Clearly Netflix, and I'd argue Google, Costco, SouthWest Airlines, are good companies. The rare company that routinely provide better service for the same or lower prices. The presence of competition helps in this situation. But, I'd argue that there is a sincere believe at the top levels of these companies that doing the right thing for their customers will result in higher profits over the long term that is largely responsible for their good behavior....
I'd agree that it is the companies that think long term that are providing the true customer service. But w/o a competitive environment, that thinking tends to fade away fast - why worry about long term customer loyalty if your customer is "trapped"? I just don't see any examples of monopolies that act that way, and plenty of examples to the contrary (cell phone carriers, cable/satellite providers head my recent frustration list).
I think the credit card market is actually pretty competitive according to Creditcard.com with the top 10 issuer accounting for 90% of the cards and the#1 firm JPM Chase having just over 20%. At the transaction level it is an oligarchy between Visa, Mastercard, and American express.
I suspect it is that oligarchy that causes the problems.
Unlike delivering movies, financial products are inherently complicated, especially to a financially naive public. I am proud capitalist pig, but I don't understand the objections people have to the government stepping in and acting as referee to prevent consumers being scammed by large corporations with talented lawyers and clever marketeers.
I think you missed my point - I'm saying that if there was a true competitive environment, the govt would not need to step in and act as referee. And as long as there is no truly competitive environment, the govt will end up doing a poor job of trying to constrain the abuse. The abusers will find loopholes to work through. It's like squeezing a balloon, it just pops out somewhere else.
That is why I prefer that govt action be first directed at restoring a free market (yes, even if that sounds a little counter-intuitive), but I do think it is needed sometimes. Hah, it seems to me that most of the areas where a business lacks competition, it was the govt that had a hand in creating the problem to begin with.
But, if I were KING of the US, and I wanted to ' quick fix' this w/o changing the market itself, and just wanted to dictate some action, I would follow the KISS principle. I would:
1) Freeze changes to CC contracts.
2) Give the credit card companies 15 days to get together and submit a standardized, single page, 14 point font boilerplate document for new CC contracts. If they don't come up with something acceptable, I will, and they won't like it.
3) 15 days to come up with a standardized "Fact Sheet" that CC applicants must sign. This has to detail the Boiler Plate in easy to understand terms, and should be written like one of those tests that they want you to pass, because by passing you learned all the right answers.
4) A similar document to make the acceptance and rates transparent. Document the formula for credit scores, assets, time in job, accident record, etc - people should be able to know what they need to get credit.
I disagree that these financial products need to be all that complex. You have been approved for access to X amount of credit, pay by X date or have X fee, plus X interest rate on the balance. Interest rate can change and is determined by X.
The old rule is that if something is too complex for you to understand, you should not invest in it. So people really should not be "investing" in credit cards if they don't understand them. So they should be made simpler for the common man. Heck, I'm sure I don't understand MY CC contract, but as far as I can tell, 99.999% of that deals with what happens if I don't pay my bill in full by the due date. I always do, so I don't worry about it.
-ERD50
