Credit Cards: The Worst Invention Ever?

President Obama is expected to sign the new "credit cardholder bill of rights" later today, and there's been a lot of credit-card craziness floating around the interwebs this week. But I'm still amazed that there are people out there who believe things like this, from James Boyce in the Huffington Post:


The all-caps are in the original TO DEMONSTRATE THAT THIS IS A BIBLICAL TRUTH AND NOT JUST SOME GOOFY PERSON'S OPINION. But it is, alas, just some goofy person's opinion. And that opinion is just about as goofy as an opinion can be.

This same basic argument came up on the New York Times website a few days ago, so I won't belabor the point beyond saying that it's pretty obvious the widespread extension of credit can increase social welfare. This is easy to see if you think about a college student paying her way with credit in anticipation of a higher future income, or a small business owner making an investment in his business in an anticipation of higher future sales.

More generally, I wonder how far these credit-card skeptics are willing to extend their argument. There's nothing uniquely magical about a credit card: it's just one of many technologies for extending credit. So do the critics think credit generally is a terrible and unnecessary idea?

Go to just about any developing nation and you'll hear that one of the most stubborn problems is a lack of credit. (Remember Muhammad Yunus?) Loans are either completely unavailable or available only at a prohibitively high price. Do these people not need credit? Or does Boyce just not know what he's talking about?