Tim Miller writes in the Christian Science Monitor about ‘payday loans’, which I take to include various kinds of short-term, high-interest loans using an upcoming paycheck, a car, or any other big-ticket item as collateral. Miller’s thesis is that these loans are, for the poorer among us, sometimes a good option for short-term cash and should not be banned, even though many politicians (Democratic presidential candidates Senator Hillary Clinton [NY] and Senator Barack Obama [IL] included) label them as ‘predatory’ and wish to prohibit them.
I disagree with Miller in his argument that these loans aren’t inherently a bad idea. They are. They should be avoided like the plague, even by the poor who don’t have the credit for a more traditional loan. But I do, however, agree with Miller’s conclusion. The companies that offer these loans have every right to offer them, and if people are dumb enough to sign on the dotted line that’s their problem—not mine, and not the government’s.
The United States is already far along on the road to becoming a ‘paternalist’ or ‘nanny’ state, where the government takes on the parent role and [futilely] attempts to prevent its citizens from making bad decisions. But this nation was founded on the ideals of freedom and liberty to make our own decisions—good or bad, right or wrong—so long as our decisions don’t hurt others. Paternalism is an affront to those ideals.
I oppose payday loans (and make fun of their TV advertisments incessantly, as Melissa can attest), the same as I oppose variable-rate mortgages. But if we want to put these ‘predatory’ companies out of business, we need to stop using their services. We cannot, nor should we, rely on some all-powerful government to protect us from everything that could harm us.