Recent debate over the Credit Cardholder’s Bill of Rights Act of 2009, which just passed the House, reminds me of an issue I think is widely ignored or misunderstood by the media and political commentators: Does it matter whether the preferences and arguments advanced by political actors are sincere or strategic?
I think it matters less than we often think, and the pro-credit industry arguments are a good example. The bill restricts credit card companies from a variety of practices that hit hardest on those likely to miss payments. For instance, creditors have to send you your bill at least 21 days before it is due, so you are less likely to run out of time in sending in your payment. That sort of thing.
The bill seems good for consumers, but some argue that if the bill passes, credit card companies will have to pull some of the benefits given to good debtors (who pay their bills on time) to make up for the lost revenue they can no longer pull in from bad debtors. See for instance GOP Whip Eric Cantor, as quoted by the New York Times.
“While perhaps well intentioned, this bill will make credit less available to hard-working families, small businesses, and consumers who are already struggling,” said Representative Eric Cantor of Virginia, the No. 2 House Republican. “Simply put, the bill forces good actors who have managed their finances responsibly to subsidize the bad actors that did not.”
Do you suppose Cantor really thinks that? I don’t. The idea that credit card companies need tricks and traps (like morning due dates that pass before the mail is delivered) to make "bad actors" pull their share of the load doesn’t fly. It probably is true that, ceteris paribus, anything that makes the credit industry less profitable could make credit less available. But that doesn’t mean that those who get caught in credit traps were "bad actors."
But whether he believes the argument or not, it is a very clever rhetorical device. It echoes the complaint that any interventions in the housing market mean that those who pay their mortgages on time have to subsidize those who cannot. It clearly conveys who they think is on their side, and who they want on their side.
So it’s a bad argument, but that’s not my question. My question is, does it matter that no one could seriously believe it, that it’s merely a strategic argument? I think no. It’s clearly such a bad argument that almost no one in the House or Senate seems to have taken it seriously. The bill appears popular enough with voters that even donations from the industry didn’t stop them from voting for it. Meanwhile, supposing it were a good argument, would it matter if the people making it were making it for merely strategic reasons? Someone has to have an incentive to think through possibly bad implications for an otherwise popular policy. So I’m not making the case that this is all cheap talk, or that the arguments themselves don’t matter at all. Only that their sincerity doesn’t matter.
I want to build on this idea tomorrow, and claim that the sincere preferences of elected officials matter even less than the arguments they use. But first, I want to know what you think. Does it matter if the policy advocates don’t even believe their arguments. (And, just to be fair, am I right that it’s hard to believe Cantor believes this one?)