Is Financial Innovation A Friend Or Foe? : Planet Money On today's Planet Money, three experts debate what financial innovation really is and how much good it's done us in the last 25 years.

Is Financial Innovation A Friend Or Foe?

Can financial innovation help this t-shirt wearer? Steve Rhodes/Flickr/Creative Commons hide caption

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Steve Rhodes/Flickr/Creative Commons

Can financial innovation help this t-shirt wearer?

Steve Rhodes/Flickr/Creative Commons

Is Financial Innovation A Friend Or Foe?

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On today's Planet Money:

We started our debate on financial innovation a few weeks ago with the Atlantic's Mike Konczal and Columbia's Charles Calomiris. Today Tyler Cowen of Marginal Revolution and Felix Salmon of Reuters join Mike to answer the question: has financial innovation in the last 25 years been positive or negative?

-- Blogger Felix Salmon says that financial innovation was a good thing, until it became a way for bankers to get around regulation.

-- Economics professor Tyler Cowen argues that it wasn't financial innovations that caused economic calamities — it was leverage — banks being able to borrow huge amounts of cash with little money down.

-- Financial engineer Mike Konczal says it's all about competition. If a rival bank comes up with a new innovation, you need to compete — whether it's dangerous or not.

Bonus: An innovation in the way you buy your newspaper.

Download the podcast; or subscribe. Intro music: Phoenix's "Listztomania." Find us: Twitter/ Facebook/ Flickr.

Insert card, get paper. Frank Caliva hide caption

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Frank Caliva

This picture comes from listener Frank Caliva, who found this credit-card-accepting newspaper box right outside of the McPherson Square Metro station in Washington, DC. He writes:

This was the first box I've ever seen that didn't just have a coin slot, but had an actual credit card reader attached to the box.

The Journal is up to $2.00 a paper, and I suppose since it's unlikely most people have two dollars' worth of change in their pockets, a credit card reader might make sense. I think it's also a testament to the fact that dollar coins just don't seem to catch on in the United States. From an efficiency standpoint (both for the purchaser and the seller) popping two coins in a slot seems to make more sense than having to go through the trouble of installing/supporting a credit card reader.

On the other hand, the box is in a pretty [fancy] part of DC, filled with lobby shops and law firms. Swiping a credit card may make more sense for people who charge everything to clients anyway.