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Payday Lending, RIP

Tags Capital and Interest TheoryInterventionismMoney and Banking


Ohio has effectively shut the door on payday lending. The state legislature — a bunch of nanny do-gooders — recognized the seen: the closing of 1,600 payday stores and the loss of some 6,000 jobs. But these same folks missed the unseen: the tens or hundreds of millions of dollars invested in these businesses; with investment losses to be suffered by many unknown Ohioans. Of course, these losses are bound to ripple through Ohio's rust belt economy, creating unpredictable effects. These types of state interventions in the market reduce future investment in capital. An investor has to consider the consumer, the market, and the state. Of those three, the state has become the most volatile, the greatest unknown. Payday lending is gone in Ohio. Current and future Investors in the state will have to wonder if the whims of the legislature have finally trumped property rights in the Buckeye State, with the state willing and able to alter ownership and control of property with the stroke of a pen. Is Ohio any different from the troubled countries to our south? I am no longer certain that it isn't.


Jim Fedako

Jim Fedako, a business analyst and homeschooling father of seven, lives in the wilds of suburban Columbus. Send him mail.

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