Cash money: how consumer activists sabotage ATM customers.

• Author: Hazlett, Thomas W.

The California legislature has been devoting much of its 1997 deliberations to an issue of vital importance to the health of our republic: whether laws are needed to stop banks from gouging customers for cash withdrawals at automatic teller machines.

It turns out that when your bank provides you a service, like making cash available to you in some remote location at 3 a.m., they sometimes charge a fee. These charges can run all the way up to $1.50 for delivering up to $300 in fresh bills. That is an outrage. It's your money, and you should be able to pop it into your wallet wherever and whenever you want, at face value. Some legislators are incensed and, taking their cue from the watchdogs of the public interest at Consumers Union, are attempting to make ATM fees illegal.

This episode speaks volumes about the manner in which politicians and "public interest" operatives package the case for government regulation. That brief typically consists of two parts: 1) An unconscionable ripoff is being perpetrated by a gang of avaricious thugs in the unregulated marketplace. 2) The government must pass a law to rein in these villains.

No fuss, no muss, no intellectual heavy lifting. Lawlessness has permitted evil men to perpetrate crimes, and a bureaucrat must be deputized. Regulation is as easy as dialing 911.

And yet somehow they keep getting a wrong number. Perhaps their circuits are crossed. Let's check that listing.

The economics of ATM fees are not rocket science. In short, banks charge fees (both implicit and explicit) for providing financial services. One such service is safeguarding one's liquid assets (often in an interest-bearing account) and then making them available on demand. Until just a few Super Bowl blowouts ago, the customer was forced to cash his chips by locating a branch of his bank, motoring there, queueing up, and dealing with a bank teller sporting a "Have a Nice Day" lapel pin. Such negotiations, of course, could be conducted only during "banker's hours." Come 3 p.m., and your money was locked up for the night.

Now, thanks to a modicum of deregulation-induced competition and a hearty push from the miracles bubbling up in the laissez-faire computer technology sector, ready-teller machines make one's cash reserves safely available 'round the clock, 'round the world. Your mad money is accessible to you at every store, bar, restaurant, bus depot, shopping mall, airport terminal, casino, hotel, and major intersection in...