Suze Orman is an expert on what?
By Michael M. Bates
Being in the same tax bracket as Ralph Kramden, I generally don't need financial advice. Consequently, my awareness of celebrated money maven Suze Orman is limited. I know she is regularly seen on taxpayer funded television and has written several successful books. That's about it.
A few weeks ago, C-SPAN aired a Senate hearing on federal college financial aid. Ms. Orman was one of the witnesses. For a person hailed as a monetary guru, it wasn't an inspiring performance.
Ms. Orman spoke about young people's widespread financial irresponsibility. Who will teach them fiscal accountability? she asked. Not their grandparents or parents. And how could "teachers that are all at the poverty level to begin with" possibly do the job?
During her testimony, Ms. Orman changed her mind. She abruptly decided that those impoverished educators can handle the action after all. Every high school student would be required to take "some financial exam that they have got to pass before they enter into the world."
Suze said a few minutes later that most people aren't equipped to make good decisions on higher education financial aid. Dealing with lenders, applications, agreements and all that other stuff is just too complicated. She therefore wants more government regulation:
Ms. Orman has turned truth on its head. When people and companies compete for our business, we win. Most consumer goods are plentiful in this country, relatively inexpensive and getting better in terms of quality.
The government didn't impose laws that created this situation. If it had, they'd probably have backfired. Competition almost always leads to lower prices and greater efficiency.
In 1981, the IBM personal computer was introduced. Boasting 16K of RAM, the base price was $1,565. That didn't include a monitor or disk drive.
Were IBM still the only source of PCs, we can only guess what pricing would be like. Competition quickly improved the quality and quantity of computer features and brought prices sharply down.
That didn't happen because Washington curtailed choices, as Suze recommends for financial aid. Nor was it because manufacturers wanted to do us all a big favor. It was simply in their own best interest to compete for – and win - our business. That's how they make profits, stay afloat and prosper.
The same year that IBM brought out its PC, a first-class postage stamp was 18 cents. Now it's more than double that. This week a postal regulatory commission recommended a 2-cent increase to 41 cents. With a monopoly on first- and third-class mail, the United States Postal Service doesn't have to worry much about competition.
Moreover, it's moved into areas that might have puzzled first postmaster general Ben Franklin. Need an Ultimate Mancini CD? A Marilyn Monroe Teddy Bear? A NASCAR t-shirt? A copy of "The Gifts of Kwanzaa"? All can be ordered on the USPS Web site. Why I don't know.
I doubt that it improves the Postal Service's effectiveness. Its pricing and levels of service, in my judgment, haven't gotten better. Unlike most other sectors of the economy, the Postal Service seldom has to contend with challengers. If it did, would customers always lose as Suze Orman claims?
This Michael Bates column appeared in the March 1, 2007 Reporter Newspapers.