Friday, May 05, 2006

FAITH based initiatives

The American Muslim has scheduled news conference. This is an interesting announcement. It would appear that they find Wachovia's closing of the account to be problematic and worthy of some sort of political response. Presumably, this response would then force Wachovia to re-open the account. Perhaps, their ultimate goal is to force all banks to not discriminate based on the religious preferences of their account holders.

I don't know the ultimate goal of this. But as a person who holds religious beliefs, I find this to be rather wrong headed. Let's suppose, for example, that I were a customer of, say, Bank of America. And Bank of America decided that it was going to close all the accounts of all people of German descent who are also Christians. Would I be annoyed with this? Yes, of course. My great grandparents moved here in the early 1900's from Germany and I am a Christian. I'd be excluded.

But, unfortunately, a free market demands that each participant in the market be free to decide their trading partners. I am free to exclude Bank of America as a trading partner - I can choose not to be their customer. They should have that exact same freedom - to choose not to do business with me. At the end of the day, it doesn't matter what the reasons are. If you force trade between two parties where one of them doesn't want it, that party is being robbed. Thaey are having their assets taken from them without their permission and given to someone else. It doesn't matter that they receive some compensation for those assets. What matters is that the robbed entity didn't think that compensation sufficient for the trade. As a result, they're getting something less than what they're being forced to give up. I see no distinction between that and robbery.

And it makes no difference if this is between a Muslim group or a Christian group or a German group or whatever group. If Wachovia doesn't want to do business with them, that is their prerogative. If, it turns out that none of the existing major banks want to do business with this group, that simply creates a market oppurtunity for someone else. Let's suppose that I'm being discriminated against by Bank of America. I could give you my money in return for a promise that you

  1. Have sufficient loss insurance
  2. Will give it back to me when demanded
  3. Will pay me an agreed upon interest rate
You are then given the freedom to invest that money however you want, so long as you meet the above criteria. You might even open an account at Bank of America, and the agreed upon intersest rate is 0.5% less than Bank of America's published rate.

But maybe I don't trust you. Ok. If Bank of America is discriminating against me alone, then Citi probably won't discriminate against me alone. They want my profits. So I'll go there. Or, if Bank of America is discriminating against me as a class (German Christians) then I can still go to Citi. But maybe all of the existing banks are discriminating against German Christians. Now the risk of trusting you might look better. Or maybe there's someone else who's interested in my 0.5% profit and is more trustworthy than you.

Given time, the market will produce someone who's willing to get my profits. The beauty of free association is that this is what happens. The cost of free association is the ability of one entity to refuse to associate with another. If you keep free association, over time, we all get what we want. If you start forcing associations, over time, none of us get anything we want.

Don't kill free association.

No comments:

Post a Comment

I've been getting a lot of friends from facebook starting to read my blog. I'm glad of that. I look forward to comments, critiques, etc. But please do not reference me or any of my family and friends by name. Here's why.