stuff like $200 million dollar a day vacations.
Bottom line, if the fool loses his money to someone really smart, we are all better off [but for the fool]. Because the smart man would use the money for capital formation, making himself and everyone else wealthier. So that giving the fool a credit card, even though his IQ is less than 90, is an all to gain nothing to lose gamble for the economy.
|Give that dummy a credit card.|