Philosophy of Miles

3 Flares Twitter 1 Facebook 2 Filament.io 3 Flares ×

My original idea to write a post discussing the miles game with someone who was suspicious of the endeavor, really came from a place of wondering how anyone could possibly have a problem with it.

I see the miles game is a huge win-win proposition. Not only is my family traveling everywhere for free now, but the credit awareness, organizational skills, and creative thinking encouraged by the miles game have all had very positive effects on my life as a whole.

That being said, my conversation with Mrs. Skeptic, and the ethical debates that of sprung from it on my Facebook page have raised several interesting ethical questions that are worthy of more discussion.

So I’ve tried to organize all the criticisms of the miles game into a list that I will try to deconstruct in this post.

Criticism 1: It just doesn’t pass the smell test.

“I was responding to some language I have heard about the credit card companies and why it might be justified to use the system in a way it wasn’t intended – such as the “smell test” language.”

I think there are two ways of looking at this statement.

The first way kind of relates to that old saying about pornography. “I don’t know how to define it, but I know it when I see it.”

This is referring to that gestalt feeling that you have when something seems morally wrong.

I can’t really argue with this because it’s a feeling. And I wouldn’t want to argue someone out of this line of thinking anyway. In general it’s probably a pretty good rule that you live in a way that is consistent with your own internal moral compass.

Personally, I have zero compunction about playing the miles game. There’s no moral hesitation.

The second way of classifying this criticism could be called the “social animal” hypothesis.

The idea is if you act in a way that is outside of the norms of behavior in your society, it is inherently uncomfortable.

People certainly draw much of their morality from the social cues around them. So behaving in a way that most people do not (eg churning cards or manufacturing spend) can be quite uncomfortable.

There are obviously problems with basing one’s own morality entirely on on the actions of those around you (think Nazi Germany), but in general, I will concede that life is more comfortable when you’re not ethically swimming upstream.

Criticism number two: The zero-sum game argument. 

“Finance is a zero-sum game. The gains to some must come from losses incurred by others. The credit card companies are too smart to be the dunce. Externalizing costs so that money flows from the poor to the rich is the way the system is rigged. Working within the rules may be legal and not necessarily unethical but I understand how someone with a broader perspective may feel something is amiss in the logic of it all.”

So the argument here is that if you’re winning, someone else must be losing.

I have two problems with this line of reasoning. The first is that I’m not sure that this is true.

The credit card companies set these bonuses to attract new customers. While they might lose money passing out bonuses, they likely view these losses in a similar light to the way grocery stores view loss leaders (like four dollar turkeys) They attract more customers, and they end up making the money elsewhere.

The second issue I have with this line of reasoning, is that it essentially implies that the only way to act morally is to lose money. That doesn’t pass my own smell test!

Criticism number three: The Robin Hood argument.

“The whole thing sounds a little like Robin Hood – sticking it to the credit card companies, or at least taking advantage of a loophole. The problem is that it’s for one’s own benefit and not for the benefit of the poor. I’m not so sure that works purely in terms of ethics (classically conceived anyway).”

Flynn_robin_hood

So by putting visa gift cards onto my Bluebird card I am able to….

I have a couple of problems with this one.

The first is that I personally don’t justify the miles game in this manner.

Many people may describe this endeavor in terms of “sticking it to the credit card companies,” but that is not an argument that I use or feel is at all necessary to use.

As I see it, the reason to play the miles game, is that it benefits the player. Period. Full stop.

The second issue I have with this argument, is that it seems to imply that if you are not actively doing good, you’re doing bad.

As I see it, the miles game is ethically neutral act like 99.9% of the acts that we commit every day. To me it is ethically indistinguishable from buying some french fries and eating them. It’s neither good nor bad. It just is.

Criticism number four: The spirit of the law argument.

“Clearly churning is not what the credit card companies had in mind with these programs. They are offering you something for loyalty to their card. I’m realistic enough to know that they don’t really care about me or you, but there seems to be an assumption about the spirit and purpose of the program – an “unwritten rule” perhaps that miles churning disregards.”

I have a couple of problems with this one.

The first is that it assigns a spirit or motivation to Corporations. Corporations generally have one motivation and that is to profit. Worrying about other peoples motivations is hard enough. But worrying about a corporations intentions? This seems futile at best.

