How to Talk to a Libertarian (If You Must)

And now, another entry in our continuing series on the epic stupidity of dead-end libertarians:

I'm old enough to remember the days when gas had different prices for cash and credit. The reason for this is, of course, is that credit card companies take a cut out of every transaction.

Of course, nowadays credit cards are so ubiquitous that no store owner dare put a different price for credit than cash. Can you imagine the uproar if a local grocery store had different prices for cash and credit? While some people might notice that the new "cash-only" prices were cheaper, most people would find it repugnant, as would their water-cooler buddies, and would just go to the other store down the street. In short, it would be unilateral disarmament, and the store would lose business.

But the thing is, if a store did that it'd be *lowering its prices*. The credit card fees are built in across the board right now, and we're paying them whether we use cash or credit. What's more, they're invisible. We don't see the price of using credit cards. And even if we did, its not like we could avoid them. So we're in a position where we may as well just use whatever's convinient - if we individually try to behave better to lower prices, then everybody else is a freerider.

So, to recap: we don't see the cost of using credit cards, if a store individually changes to a model with a surcharge for using credit they'd lose business, and the costs are shifted onto everybody encouraging indiscriminate credit card usage. Who wins from all this? Why, credit card companies of course.

The point of all this isn't to bitch and moan about The Evil Corporations(tm), but to demonstrate a massive failure of the infallible free market. Of course, the government could mandate that all retailers accepting credit dierectly pass on the percentage paid to the credit card companies in the form of a surcharge equal to what they'd pay the credit card companies. Not only would this make transparent the costs of credit card use, allowing the market to work its magic, but it would also have the long term effect of reducing credit card surcharges. Of course, that would require the evil verboten government regulations. What's a poor libertarian to do?

(And, yes, to my zero readers, I realize that the politics of the regulation I proposed are awful and it would never pass. Its used as an example to demonstrate the incoherence of dead-end libertarianism. Don't be an asshat.)