My friend Matt recently created the website, predatorylendingassociation.com, which is a satirical attack on payday lending. I have great respect for Matt. He wants to make the world a better place. He recently created walkscore.com, which educates people on living in high density areas that don’t require dependence on automobiles.
Matt believes the payday lending industry should be regulated out of business because it does more harm to society than good. He applauds a North Carolina law that outlawed payday lending. This begs the question for me: should government regulate or outlaw industries in order to protect people from themselves?
I have no love for the payday lending industry, but I disagree that it’s a good idea for government to pass a law in order to protect people from themselves. As corrupt as this industry may be, nobody forces anyone else to take a loan from them. These loans are entered into by adults of legal age with their full consent. If two parties wish to enter into a contract, why should the government stop them?
If it’s the government’s mandate to protect people from themselves, where does one draw the line? Cigarettes have been shown to be incredibly dangerous. My mother smoked all her life and died of lung cancer. There was a time when cigarette companies made claims that smoking was healthy. This was outright fraud and stopping fraud is the domain of the government and the courts. But these days, there is a ton of education and warnings about the dangers of smoking, yet millions of people still smoke. I have several friends that regularly smoke. Should government step in and protect these people from themselves? Should we outlaw cigarettes because they cause more societal harm than good?
I have many friends that regularly smoke marijuana, but the government decided it harmful and therfore should outlawed. My friends would argue that they are really illegal because of a misplaced war on drugs and a desire to limit competition to tobacco companies. Ah, this is one of the problems with protecting people from themselves – the people in power get to decide what is harmful.
A libertarian-minded friend of mine told me this quote, “Never give a friend a power you wouldn’t want an enemy to have.” Most of my socially liberal-minded friends want women to have easy access to abortion. It’s not that much of stretch to imagine certain elements coming into power that would claim we need to protect women from aborting their fetuses and suffering eternal damnation. Or maybe they might decide that homosexuality should be outlawed because for the same reasons. Giving the government the power to protect people from themselves is a slippery slope. I do not want the government to have this power.
In a free society, the government should not try to protect people from themselves. People should be free to make their own choices, whether they are good ones or bad ones. When government tries to decide what is best for us and makes our decisions for us, the result is a small group of people in a far away city running our lives. This may start out with the best of intentions, but it leads to abuse and eventually the people become slaves of the government.
4 comments:
This is an argument most easily made by well-educated people enjoying a comfortably upper-middle class socio-economic lifestyle. "I'm doing well, leave me alone."
Let's now pretend that you didn't have that kind of education. That your biggest problem was where to get cash to buy your medication or the next meal for your children. Then, do you have the opportunity to read through all the fine print, to run your Excel model to understand the annual interest rate you are paying, or to negotiate the terms?
As a blanket statement, this a dangerous and more importantly, hopeless policy. Why can't we hold onto the hope that it's the role of government to create a better society?
Of course, there is always danger in having someone else decide what a "better" society looks like and so I understand your perspective. But don't we have (some) answers to that in the form of Checks and Balances, Division of Power, and Democratically-elected leaders? Granted, these systems have come under real attack lately, which is a topic for an entirely different discussion. Nevertheless, advocating such a hands-off laissez-faire position seems defeatist and hopeless. And most importantly, it favors the well-off.
There will always be those less fortunate, less educated, less blessed by the outcome of the ovarian lottery. They may not know that seatbelts save lives. They may not know that cigarettes cause lung cancer (certainly there have been well-funded fraudulent messages, but even in the absence of those, there are people who just won't get the facts). These people may not fully understand macroeconomic trends that will cause their monthly house payments to spike beyond their ability to pay. Yes, it's a slippery slope, but one we much venture down. If we don't, together, as a nation (as a government), then individual members will slip down that slope on their own...
(Indeed, in many (all) of these cases, you could make an argument that a less well-off, less educated individual was harmed by someone in a better position instead of harming theselves, but that's an entirely different argument which I'll set aside and speak to your principle.)
You are not isolated: a person harming himself becomes a blight on society. Over-consumption of trans-fat causes cholesterol problems which leads to heart problems which turns people into a cost on the medicare / medicaid system (not to mention a lack of production in the workforce). The same argument could be made of credit issues, seatbelts, etc. Unless you are also advocating a drastic scaling back of social services (which you may be, but I didn't want to assume--maybe a topic for another blog post), a person harming himself does not have isolated impact on society.
Letting people harm themselves will continue a dangerous stratification which has already started. Maybe that's OK at the beginning (if you're on the right side), but a very dangerous national trend.
This is NOT to defend all actions, causes, or methods of any particular government (especially not our current one). But it does represent a Hope that society, in a dynamic and constantly evolving way, can work towards a place where we lift up ALL of us instead of those of us who are currently more fortunate, more well educated, or in a better negotiating position.
I believe that government can and should be much more than a wall than protects good people from bad people. It should offer each of us the opportunity (or at least the hope) to make a better life for our children than we have had for ourselves. It should be the force which allows the strong, the weak, the rich, the poor, the lucky, and the unlucky to work together to build a nation that is better for everyone tomorrow than it was yesterday. For everyone, not just those currently in a good position to make smart choices.
Nice blog!
When I was in brazil, I was surprised by the fact that very very few people smoked in bars. I first thought they had laws like the US. Then I realized that nobody really smokes there. Smoking is legal but every pack of cigarette clearly educates users that cigarette kills and also causes impotence (see pictures below). I do wonder which is a better motivator for them :)
I like this balance. I think government should get out of the way, but educating people is important. Granted, it doesn't always work as we don't always know what's good or what's bad.
Look at these two pictures:
http://picasaweb.google.com/publicrezapictures/Rio/photo#5147051501614594098
http://picasaweb.google.com/publicrezapictures/Rio/photo#5147051501614594098
happy holidays!
What about laws against murder, rape, domestic or child abuse? Are you saying there should be in laws against those because the government should not decide what is bad? If not, where do we draw the line as a society?
Would you rather have your person not be able to eat, get badly needed medicine, get their car fixed so they can continue working, etc if there are no payday loan providers? Payday loans fulfill a valuable service that people need, however the government should be doing much more to regulate the industry in terms of better disclosure. You should not have to plug away at a laptop to figure out interest rates and fees. What the government should do is to make sure the interest rates and fees are in written in easy to understand, common language and that all fees are fully disclosed on every ad so that the customer has to read it and agree to it before going forward with the loan. For example look at this payday loan site:
https://www.fast-cash-personal-loans.com/home.asp#apply
I have a really hard time seeing the fees, which should not be allowed. This stuff is not that complicated, people understand basic interest rates and fees and will choose a provider if they can easily pick the best one. The governments role should not go between two private parties if they want to do a transaction, but to make sure both parties fully understand the transaction they are entering into.
Smoking is a great example, government forced the industry to give all the relevant information up front on every box. People know smoking is bad for them. In payday loans, you would create competition in the market since fees would be open and clear to the end user with common definitions, and people could choose a provider with the cheapest fees/rates. With the current system, you have incomplete information, which is why payday loan providers make huge profits.
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