The second point that I would make is that the rules of this game are determined by contracts that the credit card companies themselves write.

They have the power to approve or not approve your credit card applications as they see fit.

They even have the power to suspend your account without you violating the terms of the contract, for “perk abuse.”

So worrying about fairness to credit card companies seems to me like a misplaced concern.

Criticism number five: The corrupt system argument.

“If inclusive wealth is a monetary measure of all natural, human, and physical assets it is finite in a closed system. Our wealth is built on externalized costs to the poor and our environment. There’s no way around that. The cost of our gains from the credit card scheme are borne by those who pay fees to the credit card companies. The poor probably end up paying higher fees than the rich. There’s no way around that. That’s the system we have and we play the game. The cognitive dissonance can be rationalized away by some better than others.”

I think this is a sound argument.

If Miles game players are receiving outsized benefits for their activities, then it seems logical, that these costs are passed on to non-miles game players and less informed customers by the credit card companies.

A couple of points though:

In a system that is slanted towards the Haves and away from the Have-nots, it seems likely that almost everything we do outside of the miles game also perpetuates this injustice.

The second point to make, and I think this is an important one, is that by playing the miles game, as prescribed here, you are more likely to:

A) Closely monitor your own credit score.
B) Get organized and pay your bills on time.
C) Not carry any credit card debt.
D) Start taking a good long look at your financial life.

So I would argue that by spreading the “gospel” of the miles game, I am increasing The likelihood of personal financial empowerment, for each person who takes me up on my offer.  And if that ain’t morality, I don’t know what is.

3 Flares Twitter 1 Facebook 2 Filament.io 3 Flares ×

11 Responses to “Philosophy of Miles”

  1. Mark January 17, 2014 at 7:34 am #

    I really applaud you for writing this essay and the interview you did with the skeptic.

    One issue I’ve never scene any miles blogger talk about is class. You touch on it in this article from a few angles. But this is one more. People with more money and access to money can get a lot more miles than a poorer person, like me. I’ve been doing the miles/points game for over nine years and my wife and I are working class, earning less than $20,000 a year combined, and we strategize with every dollar to get as much out of credit card spending and we do pretty good. However, when I meet someone who is interested to learn from me and I find out they are middle class I know they have the opportunity to do much better than I do accumulating.

    Like in the winter time we can’t do the $5,000 INK promotions, so we do the $1000 and $500 spend promotions. I also live in a rural area without a office depot, walgreens and walmart (can you believe it!) so I can’t do the bluebird deal.

    Plus when I read all these helpful miles bloggers talk about and have pictures about their first class trips to resorts on first class or business class, I get miffed. Because I’m poorer and don’t have as many points/miles we stretch out our points so we always fly economy, usually stay in 2* hotels and often couchsurf, and we are very very thankful of this privilege. Realizing from our work travels to the Middle East and living in a very poor rural area, flying and staying at any hotel is an EXTREME privilege. We give away at least 1/3 of our points and miles to those who need it.

    Why don’t these middle class miles bloggers talk about this class issue? Your argument above that you’re essentially neutral utilizing your wealth privilege for your own benefit is lacking the perspective of poorer people. How many times I’ve met someone or had a family member interested in this hobby only to find out they have bad credit because they lacked health insurance and racked up thousands on their credit card to pay medical bills. Or people in my community who are on food stamps, pay check to pay check, working hard but a credit card company won’t issue credit to them. What do I tell them to justify what I do? It’s privilege and it’s not fair or just.

    I challenge miles bloggers and their privileged followers to use your privilege to help others, share your miles and points. And at least stop flying first class and staying in resorts with tons of points. Some humility.

    Thanks for listening.

  2. Miles Dividend M.D. January 17, 2014 at 8:54 pm #

    Mark,

    Thank you for sharing your perspective. It is a good one.

    There’s a lot in there but I’d like to respond to some of your concerns.

    1: “I also live in a rural area without a office depot, walgreens and walmart (can you believe it!) so I can’t do the bluebird deal.”

    -Do you have CVS stores? if so, you can still do the bluebird deal via vanilla reloads. No Walmart required. If not, the combination of GoBank cards and Green Dot cards may be a good angle for you consider to manufacture spend. Again, no Walmart required.

