Friday, May 22, 2009

Credit Card Holder Bill of Rights

The new administration is all set to bring in the new credit card policy. What they do not realize is that these rules will make people more indebted than before. Here is a simple analysis of a few key points:

1. No charges when card holders spend beyond credit limit.

Hmm. Lets think about this. The limit on my card is $2000, if I spend even a $1 more than that I have to pay $35 over the limit fee. So, I constantly have a running account in my head of how much I have spent on my card. If I feel like I am reaching the $1900 mark, I stop spending, because I do not want that $35 fee. If there was no fee, I would do nothing of that sort and keep using my credit card. Isn't that just common sense?

2. Card holders need to be given at least 45 day notice before fee and finance charge increases

The card companies already do that. They give you a 2 month notice before any changes to your card take effect. I have read the fine print in my card holder agreement. 

3. No arbitrary interest increases and universal charges. 

Hmm. My APR goes up if the card company perceives me as a bad credit risk. It is their way of protecting their money. Its just silly to ask the money lender to keep lending you money and not impose any penalties even though the chances of you defaulting on the loan are high. It is precisely this policy that leads to bankrupt government banks. 

People who do not know how to handle their money will not be better off by the government holding their hand. This is akin to saying that teenagers are risk prone so we should keep them under lock and key. That is a ridiculous idea. In the same way, these rules will only change the incentives in the credit card market. Even good credit risk people will find it more difficult to get a credit card, because the companies have no way of assessing risk through user fee and charges and APRs. So, they do not know if the person who is defaulting is doing so because he is a bad risk or because he is just taking advantage of the no penalty situation. 


Wednesday, May 20, 2009

Stop using Chinese please!!

Chinese toys, pet food and now Chinese dry-walls are leading to health concerns. One day, just for a day, people in the US should not use anything that was made in China or had components made in China. I bet you the country would stand still. 

Who has the right?

A couple of years ago, I saw a new item on TV where the parents of a young boy suffering from cancer refused chemotherapy and wanted to follow a more holistic method of healing. The city Social Services reported them and the parents were charged with negligence and forced to put their kid through chemo. Here is a similar case. I am not sure if its the same case. Why do the parents not have the final say in this matter? Is five years of a painful life better than two without pain? Its difficult to answer such ethical questions. What concerns me is that, the courts instead of saying "we do not have a definite solution here and are conflicted", have chosen to force the parents and penalize them. How should the law handle such cases?

Monday, May 18, 2009

Criminal Prosecution of Psychics

Last night I was watching 48 Hours on TV and the show was about scammers. One segment was devoted to this Psychic out in Florida who runs a legitimate Psychic business, but who is being criminally prosecuted by the City and State for swindling her customers of thousands of dollars. One lady actually gave her a million dollars and more to help improve her life condition, but now wants to criminally prosecute the Psychic for defrauding her. What I do not understand is how someone can give away a million dollars and then accuse the other person of cheating. C'mon if you believe that Psychics can actually change your life, you gave the money voluntarily. If you did not believe they could help change anything, and still gave the money then there is something else other than rationality that motivated your behaviour. I could not believe that the courts were taking the accusations seriously. 

Friday, May 15, 2009

Some Random Guy!!

I moved this past monday and my colleague Jared asked me how I found this apartment, and if I knew my landlord. I said I found the place on Craigslist, and that my landlord was some random guy who had advertised a place for rent. Jared was quite taken aback that I could trust my life and possessions to some random guy online. When I first moved from Nebraska to Virginia, I found my first landlord online. I had not met her, nor did I know anything about her. I saw her ad, replied to it, and her daughter (a law student back then) drew up the lease papers, made two copies, signed both and mailed them to me, I signed both as well, kept one for my records and sent the other with the first month rent as deposit ($450). I only knew the address in Fairfax, and drove up from NE in my truck. For all I knew, they could have been axe-murderers or just simply cheats with no real address. However, when I landed I was not surprised at all, and I lived in that house for two years and have fond memories (the only reason I had to leave was cause I was going away to India and also had the housing job with on-campus living). 
Of course when I moved this time, I met my landlord and made an informed decision. Sure! There are horror stories out there with Craigslist. But, the number of success stories far outnumber the horror stories. There is no regulation of Craigslist. Its a purely spontaneous creation and market run system and the measure of success is such that a young woman can go ahead and trust some random guy online advertising a house for rent. Markets Rock!!

