Economics: PayDay Loans- Bastards or Black Sheep?

[heydaralon]

My only point was that in a situation like this, where there are pissed off poor people on one side, and banks and business with bales of cash on the other, you don't need to worry if you are in the business corner...

[DBTrek]

I'm not worried about payday loans, I don't use them.
I'm just discussing what I believe are economic misconceptions about them.
And along with these misconceptions, I'm looking at the ramifications of passing legislation based upon flawed perceptions or ignorance.

• If folks understand why payday loans charge high interest rates, then they won't feel emotionally compelled to destroy them for "screwing over the poor".
  
  If folks understand the circumstances in which the institutions are valuable, they're more likely to leverage them properly.
  
  If folks understand the dangers of using them recklessly, they'll avoid doing so.

If folks understand all of the above, and still want to abolish them - then at least they're acting in an informed manner instead of being led around by that mob of folks who hate businesses, hate wealthy folks, and ain't that fond of capitalism either.

I'm enjoying the discussion, but at this stage of my life and career it's unlikely I'll need the services of a payday loan place again.
(God willing)

[Hanarchy Montanarchy]

On the same token, I am not sure that reading a couple of Sowell and Hoppe books means I know better than the Oregon demos what should count as usury, and what should count as valid.

You have amazing faith in average Oregon legislators, if you think their knowledge of economics not only exceeds Sowell and Hoppe, but also believe that their predictive powers of where "usury" begins are superior to allowing the market forces of supply and demand set price points.

Those have to be the most unbelievable representatives in the world. In fact, with those powers of prognostication they may simply be the most gifted humans in the world.

... but having been to "we aren't competent to pump our own gas, Oregon" multiple times, I find that possibility extremely unlikely.

I think this cuts to the heart of our disagreement.

I don't think the people of Oregon know more than Sowell or Hoppe about economics. But I am not certain that knowledge of economics is the only important factor in good governance, and I am willing to trust the people of Oregon to experiment with restrictive legislation on high risk, high interest loans.

Because I like democracy, and you are, like, a total fascist maaaan.

[heydaralon]

I'm not worried about payday loans, I don't use them.
I'm just discussing what I believe are economic misconceptions about them.
And along with these misconceptions, I'm looking at the ramifications of passing legislation based upon flawed perceptions or ignorance.

• If folks understand why payday loans charge high interest rates, then they won't feel emotionally compelled to destroy them for "screwing over the poor".
  
  If folks understand the circumstances in which the institutions are valuable, they're more likely to leverage them properly.
  
  If folks understand the dangers of using them recklessly, they'll avoid doing so.

If folks understand all of the above, and still want to abolish them - then at least they're acting in an informed way instead of being led around by that mob of folks who hate businesses, hate wealthy folks, and ain't that fond of capitalism either.

I'm enjoying the discussion, but at this stage of my life and career it's unlikely I'll need the services of a payday loan place again.
(God willing)

Ok fair enough. From my limited experience with the extremely poor they generally get that the loans terms are onerous because their credit is so shit, and while they might act like butter wouldn't melt in their mouth when dealing with banks, many of them have no intention of paying back their lenders. This is not always the case, but if you end up using payday, its almost like ending up in jail. You know why you are there. I have never used the services, but plenty of acquaintenances at work are depressingly familiar with their terms and those of pawn shops. I guess some people may not understand why the interest is high, but to me that seems like willful ignorance on their part.

What is kind of good and bad about America is that there is an entire economy built around catering to the very poor. Bankrupcy lawyers, pawn shops, payday loans etc. Apparently, declaring bankrupcy in Europe makes you persona non grata in the business world, and people won't deal with you at all, whereas here a bunch of Silicon valley dudes all went bankrupt at some point. I wish Hastur or Bjorn or one of those European dudes was around to weigh in on this and confirm if this stereotype is true, and if they think US bankrupcy laws are better than their own.

[heydaralon]

As a thought experiment, would anyone on here be for a kind of Merchant of Venice Pay Day loan? What if you couldn't pay, and the terms stated that you had to give some of your organs to the lender which could then be harvested and sold. Should it be legal to use your organs as collateral? If so, what organs? An eye? A testical? A kidney? Should this kind of loan be legal? I'm not arguing that the organs would be sadistically be torn out and thrown away. They would be taken out under anesthesia and used by hospitals etc. Iran allows organ donations for money, and a very shitty Jude Law movie (I think) had a similar premise. How would the board feel about this? Should it be legal here?

[Montegriffo]

As a thought experiment, would anyone on here be for a kind of Merchant of Venice Pay Day loan? What if you couldn't pay, and the terms stated that you had to give some of your organs to the lender which could then be harvested and sold. Should it be legal to use your organs as collateral? If so, what organs? An eye? A testical? A kidney? Should this kind of loan be legal? I'm not arguing that the organs would be sadistically be torn out and thrown away. They would be taken out under anesthesia and used by hospitals etc. Iran allows organ donations for money, and a very shitty Jude Law movie (I think) had a similar premise. How would the board feel about this? Should it be legal here?

No.
I think you may have missed the point of MOV.

[SuburbanFarmer]

My argument is that if we can consider payday loans a tool to keep the poor from starving or having their power shut off (two conditions I didn't bring up myself, I might add), then we can make the case that they aren't 'freely' entering the contract.

You can live without power - ask the people who survived a hurricane or tornado. Check with a Puerto Rican.

I could have easily lived on Ramen noodles for three days. I chose not to. I got a quick $100, paid it back in 4 days - it was probably $120 or so. Easy decision. I paid $20 so I didn't have to eat Ramen for three days. (Or something like that.)

No deaths; just a choice I made freely, knowing damn well I was paying a price.

You would, however, lose custody of your kids if it went on for too long.

You would also be unable to store food, or could even freeze to death in the winter up here.

Electricity is not a 'luxury'.

[DBTrek]

So ... in that dire scenario a payday loan place would give you one more tool to extend your ability to keep your electricity and kids until your fortunes turned around. And if your fortunes don’t turn around, it just buys you a few more months with your kids and electricity. . . Maybe enough time to make it past winter and to a place where you could drop electricity long enough to catch up on your debt.

Those bastards.

[DBTrek]

As a thought experiment, would anyone on here be for a kind of Merchant of Venice Pay Day loan? What if you couldn't pay, and the terms stated that you had to give some of your organs to the lender which could then be harvested and sold. Should it be legal to use your organs as collateral?

No.

There’s more to life than what is best economically, and not harvesting people’s organs over debt falls squarely into that category for me.

[SuburbanFarmer]

That's actually an interesting thought experiment.. Why wouldn't we allow someone to put a kidney up as collateral?

And what would the media villainize when someone came crying to them with a missing kidney?