Trump's Magical Thinking on Credit

David Harsanyi rightly calls out Trump's demagoguery on credit card rates by likening them to the anti-capitalist rhetoric and price control policies of New York's new, socialist mayor:

Banks are businesses, after all, not charities.

Image from Ways and Means Democrats.

But if banks lose out charging riskier customers lower interest rates to get on the good side of the administration, they'll simply raise fees elsewhere, pull back on rewards and find other creative ways to make their reliable consumers pay.

Price-fixing never alleviates cost -- it merely displaces it.

Take Mamdani, the socialist mayor of New York, as he "cracks down," as one travel magazine referred to it, on "junk fees" in city hotels.

"Junk" is just a description of a cost that consumers and politicians have arbitrarily decided shouldn't be paid.

But they will be: Hotels will almost inevitably raise prices elsewhere or decrease services to make up for it.

Economic magical thinking never dies, however, because it's tethered to envy and anger rather than rationality.

Harsanyi even follows this with a quote from Thomas Sowell, whom I am tempted to call "The Forgotten Man of the Right," although that might be debatable, as some Democrats, at least, seem to remember him fondly.

My one criticism of this fine piece is that I wish it had explicitly stated the underlying economic principle, that price controls cause shortages. But then again, perhaps Harsanyi knows that his audience will be able to figure it out, while the rest won't, or won't care.

-- CAV