    2. “Plus when I read all these helpful miles bloggers talk about and have pictures about their first class trips to resorts on first class or business class, I get miffed. Because I’m poorer and don’t have as many points/miles we stretch out our points so we always fly economy, usually stay in 2* hotels and often couchsurf, and we are very very thankful of this privilege.”

    -I can understand your frustration here, but these bloggers are just sharing their perspectives. For an upper or upper middle class miles game player this is where the real sweet spot lies, using miles for luxury travel.

    It sounds to me like you have a unique angle that I haven’t considered: “The Miles Game for The rest of us?” I would love to read a well written blog about your challenges and triumphs.

    3. Why don’t these middle class miles bloggers talk about this class issue? Your argument above that you’re essentially neutral utilizing your wealth privilege for your own benefit is lacking the perspective of poorer people.”

    -I do try to talk about the class issue, but I can only see it from my own perspective.

    My neutrality simply means that I see my participation in the miles game as neither a good nor evil act. It neither helps nor hurts the poor. It just leverages opportunities that are available to me. (on the other hand I see the early retirement game as a morally beneficial one on balance.)

    I honestly really believe that poor and rich people are all selfish. We are all acting in our own self interest and that is to be expected. But I share your frustration that everything seems to be structurally tilted in the favor of the “have’s” (like me) at the expense of the “have not’s.”

    4. “I challenge miles bloggers and their privileged followers to use your privilege to help others, share your miles and points. And at least stop flying first class and staying in resorts with tons of points. Some humility.”

    -I challenge you to live your life in the way that is most meaningful and rewarding for you. And to write about it honestly and advocate for it. (I will subscribe.)

    I would argue is that worrying about the decisions that others make about how they live and write about their lives is an exercise in futility and frustration.

    Carrots work better than sticks. Show us how your way of playing the miles game will make us happier.

    With Humility,

    Alexi

  3. Robert January 19, 2014 at 8:44 am #

    There is a lot of truth to the last part of your argument, but may I suggest yet another reason to play the game despite the possibility that costs are shifted to the poor? I know this sounds perverse, but (1) not everyone–certainly not the corporations–care about the poor; (2) if you care about the poor, the more money you save by playing the miles game, the more money you have to help the poor you care about; (3) furthermore, by making the game less profitable for the corporations, you may force them to alter their recruiting efforts, reducing the inducements that have enticed poor people to get credit cards in the first place, leading to their paying usurious interest. In doing so, you’ll be doing the poor a big favor.

    Think of it like hedge funds. Many of these funds are only open to “qualified investors” because of government regulations. You have to be a high net worth individual just to participate. Some people think that this is just helps “the rich get richer” and they are protecting their monopoly on money-making, preserving “class structure” (as Mark would probably put it). To the contrary. Many hedge fund strategies make money over long periods of time but lose exorbitant sums overnight during “bad times”. Only high net worth individuals can afford to play and sustain that kind of game. Thus, the regulations make sense and protect the poor. If you contribute to making credit cards less affordable to the poor, I think you are doing them a favor because aside from payday loans, carrying credit card debt is one of the fastest debt-fueled paths to poverty!
    (I realize this argument sounds elitist, and cards are useful for certain transactions, but I think the poor are better served by debit cards which can do the same thing, but without the risks of a debt spiral. And apologies to Mark, as I don’t mean to be insensitive, but he sounds quite intelligent and capable of finding a well-paying job–moving to another part of the country if necessary to do so. We all make choices about lifestyle, work and income we have. The USA is still a land of opportunity for those who want to grasp it, and thousands of immigrants with sometimes little education prove it every year. For those with major health problems or addictions or other issues, it may be tough to boost their incomes. For these, our country offers a basic level of support. But people abuse even that, when you consider how disability payments have skyrocketed in the past few years. At some level, everyone has to realize that they can’t live like the rich unless they earn like the rich, and it isn’t a right to do so; on the other hand, everyone can live like the rich if their definition of wealth is focused on things that matter most–family, friends, love, intellectual endeavors, fun hobbies, etc. If watching the wealthy makes you envious, pull the plug on the TV and computer and go out and enjoy a walk in God’s kingdom–climb a mountain, walk through the woods, stroll along a beach. You’ll feel rich!).

