Tuesday, May 19, 2009
Welcome Ezra Klein
Ezra Klein is washingtonpost.com’s newest blogger. Not terribly surprising since he has enjoyed much success as a liberal blogger elsewhere. What is surprising is his intended subject matter: Economic and Domestic Policy.
We all have our opinions but honestly, I have no idea why anyone at the Post would associate Mr. Klein with economic expertise. (I know, I know – Steve Pearlstein works at the Post). Certainly, his resume and past writings give no hint of this and if this posting on proposed changes to the credit card industry is any indication…:
“The credit card industry, in recent years, has developed something of a tiered model. Good customers are treated extremely well. There are rewards programs, favorable terms, and high limits. But those who don't prove as assiduous about their bills, or slip up amidst their payments, fall into a second tier that's as punishing and deceptive as the first tier is serene and straightforward. Hidden fees, unexpected rate increases, universal default, and all the rest. The result is that low income credit card holders effectively subsidize high income credit card holders.”
This, of course, is pure populist nonsense. The only way a credit card holder is “subsidized” is if the revenue accruing to the credit provider because of the cardholder’s account is less than the cost of that account to that same provider. And the claim that “low income credit card holders effectively subsidize high income credit card holders” certainly doesn’t follow from his litany of examples of the differences between good credit and poor credit behaviors (unless this progressive icon is equating lower income with not being “as assiduous about their bills”).
Markets adapt and some credit providers may foolishly conclude that the “second tier” types are just not worth the hassle. If so, I stand ready to applaud the likes of Ezra Klein who will put their money where their blog post is and provide - for less than the previous providers - that suddenly-missing credit. No doubt they’ll make up any losses in volume.
At any rate, welcome to the MSM, Mr. Klein - Barack Obama is going to need all the cheerleading he can get.
We all have our opinions but honestly, I have no idea why anyone at the Post would associate Mr. Klein with economic expertise. (I know, I know – Steve Pearlstein works at the Post). Certainly, his resume and past writings give no hint of this and if this posting on proposed changes to the credit card industry is any indication…:
“The credit card industry, in recent years, has developed something of a tiered model. Good customers are treated extremely well. There are rewards programs, favorable terms, and high limits. But those who don't prove as assiduous about their bills, or slip up amidst their payments, fall into a second tier that's as punishing and deceptive as the first tier is serene and straightforward. Hidden fees, unexpected rate increases, universal default, and all the rest. The result is that low income credit card holders effectively subsidize high income credit card holders.”
This, of course, is pure populist nonsense. The only way a credit card holder is “subsidized” is if the revenue accruing to the credit provider because of the cardholder’s account is less than the cost of that account to that same provider. And the claim that “low income credit card holders effectively subsidize high income credit card holders” certainly doesn’t follow from his litany of examples of the differences between good credit and poor credit behaviors (unless this progressive icon is equating lower income with not being “as assiduous about their bills”).
Markets adapt and some credit providers may foolishly conclude that the “second tier” types are just not worth the hassle. If so, I stand ready to applaud the likes of Ezra Klein who will put their money where their blog post is and provide - for less than the previous providers - that suddenly-missing credit. No doubt they’ll make up any losses in volume.
At any rate, welcome to the MSM, Mr. Klein - Barack Obama is going to need all the cheerleading he can get.
