Life on the wrong side of China’s social credit system

In a sense you are right -- there is a hidden fee, and it's related to the value that credit cards create for merchants. There are other ways to make money on payments, besides interest. The card company charges the merchant a fee -- perhaps 3.5% -- to process the transaction.

If a customers pays 8.00 USD for a toothbrush with cash, the merchant receives 8.00 USD in cash. If the customer pays with a credit card, the merchant receives 7.72 USD directly in their bank account. They lose 0.28 USD on 8.00 USD. Why do they take this deal?

* Reduced risk of theft and loss. Cash is easy to steal -- it can be stolen by employees, by dedicated robbers, and by passers by.

* Increased likelihood of making a sale. People don't want to carry too much cash, so sometimes they run out; and instead of making an impulse purchase, they just don't make the purchase. Credit makes it much easier for them to make that purchase.

Criticizing evil does not implicitly mean you endorse your own localized evil. The rampant systemic and structural racism and classism built into American society is heinous, but all I can realistically do about it from my vantage point of poor 20 something living in rural PA is vote and advocate for politicians I put my trust in to right the wrongs.

The social credit score system is an actual scoring system based on your overall social activities, including both financial and non-financial (e.g. the rightfully dreaded political/religious activity). No nobody knows exactly how it works and no one I know in China actually knows their score or anything even qualitative about their score.

The discredited list is just a yes or no list based on court judgement for your financial debt, nothing more and nothing less. It is a public list and there is a clear way to end up on it.

All Fractional reserve lending systems replace capital with debt in the form of checks; A Loan made from a cash deposit comes back to the bank as collaterol on that debt, and as a new deposit which can create a new debt. The bank expects to be solvent because it can sell the loan to another bank to raise cash to cover the deposit, but in reality, what ends up happening is the ratio of cash to checks grows rapidly driving inflation. Inflation drives interest rates upward since nobody loans at less the rate of inflation. Interest rates, and the banks propensity not to spend more than they take in from interest, locks society into a game of musical chairs for repayment.

This is a politically unstable situation for bankers because nobody likes the idea of forcing honest people into bankruptcy and stealing their property, except perhaps a few very greedy and shortsighted bankers and politicians at the top of the heirarchy. This produces all sorts of laws and regulations, aka "compromises" which allow the ratio to continue to grow, and at some point the velocity of capital is insufficient to service the interest on existing debts at which point we begin forcing risk into places within the economic system it does not belong. We stopped publishing M.3 when it was at around 56 trillion, that is a ratio of around 56:1. M2 to M0 and M1 to M0 are two other ratio's to watch.

Ergo, we have not deflated the US housing market since 2007, and continue to drive prices to unaffordable levels. Assuming one has the cash to purchase a house, one must now contend with the risk of an impared title and a bankrupt title insurance company. Jobs can't pay living wages because businesses are saddled with business debts, and Governments don't enforce their laws because they too are bankrupt. The stock market is over-inflated from hedge funds and HFT games. List goes on.

Eventually you end up reducing the number of checks in the system forcefully through bankruptcy, such as through an economic crash, or you destroy price signalling mechanisms within the economy which leads to an economic collapse. A good measure of a collapse is fertility rates, birth rates and average life expectancy. When the USSR Fell, their fertility rate was down to 1.2 births per women; the US currently sits at 1.72. 2.1 births per women is replacement. Birth rates are falling because women are having kids later in life, and live expectancy is dropping due to an increased suicide rate. These rates tend to drop suddenly once society becomes too far taxed by the way, as the USSR's statistics shows.

Our discussion about $15 an hour minimum wages is very much so a discussion about forcing rich people into bankruptcy so the average working Joe can have basics in life and society can be stable. We can make correlations to history, but at the end of the day, there's a lack of concrete data to proove out the above pattern of behaivour and the people running the economic system, including doctorretes in economics, don't fully understand these mechanisms.

What China has managed to do here is create a class of permanent underdogs for whom the game is rigged and force them to literally compete against the rich for life and liberty. Literally the rich are eating people alive. This is an unstable, shortsighted arrangement; the chinese do not have a good grasp of how technology impacts society and are not interested in learning about how its has impacted other countries. They risk creating a powderkeg of permanent underdogs and a business culture of not making investments due to the risk or not engaging with the government due to the regulations. All of that will challenge their ability to remain stable and is likely to result in an eventual collapse.