  4. Miles Dividend M.D. January 19, 2014 at 11:00 am #

    Robert,

    This is an interesting argument. Not sure I buy points 1 and 2.

    While it is true that you can use your savings to help others, that is not an essential component of the miles game. This sort of justification could be used for any sort of a self enrichment scheme.

    Point 3 is compelling however. As I see it, It is an argument for the efficient market theory as it relates to credit markets.

    On the hedge fund question, I don’t envy the super rich their hedgefunds at all, all evidence suggests that a simple low cost index fund approach will beat the hedgefunds more often than not.

    I see no reason why poor people shouldn’t have access to credit cards and the
    benefits they offer, but I agree that this represents a risk for anyone (rich or poor) with poor impulse control.

    Finally, I agree that the USA has historically been a land of great opportunity, but there is ample evidence that over the past 30 years we have become dramatically less upwardly mobile. (At this point Britain is more upwardly mobile than we are) We should address this politically, and not ignore the facts.

    I talk a bit about my take the upward mobility of immigrants in this post,

    http://www.milesdividendmd.com/vive-la-revolution/

    Thanks again for your excellent comment(s).

    AZ

    • Robert January 19, 2014 at 1:10 pm #

      Just read your post on immigrants; that’s an interesting hypothesis that I hadn’t consciously considered before but I think you are correct. Being bombarded with consumerist propaganda probably does indeed contribute to poverty in America. Just look at all the bling so many of the poor seem to have to buy. I have friends on food stamps yet every member of the family has a smart phone. I have an old flip-phone, on a $3/mo pay-go plan!

      –Still, and without wishing to make this political (a pox on both their houses, really!), I think you also need to consider the other side. There is an entire culture of dependency that is fostered by many of the political class, that builds an expectation among the poor. This expectation contributes to overspending, as well as to the attitude that they don’t have to worry about it because somebody else will.
      –Example: a doctor we know who worked ER at a mega-city trauma center said the poorest patients were often the most difficult. Even though they were government/charity cases, they were extremely demanding, refused to cooperate on treatment plan, and were often back multiple times. It was education or lack of knowledge; it was a demanding attitude of “you have to treat me and I’m here, and I’ll sue you if you don’t do it right!”
      –As for not liking my arguments #1/#2 (they go together as a sequence, not separate points), let me ask why you don’t voluntarily give more of your money to the government (the IRS does accept voluntary contributions, and a few folks do it)? Probably one reason is because you realize it won’t be spent on causes you support, or if it is, the waste will be huge. I’m not saying your motivation for playing the miles game needs to be to save more money for charity. But I am saying that IF your concern for being involved is that you are hurting the poor, I’d argue that the money you save COULD be spent on charity, and you’d have a far bigger impact by that direct spending than whatever damage may be trickling down to the poor as an indirect result of your participant in miles programs. At least I THINK so. :-)
      –Which brings me to a final delicious point: Have you ever used your Bluebird account to pay your income taxes and earn miles in the process? How cool is that?! If you can keep track of things, maybe best not to have tax withholding but pay quarterly estimated payments, so that you can pay the full amount with your Bluebird, not just any remaining that you didn’t have withholding for.
      –Or, have you ever bought US Savings Bonds from Treasury direct, or invested in a brokerage account, or done any other such financial asset transfers, using your Bluebird account? That would seem a way to manufacturing some really big dollar spending that would be investing instead.
      –I haven’t done any of that as I’m new to this game, but I’d be curious to know if you have.

      • Miles Dividend M.D. January 19, 2014 at 11:00 pm #

        Robert,

        I have no problem with making it political. We all have our biases, and I am an unrepentant liberal. It’s part of the way that I see the world. I am a big fan of exchanging ideas. It’s healthy and interesting.

        I don’t deny that some poor take advantage of the social safety net, I just think that its small potatoes compared to say Tax expenditures or military contractor boondoggles. Fraud and abuse should be eliminated wherever possible, regardless of the perpetrators class.

        I’ve met plenty of entitled patients, rich and poor. And the only generalization I would make about the 2 groups, from my experience, is that poor people tend to be in worse health.

        It is possible to pay taxes with bluebird checks. Frequent miler has a nice post on the different ways to manufacture spend to pay taxes. Check it out! It’s a great feeling. It’s makes taxes less painful.

