5 ms·

I'm not sure what point you are making. Even if competition in the payday loan market is so fierce that there's zero margin, it still remains that the rates wil

by lutorm 10y ago

I'm not sure what point you are making. Even if competition in the payday loan market is so fierce that there's zero margin, it still remains that the rates will be high enough to help trap people in poverty, and having people need to take out payday loans is the solution the capitalist system has devised for this situation. To pretend that this is not a failure of the capitalist system seems very narrow-minded.

rayiner 10y ago
The folks attacking payday lending (i.e. mainstream American liberals) aren't suggesting replacing those options with minimum basic income or a comprehensive welfare state. They're simply ignorant, and think that poor people will be helped if the government sets lower rates by fiat. In reality, it will simply remove another option from people who have very few.
- eropple 10y ago
  > The folks attacking payday lending (i.e. mainstream American liberals) aren't suggesting replacing those options with minimum basic income or a comprehensive welfare state "Mainstream American liberals" would love to be pushing for a comprehensive welfare state more aggressively except that they are then beset upon with screeches of the socialisms and the death panels. But we are pushing.
- lutorm 10y ago
  Well, I am attacking payday lending, and I am for replacing it with a comprehensive welfare state. I don't know if I'm a "mainstream American liberal", I'm barely American, but maybe it would behoove you to be a little more open to the fact that maybe you don't in fact know what everyone else is thinking and whether they are ignorant or not.
  - rayiner 10y ago
    That's great, but I wasn't talking about you. I'm talking about the mainstream American liberals (i.e. the main constituency of the Democratic Party), which is pushing for heavily regulating payday lending but certainly doesn't embrace a European-style welfare state or basic income.
- tptacek 10y ago
  Well, hold on. I'm familiar with the libertarian argument in favor of deregulated payday lending and I believe the figures that suggest rates are high because default rates are high. But the actual product being sold might be harmful, in the same sense as cheap revolving credit can be. The availability of payday loans leads to bad discretionary spending decisions (not just "flat screen TV" bad, but "accepting financial risks that are best not accepted" bad) which leaves people trapped --- and then you start getting interested in how much the returns in the payday loan business are subsidized by poor people who made understandable-but-ill-advised financial decisions and are now trapped under fees and interest from a payday loan. Your points about low-income housing are well taken. But I think the comparison to payday loans, and the subtext that all services offered to poor people are intrinsically beneficial, kind of falls apart. There are other problems here too. For instance, we tend to believe that renters are have worse upkeep incentives than owners, who directly benefit from improved property values. Similarly, people who let out trailers to the poorest people in society may also disincentivize upkeep. After all: they've pegged their business to the very bottom segment of the market. That's a real market phenomenon too: "the race to the bottom".
- pcwalton 10y ago
  > In reality, it will simply remove another option from people who have very few. Their argument is that this is a good thing, because taking a payday loan is usually not a rational economic decision, and therefore overall welfare is improved by forbidding people who stand to lose a lot from poor economic decisions from making those decisions. It's the same logic behind investor accreditation requirements. Now there are legitimate arguments to the contrary, like some of the ones you've made upthread. But let's state both views accurately.

by lutorm 10y ago

rayiner 10y ago

The folks attacking payday lending (i.e. mainstream American liberals) aren't suggesting replacing those options with minimum basic income or a comprehensive welfare state. They're simply ignorant, and think that poor people will be helped if the government sets lower rates by fiat. In reality, it will simply remove another option from people who have very few.

eropple 10y ago
> The folks attacking payday lending (i.e. mainstream American liberals) aren't suggesting replacing those options with minimum basic income or a comprehensive welfare state "Mainstream American liberals" would love to be pushing for a comprehensive welfare state more aggressively except that they are then beset upon with screeches of the socialisms and the death panels. But we are pushing.
lutorm 10y ago
Well, I am attacking payday lending, and I am for replacing it with a comprehensive welfare state. I don't know if I'm a "mainstream American liberal", I'm barely American, but maybe it would behoove you to be a little more open to the fact that maybe you don't in fact know what everyone else is thinking and whether they are ignorant or not.
- rayiner 10y ago
  That's great, but I wasn't talking about you. I'm talking about the mainstream American liberals (i.e. the main constituency of the Democratic Party), which is pushing for heavily regulating payday lending but certainly doesn't embrace a European-style welfare state or basic income.
tptacek 10y ago
Well, hold on. I'm familiar with the libertarian argument in favor of deregulated payday lending and I believe the figures that suggest rates are high because default rates are high. But the actual product being sold might be harmful, in the same sense as cheap revolving credit can be. The availability of payday loans leads to bad discretionary spending decisions (not just "flat screen TV" bad, but "accepting financial risks that are best not accepted" bad) which leaves people trapped --- and then you start getting interested in how much the returns in the payday loan business are subsidized by poor people who made understandable-but-ill-advised financial decisions and are now trapped under fees and interest from a payday loan. Your points about low-income housing are well taken. But I think the comparison to payday loans, and the subtext that all services offered to poor people are intrinsically beneficial, kind of falls apart. There are other problems here too. For instance, we tend to believe that renters are have worse upkeep incentives than owners, who directly benefit from improved property values. Similarly, people who let out trailers to the poorest people in society may also disincentivize upkeep. After all: they've pegged their business to the very bottom segment of the market. That's a real market phenomenon too: "the race to the bottom".
pcwalton 10y ago
> In reality, it will simply remove another option from people who have very few. Their argument is that this is a good thing, because taking a payday loan is usually not a rational economic decision, and therefore overall welfare is improved by forbidding people who stand to lose a lot from poor economic decisions from making those decisions. It's the same logic behind investor accreditation requirements. Now there are legitimate arguments to the contrary, like some of the ones you've made upthread. But let's state both views accurately.