From Veronique de Rugy over at NRO:
The Consumer Financial Protection Bureau is at it again. In the name of protecting consumers, it would like to ban or heavily restrict a tool that is very useful to them. This time the target is payday lending – high-interest, low-dollar “payday loans” – that the federal government wants to regulate out of existence. Yet, no matter how horrible the well-intentioned bureaucrats at the CFPB think it is, the $38.5 billion payday-lending market is used daily by many customers for whom it is the only source of credit available.
I almost can’t even talk about this – it is just so blind to reality.
The article goes on to make all sorts of arguments that the payday loans aren’t that bad and that poor people need them. At the end of it all, you have a strong and vigorous defense of an institution – and a practice – which Progressives can easily demonize and which they can use to garner support among poor people. That Progressives won’t ever do anything to get people to a point where they don’t feel a desire to use payday loans is neither here nor there – by attacking payday loans as a blood-sucking “soak the poor” scheme, Progressives will gain support. Meanwhile, we’ll be out there going, “come on, guys; it’s not so bad”. We deserve to lose, we’re so stupid.
The reality is that payday loans are a horribly anti-Conservative thing. Conservatives are supposed to be about making things so that people can live independently of the ministrations of Big Government. This means we have to convince people that working hard and saving money is the way to go…not working part-time and using payday loans to even out the cash flow for immediate consumption!
I know full well that payday loans are often the only form of credit a poor person can get – but it is far better that they get no credit, at all, then get vastly expensive credit which is used for immediate consumption rather than long-term investment. Having access to payday loans – like having access to welfare – encourages improvidence. Such things make people less conservative in thought and action. And the only purpose of sustaining such things is – aside from encouraging irresponsibility among the poor – is to make a few people rich by making the loans. They do nothing good in a Conservative sense.
But the real stupidity here is that Conservatives don’t think – we see a business and it’s profitable and legal and we instantly assume it is worthy of defense. It doesn’t work like that! What is legal is not necessarily what is right. A Conservative response to payday loans is to encourage savings – figuring out a way to make saved money so clearly a good thing that people will want to save (you know, so the poor person will have $300 in his account when money is short for food, and thus won’t have to take out a payday loan). A major step on this would be, of course, to make real money again – gold and silver backed money – but that isn’t happening any time soon. But we could take a baby step and say to the Banks, “as long as you’re borrowing money from the Federal Reserve for next-to-nothing, you’re going to pay 5% interest on savings accounts up to $100,000.00”. Allow people to write off their taxes 10% of the amount of cash they have saved up to $100,000.00. Give EITC to people who make 100% or less of the poverty rate but still manage to save 10% of their gross annual income. That sort of thing. But whatever we do, for goodness sake don’t defend people can justly be accused of charging 400% annual interest! If the Progs want to slap another tax or regulatory step on payday loans, let them! Defending such companies is not the hill Conservatism should die on.
We really got to start thinking, Conservatives. We can’t forever be stupid – because if we are, then we’ll be living in the United Socialist States of America by 2030.