        You also might enjoy the post I just posted, It’s about my own liberal hypocrisy!

        Thanks,

        AZ

        • Robert January 20, 2014 at 9:01 am #

          I found the Frequent Miler blog I think you are referring to. They talk about using Amex credit cards to buy Visa debit cards etc. Maybe I’m missing something: When you write checks with BlueBird are you assessed a fee? (Otherwise, why wouldn’t you just write a check from BlueBird rather than jump through the hoops outlined in Frequent Miler?)

          • Miles Dividend M.D. January 20, 2014 at 9:50 am #

            Robert,

            No reason you can’t use a bluebird check to pay your tax bill. I may do the same, though in practice these days I just offset all of my spending with manufactured spend and use the bluebird/gobank checks to pay the credit card companies. Same thing, just a bit simpler in practice.

            Who knows, you may so enjoy paying your tax bill that you will come around politically! (kidding)

            AZ

  5. Robert January 19, 2014 at 1:12 pm #

    correction: “It was education or lack of knowledge…” should read, “It was NOT education…”

  6. Mark January 19, 2014 at 9:40 pm #

    Alexi,

    Thanks for your tips in The Other Half. I’ve counseled a few dozen people, all working class, how to play the game. I start with credit score, ability to pay off monthly credit card balances, good record keeping, and strategize with what they’d most want from it all.

    I go to a city once a month where there is a CVS/Walmart/Walgreens/Office Depot where theoretically I could do the GreenDot and/or Bluebird. However, for most people I know this is a very advanced intimidating move. For me I often don’t have the reserves to risk if suddenly my account got shut down, waiting months for my money back. Plus I don’t have rent, no cell phone, no usual utilities. Most of my expenses are transportation, household and food and I use the low hanging fruit credit card offers on these transactions; there’s not a big incentive to take the risk to move the money around with the Bluebird schemes.

    And you’re right, the low hanging fruit I highly encourage my family and friends to do are the SW Airlines companion pass, and hotel promotions like IHG 80,000 bonus and even Amtrak’s 12,000 bonus points.

    But my central point is about the choices we make with the privileges we have. I’m healthy, a white male, loved by my family and I’m skilled at farming and a jack of all trades. I work harder than most people I know. I have a lot to give. I have a lot of privilege.

    I’m able to accumulate some nice miles and points. I could use my points and fly first class and stay in luxury hotels, with some serious strategizing. Or, I could take my mom and sister on a trip that they can’t afford. Or give a friend or relative some miles to visit a love one they haven’t seen.

    Years ago my father got very sick. I quit my job, went to live with him across the country, and took care of him for several months until he died of lung cancer. Economically it was a bad choice, I used my meager savings to take care of him. But those months I had with him are precious beyond value. So I think many people would make that same choice given the opportunity. We don’t always make the choice that only benefits ourselves.

    So how could higher end miles/points folks use their privilege? Go volunteer at a small homeless shelter. Get to know folks. You’ll likely find folks who haven’t seen their parents or sister or brother in years because they can’t afford it, or are disabled in some way — and you could provide a free way for them to travel.

    Or how about volunteer at a non profit that helps immigrants fleeing political violence get the rest of their family here. Or how about those make-a-wish groups that make dreams come true for the sick and unfortunate? The options are endless.

    I’m not asking anyone to become Mother Theresa. You can still go on your trips and stay in hotels. But hey, you could stretch your miles, stay in 2 or 3* hotels, fly coach instead of first class, so that someone else gets the benefits of your class, luck or fortune. Any way you slice it, you’ll come across generous and giving and you’ll feel good and the recipient will feel good.

  7. Miles Dividend M.D. January 19, 2014 at 10:49 pm #

    Mark,

    That’s a really interesting comment. I feel like I understand your perspective better.

    I think you nail it when you stress the importance of living a life that is centered around your loved ones and in serving people in general.

    There is truly nothing to argue with there, and there is a lot for me to learn from.

    I hope, in some way, my tactics are of use to you, because I would like for you to be able to travel more (and share more travel) and have more financial security. I know your riches would be well spent.

    Alexi

Leave a Reply


Visit Us On TwitterVisit Us On FacebookVisit Us On Google Plus