The Not So Great State of Ohio Hates Poor People, Here's Why:

The Not So Great State of Ohio just made 2 Week and $15/100 Payday Loans Illegal.  Is this nothing other than the state hating poor people.  Poor folks enter into a perfectly moral and legitimate contract with a 2 Week or Payday lender.  The poor folks value the 100 in cash over the 15 in interest.  The Payday Dudes value the 15 over using the 100 for the two weeks.

Because both parties are not coerced into this agreement and this does not damage person or property of others then this is an efficient and moral exchange.  Furthermore this is the only way these folks can get the cash short of seeking help from violent underworld lenders such as loan sharks and the like who have even higher interest rates and use violence in their collection methods.

What makes me believe this true is that several unnamed consumer groups and poverty advocates were pushing this legislation.  I wonder if these groups are backed by Credit Unions and Banks who complete with the Payday folks?  I am confused as to how this helps the poor.  The poor with not credit history have to put money into an account in a bank.  But it is because they don't have the money first that they seek 2 Week and Payday lenders in the first place.

billott1:

poverty advocates were pushing this legislation. [...]  I am confused as to how this helps the poor.

It doesn't.  It helps those who have a vested interest in poor people remaining dependent.  That would be government, social workers, and poverty "advocates".

I think it was Sumner who said, "you can't make people better off by taking away options."

I had a discussion about this with a coworker the other day, who has used payday lenders before. I presented the same argument about the transaction being voluntary. He countered with the argument that, although it may be voluntary the first time, it can quickly create a cycle that is difficult to get out of. While this may be true, I don't believe it justifies preventing the initial voluntary transaction. It's like saying that even though my purchase of a car was voluntary, the subsequent purchases of gas are involuntary, and therefore coercive. By this logic, the gub'mint should outlaw any transaction that could in any way present future costs.

 

"You neoliberal exploiters make me sick! Everyone knows the only reason poor people are poor is because they are stupid. I don't see anything wrong with protecting dumb people from themselves."

The frightening thing is that the above isn't that far from the logic that is actually used. I have never met a person who agrees that they would be better off if I removed options from them. They can take care of themselves. But for some reason some of these people assume there are lesser beings who need that kind of "protection". I'd just feel better about all this if I met one person who liked having his or her options removed.

Libertas est Veritas:

I have never met a person who agrees that they would be better off if I removed options from them. They can take care of themselves.

By the same token, I've noticed that when anyone advocates a law restricting liberty or taking away options, it always applies to someone else. Has anyone actually ever said, "I think there should be a law against [whatever], because otherwise I might bring harm to myself or society?" I doubt it. It's always to "protect the interest of" or modify the behavior of other people.

I actually had a discussion about this a week ago at a family party.  It seems to me that if there are up to 6 Pad-Day loan's on Detroit Ave. alone and they are all charging about 300% interest, then that means that the service is worth 300% interest to the consumer right now.

My uncle made the point that the reason for the "unreasonably high" interest rates is due to the fact that the market is still new and growing.  Of course, if that's the case, then it would seem that the poor needs more pay-day lenders, not fewer.

 

Reply to the poster above:

I've come across someone who said that they felt marijuana should remain illegal because they'd be tempted to smoke it too much.  She was already a pot-head though, so I felt her position to be rather odd.

Libertas est Veritas:

I'd just feel better about all this if I met one person who liked having his or her options removed.

 

I'd like to have my option removed to fly with unsafe airline operators.