I really like the New York Times new Room for Debate blog, but the discussion of the new credit card legislation they've had running for the past couple of days is a bit of a mess. The first contributor, Dave Ramsey, says his preferred method of regulation is a pair of scissors: "Cut them up!" He goes on to write that "There is no positive side to credit card use" and "There is nothing a credit card can do that you can't do with a debit card." Huh? Ramsey wouldn't know a credit card if someone stole his and racked up $7500 in phone-sex charges.

There is a large and obvious benefit to credit cards -- and to personal debt more generally -- which is that they help smooth out lifetime consumption. People tend to earn less when they are young then they do later in life. People also tend to have some desired level of consumption. If you earn less than your desired level of consumption, but anticipate earning more in the future, it is perfectly reasonable to take on debt to increase consumption in the present. You cannot do this with a debit card.

The easiest context in which you can think about this is education. Students -- except maybe journalism students -- tend to have small present incomes but large expected future incomes. It makes sense to break out the credit card before finishing law school.

And yet there is this tendency to treat the relationship between credit cards and the public as analogous to the relationship between dynamite and small children. That's only half right. The case for additional regulation is a slam dunk if the market is beset by serious problems of information -- if consumers are being lured into contracts they don't or can't understand. But that kind of case for regulation is different from saying that credit cards are an inherently parasitic industry that can we can and should do without. That just doesn't make a whole lot of sense.