by gruez | 2025-05-31 13:53:17+00:00
>Every argument I made in this thread was about private companies, who have every incentive to only take customers who make them money; that's especially true if they're spending marketing money attempting to pursue such customers. I am making no claim or argument about government spending, which has fundamentally different strategies and goals.

A government might have different goals than a profit making corporation, but when it comes to revenue generation much of the principles are similar. The demand curve vs the laffer curve, or the idea of giving discounts in the hopes of increasing absolute profit (or in the case of governments, tax revenue less any government services/transfers). Therefore I'm not really sure why you can't compare rich people getting cashbacks to rich people getting tax breaks.

>Insofar as words have meaning, possibly. Before arguing that one group is subsidizing another, you'd first have to argue that one group is being subsidized. Leaving aside the original meanings (which only describe public funds in the first place, which this isn't), and interpreting the apparent meaning, the claim is apparently that credit cards lose money on rewards programs for rich customers, and those programs are thus subsidized, and specifically that they're subsidized by poor customers. If that were the case, they wouldn't have those rewards programs. (I'm not claiming that no company in the world has ever spent marketing money they didn't have to or spent it unwisely; I am claiming that an absurd amount of analysis has gone into the finances of rewards programs, in particular, and it is extremely unlikely that card companies are spending more to acquire a class of customers than the revenue they get from that class of customers.)

I'm not sure how you got the impression that the argument was ever "credit cards lose money on rewards programs for rich customers". The linked atlantic article specifically says that it's not the case:

“When you talk to rich people who pay off their balance, they think that credit-card companies are losing money on them, and they’re the ones subsidizing the people who carry a balance,” Klein explained. “It’s the exact opposite.”

Moreover the article is pretty specific on what they're against:

In 2023, these swipe fees amounted to more than $224 billion, driving up retail prices by $1,700 a year for the average family. Everybody pays more for their goods; only fancy cardholders get juicy perks and cash returned to them.

In other words, they're not claiming that card companies/stores are losing money to "fancy cardholders", or that they're even making less money from them. They're decrying the fact that everyone pays the same markup on interchange, but only the rich get "juicy perks and cash returned to them". You might quibble on the use of the word "subsidize", but the article is pretty clear on what's happening, and it's unfair to dismiss it with a "this is false".

>I don't think rewards programs are a redistribution program; any such claim would imply taking a loss on a class of customers but keeping those customers anyway

Defining "redistribution" is non-trivial, especially for businesses with high fixed costs and low marginal costs. For instance, suppose we define "redistribution" to only mean when a customer brings in less revenue than his marginal costs. That sounds reasonable, but it leads to some absurd conclusions. The most extreme example of this would be F2P games, where the vast majority of income comes from a tiny segment of the player base, "whales". The rest either spend trivial amounts or nothing at all. Given the economics of online games (high fixed costs to develop, low marginal costs per player), using the strict definition of "redistribution" above would imply the whales are not subsidizing all the other players. But this description doesn't feel correct, or at least doesn't tell the whole story. If all the whales evaporated there's no way the game would stay afloat, so it's reasonable to argue that in some sense, the whales are paying for everyone else, even if no "subsidy" (in the strictest sense) is going on.