Demand = Supply

I was amused to find the following product on Buy.com. A USB beverage warmer/cooler. What a neat idea!! I do not think I would personally buy it, but apparently someone has expressed a demand for such an item given that it is in the market now. I love the market system. It gives me an enormous variety of products for every whim and fancy. This past couple of weeks I have moved twice and noticed that I have a boatload of stuff. I compared my current moves to my moves back when I was studying/working in India and realised that I never had so many things when I was in India. In fact, when I was in India everytime I moved my stuff I would have 2 medium sized moving boxes filled with my books and stuff, and a one bag for my clothes and personal items. Now, I have a small truck load of stuff. The only reason I lament having so much stuff is cause its a pain moving. Otherwise, I am glad I them because it means at some point I had a demonstrated demand for this stuff and the market supplied it for me. Markets rock!!

Wednesday, May 13, 2009

Spontaneous Order on Roberts Road

Parking at GMU campus is expensive and a nightmare. Thus several students park in the streets around GMU. One such is on Roberts Road between Braddock Road and Tapestry. Since I have started at Mason, I observed that parking on this road has always been parallel parking. Once in a while there would be one odd car that was parked in a hurry and in a small spot would be sideways instead of parallel. Last week something extraordinary happened. Two days in a row the same car parked sideways instead of parallel. Within a couple of days the whole structure of parking on Roberts changed to sideways parking instead of parallel. No one asked those people to park sideways. It just happened. How about that spontaneous order eh!!

Monday, May 11, 2009

Enforcing Laws

A couple of months ago, I met with some of my grade school friends and was trying to look for pictures of our group from back then. It was difficult to find pictures, especially with me in them because our school was very conservative and boys and girls were not allowed to be in pictures together unless it was the whole class group. I remember on school retreats we were not allowed to bring our own cameras. One of the teachers brought her camera and took requested pictures at her discretion. She would refuse to take pictures of boys and girls together. However, this one time when I was in high school we went on a weekend retreat and some of the older kids brought their own cameras and took pictures they wanted to take. Although students were not allowed to bring their personal cameras, there was no way the teachers could enforce a ban on cameras. They could not check every single item of luggage students brought with them, neither could they track every single student's moves during the weekend. So in effect the ban on personal cameras was ineffective because of a lack of enforcement. 
This is true about so many Indian laws that simply have no enforcement. Even when they are enforced its the enforcer's discretion rather than rule based. In short there is very little respect for the rule of law in India. So a bunch of hoodlums can go and beat up women in a public place and get away with it. The reason is not just bad laws, but also lack of incentives to enforce them. 

Right To Information

India has recently enacted the Right to Information Act, which gives citizens the rights to get information from government agencies on any manner of issues as long as they do not compromise National Security. Here is an instance of RTI being successful (Hattip Amit). However, I cannot stop and applaud yet. Did Tyagi really have documents to prove that he had purchased the cow at fair price from Dubey? What incentive do the cops have to resolve such cases justly rather than just to pacify the person who filed the RTI application and make him/her withdraw so that the department is not embarrassed. If you read the story, you will notice that in both cases the police asked the citizens to either not pursue the case any further or write a letter saying the issue had been resolved. This seems like polite blackmailing to me. Sure it has kept these two police departments on their toes and has spurred them to act. But, it is their job right!! After all, we have other legislative mechanisms towards accountability in government departments, and none of them has been successful, why would we expect the RTI to be any more a success 10 years from now than any of the others written in the constitution. How soon before entrepreneurial elements discover rent seeking opportunities within the RTI?

Sunday, May 10, 2009

Star Trek

Back in September 1966, Captain Pike of starship Enterprise understood the implications of trade to maintain good relations. I do not know how many of you have seen The Original Season, and the Pilot episode. He suggests to the aliens that they could trade and mutually benefit. Cue to 3:00 minutes in this video for that particular insight.

Also note the championing of freedom.