A Freemarket, Techo-Libertarian Solution to Get at Credit Card Companies and Other Big Businesses With their Contracts of Adhesion:

Jason Kuznicki's post at Cato@Liberty invokes mixed feelings on credit card companies. On the one hand, I remain committed to free market dogma and think, for instance, the credit card reform bill that goes into effect in February will do more harm than good.

On the other, from personal experience, in part because I am a community college professor and know folks "taken advantage of" by banks/credit cards, I've come to view these companies like snakes. Or perhaps crack dealers. But hey, as a libertarian, I believe all drugs should be legal. But that doesn't mean I think most illegal drugs harmless. Most, by their nature, (not merely because they are illegal) -- heroin, coke, meth -- should be avoided entirely. And other illegal drugs -- pot, hallucinogens -- should be, if used at all, with caution.

Using the drug/snake analogy to credit cards, I advise my students, don't get hooked or bit; learn to be a snake charmer.

Again, note, I'm a free market-libertarian who sees NO government solution to this dynamic that won't make things worse; but I have come to sympathize with the rhetoric of "consumer protection" types (the Ralph Naders) about these big companies and their fine print contracts of adhesion.

How many of you have signed such fine print form agreements without reading carefully or at all? The problem is, if litigated in court, that language is LEGALLY binding. It's law -- private contract law.

We do this because we hurry to make the business transaction happen. And, in a sense, that is good. The free flow of commerce -- not being mired in bureaucracy -- is vital to getting man's material needs met.

When I teach contracts in my Business Law survey course, one of my objectives is for students to understand how encompassing the legal theory of "contract" is. It's not just that formal document, written by a lawyer, signed by the parties. It's the overwhelming majority of bargained for exchanges of things of value, where $$ is almost always the value on one side. In other words, it's every sale of legal goods (i.e., a cup of coffee) or legal employment relationship, in addition to many others things.

So I pose the question: Would it be better if a government bureaucrat had to approve every "contract" made in the United States, just to make sure the deal was "fair"? Answer: Hell no. That would destroy the dynamic, free flow of commerce and make getting a cup of coffee like a trip to the DMV.

But when you sign something -- be it for cell phone service, cable, a gym membership, bank account, credit card, lease, repair for your car, medical service for you or your pet, and so on -- usually it involves something more important than, for instance, the sale of a gallon of milk (i.e., why you sign). Yet, the agent for the business might look at you like you are from Mars if you start reading the fine print in detail.

That's something about our commercial culture that disturbs me. I tell my students, no matter what you sign, EVEN if you know there is a 99.9% chance you will regardless, unless you have an emergency or serious business that needs immediate attention, read the fine print, even if the merchant grows impatient. And if they give you funny looks, return it with a nasty look of your own.

If the agent has the gall to comment (as opposed to merely giving you a funny look or vibe), return with a strong "you want my signature?!?" type of line.

And read the terms especially for credit card offers, sent by mail, where no merchant pressures you to sign.

But what about my solution that goes beyond the cultural?

Why do big businesses (not you) get to write contracts of adhesion (take it or leave it fine print contracts)? Size/bargaining power. The greater the $$ you offer in your transaction, the better your chances to negotiate terms. For instance, almost anyone renting living space from a professional company (i.e., an apartment complex) is subject to a "take or leave it" contract drawn up by the lessor (I know for the super rich who may pay tens of thousands of dollars a month for their digs, the rule might not apply so strictly). From what I know, commercial lessees, because their transactions oft-involve more $$ may have more room to negotiate terms.

Because lenders/lessors tend to be larger than borrowers/lessees, most times they dictate the terms outright, or, if not, most of the terms. Yet, Walmart, because it's Godzilla, as a lessee that rents commercial space in a strip mall, thunders in with its take or leave it contract of adhesion and the lessor has two choices, no bargaining power.

Note the irony in the lessee marching in with its contract of adhesion. That doesn't fit our paradigm. Hmmm.

What if, fed up consumers mobilized and marched in with contracts of adhesion every time we are about to be given one to sign? Before the age of the Internet, it would be impossible or impracticable to mobilize consumers towards a free market, voluntary private way of dealing with them other than saying "no"?

What if, instead we downloaded a contract -- indeed a FREEWARE form -- written by some really smart "socially aware" academic -- God knows there are enough of them who dislike the excessive practices of big banks/businesses -- and put it in the merchants' faces?

At the very least, it would make for a great collective prank to credit card companies who spam us with offers to download and print these forms, slip it in the prepaid envelope and mail it off.

The Internet opens a possiblity for ordinary individuals to mobilize and engage in a "battle of forms" with big business. Think Creative Commons.

Of course, the first person who hands one of these forms to a merchant will be looked at as though he were, not from Mars, but another galaxy. But there is strength in numbers. And for libertarians and free market oriented conservatives, the MEANS are consistent with your ideology.

As a libertarian I believe if "the folks" don't privately, peacefully (I don't say "collectively" because this is a market oriented -- that is "decentralized" -- idea) mobilize towards this kind of solution, then forget it, government shouldn't step in and "level the playing field" because that will make things worse.