01-03-2019, 04:59 AM
(01-02-2019, 09:22 PM)Classic-Xer Wrote:(01-01-2019, 09:50 PM)pbrower2a Wrote: Did I say that I was a systematic leftist?If you were a banker or business owner who ignored the existence American laws that are in place and imposed your own law instead, how long do you think you would be able to remain in business legally and remain afloat financially?
Market economics is generally a good idea at prevents such follies as raising pigs as pork to feed pigs. The Second Law of Thermodynamics applies as much to economics as it does to physics and chemistry.Incentives work, and anyone who disparages consumerism as base ignores that material reality exists. Everything has a price tag.
It is sheer folly to expect businesses to make business transactions harmful to themselves. Were I a banker I would not want to let people buy massacre weapons on credit cards that my bank issues.
Bankers do not have the prerogative to discriminate in lending on the bases of race, gender, ethnicity, religion, or national origin. it is not a banker's right, especially in mortgage lending, to do the sort of racist 'social engineering' (a/k/a 'red-lining') intended to maintain 'white neighborhoods' . Bankers are not allowed to launder money, and if they end up getting income from such an activity as drug trafficking they are obliged to report such funds so that the rightful authorities can seize or sequester it. Bankers do not want to go to prison for laundering money.
To put it in banking terms, there are three C's that determine whether a banker lends to a potential borrower: character, collateral, and conditions. Character should be obvious enough: does one have a pattern of work and of meeting obligations (good) -- or does the person stiff lenders if something goes wrong? Is that person willing to buy credit life and disability insurance to protect the bank? Is the potential borrower a rational actor? Does a potential borrower live within his means -- ideally much beneath his means? This explains why small-business owners might not live large as might a tradesman who makes much the same income. Collateral implies that the borrower stands to lose big if something goes wrong. It's obvious that the bank takes the car or house should the borrower default. If one is borrowing for a money-making proposition, then the borrowing goes into marketable assets such as equipment and property that a bank can sell in the event of a failure. Conditions depend upon the loan: that the borrower on an auto loan not take the funds and use them on a vacation or a party. If it is a student loan, then it really is spend on tuition, fees, and textbooks and not on 'wine, women, and song' or even living expenses -- and that the educational course must be something highly likely to result in someone getting a bigger stream of income. If one takes out a loan for residential property, then one will get homeowner's insurance and pay property taxes through an escrow account, and if for motor vehicle then one will have automobile insurance against collision and comprehensive damage. The three C's are assumptions that using someone else's hard-earned money is a privilege and that those who get that privilege should cavil at any prospect of failure to meet the terms.
In what is normally a world of free-wheeling capitalism, someone must serve as a constraint against what Robert Ringer calls 'LSD deals' -- the sorts of business activities that are practically gambling (as in oil wildcatting or stock-market speculation, for which one must rightly depend upon one's own resources) or that are otherwise completely unsound. Purchasing raw land in anticipation of the building of the Interstate 665* freeway encircling Indianapolis about ten miles outside of the I-465 beltway is highly speculative. Building a large number of tract houses for middle-income home-buyers near interchanges of I-665 in the reasonable knowledge that "if you build them they will come" is a safer item for a bank's lending. Mortgage lending for middle-class householders who buy such houses and live in them and are quickly doing better economically than renters is a far lower-risk proposition. You can see that the first is something bankers don't want to lend money on. Bankers are the only ones who can impose risk for failure. Capitalism implies prudent investment, and not gambling with other people's money.
If I am a banker issuing credit cards, then I might not want people to spend their credit limit on something such as a military-style arsenal or upon weapons and ammunition that the bank can never collect upon should the user use those weapons and ammo in a criminal manner. One firearm is enough as a protection against a grizzly, and I know of liberals who have a firearm for that purpose. I see it reasonable for a credit card company to demand that one show a hunting license for the purpose of buying a hunting rifle. Unsecured credit cards are higher risk to a lender than are mortgage loans or auto loans, and as such mortgage and auto loans. If one has no coherent reason for buying a firearm, then why should one be able to get one on a credit card?
But I took economics in college (my major), and I have worked in a bank. I know a few things that you don't. I will take the side of a responsible banker over someone who chooses to use credit for reckless spending and for deeds that verge on gambling on a large scale.
So you own a highly-successful restaurant in Indianapolis and want to establish something much like it in Fort Wayne that should be similarly successful. That is wonderful. Were I a banker I would encourage such. On the other side, you have no experience in the restaurant business and no experience in profit-and-loss and you want to start a restaurant from scratch? As a banker I would tell you to keep your day job as a warehouse worker.
*The risks? First, I-665 might never be built. Second, the Indiana DOT might decide to allow it to be built as a high-cost toll road that will make it less attractive to potential users. Third, should there be a general slowdown in the economy, then people might not be interested in buying middle-income tract housing out there. Fourth, the borrower might fail financially while developing the property -- as in grading roads and establishing drains and sewers. Finally the speculator in raw land might not get the needed zoning variances for reasons ranging from local political corruption to environmental strictures. Risk implies a premium for lending, and good cause to put paying back the loan as quickly as possible as a higher priority than living well.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.