Stupid People

When I started writing this blog, I created the “Stupidity” tag because any regular writings about business are going to include examples of failure, and some of those examples are going to be stupid. In my case, one of the areas I study is actually institutional failure, and while stupidity is only one of a long list of things that cause corporations and other institutions to fail, I continue to regard it as both the most preventable cause of failure and the most fun to write (and read) about. So I found the story about a bank issuing a credit card to a tree to be exactly the sort of grist I look for in setting up a new post…

A story related on the urban legend research site Snopes.com details the events following a California man’s efforts to get companies to stop sending him credit card offers by writing “Never waste a tree” on the form and sending it back in. Sure enough, a few weeks later he received a credit card back in the mail for a Mr. Never Waste Tree. Granted that it would have been a crime for him to have made a bunch of purchases on that card and then refused to pay for them on the grounds that the card is the property of Mr. Tree, this would have been cold comfort to anyone victimized by such a crime – or to any of the stockholders of the issuing company, all of whom would have seen their money shoveled out the window because credit cards are so profitable that quite literally ANYONE can receive one…

Now, I could point out that most of these credit card applications are processed automatically, and it is entirely possible that no live person ever saw this one until after the NBC affiliate station in Los Angeles did a story about it in 2005. I could also point out that given the volume of credit card offers being processed at the time, it’s unlikely that a human machine-minder would have noticed this one application even if someone WAS watching the machine that day, or that the company would have done anything about it anyway. After all, it’s always easier to try to force someone to pay for the goods they have (fraudulently) purchased than it is to get them to buy something in the first place. The problem is what happens when this sort of policy is taken to its logical conclusion…

Millions of Americans are drowning in credit card debt, and the sad fact is that most of them should never have been allowed to have a credit card in the first place. Millions of others are defaulting on mortgages they should never have been given in the first place, car loans they had no realistic prospect of making the payments on, and home equity loans used to make upgrades on houses that have now lost 70% of their purchase price. When a couple of kids fill out a “birthday club” card with a fake name in order to get an extra ice cream cone, it’s a (relatively) harmless sitcom moment; when half of the country does something equally silly what you get is a crushing economic downturn, $700 billion in “bail-out” funds, tens of thousands of jobs lost in the automotive industry alone, and a Federal deficit that we may not live to see the end of…

You’ve all heard me ranting before about how if an industry will not regulate itself, eventually the government will be forced to either step in and do so or let the entire national economy slide into the crapper. I just hadn’t figured it would end up being both…