But now you can’t go to the track and double your money before you pack it back!
Oh, spare me. I wasn’t suggesting that the scenario I made up was at all indicative of my personal nature.
We’ll have to agree to disagree. Lawmakers should not cater to the lowest common denominators in society. There are grey areas, I’ll admit, but I don’t see how payday loans factor into them. It’s John’s money, and John is told very clearly, up front, before anything is signed, how much he has to pay back and when he has to pay it back. At that point, John has every right to turn around and leave. If he doesn’t, it’s on him, and I have zero sympathy for someone who turns around 2 weeks later and whines about the big bad loan company coming after them for repayment according to the terms of a signed contract.
Fraud does prey upon the less fortunate, but fraud should be limited to contractual violations. The 419 scams and Bernie Madoff’s gig can then certainly be considered fraud, but Payday loan places? I can’t see that.
you can get a pre-paid cell very cheap, and a dial-up internet service for about $5 a month. If you live by yourself, you need to get a roommate or move in with a relative or something. I find it hard to believe you can’t find a way to save $50 a month, but somehow you can find a way to pay $450 in one lump sum without wrecking your budget.
And if John Smith crashes and suffers catastrophic injuries that would have been prevented by a seat belt, then the cost of his medical care is assumed by the state. This takes money out of my pocketbook and that of every other taxpayer.
That is the justification for mandatory seat belt laws. John has the right to be stupid if it only hurts himself. He does not have the right to be stupid if his stupidity has a very real potential to affect me and everyone else in society.
Usury laws protect stupid people from high-interest loans that trap them in to a debt cycle that is extremely hard to break. This damages society because it pushes a percentage of these people into such a state of poverty that they need state welfare services that they otherwise might not have needed.
This takes money out of my pocketbook and that of every other taxpayer, and yep, you guessed it, is the justification for anti-usury laws. Plus, there is the negative effect of increasing the number of financially desperate people in society, which certainly doesn’t help the crime rate go down.
And the employees and customers and delivery people and health inspectors (and so on) who are subjected to the second-hand smoke?
Some of those people might conceivably be doing so on their own volition, but not all of them. Do those people not have rights? Plus there’s the cost to society of indigent people dying slow and expensive deaths from emphysema, which, yep, you guessed it, takes money out of my pocketbook and that of every other taxpayer. And that is the justification for smoking bans in public spaces.
Any other examples you’d like to put forth?
As a corollary to my post, I don’t think the state or anyone but John and his insurance should assume the cost of any medical care.
The rest of your post details other ways in which society picks up the pieces for those who made bad choices. I thought it implied, but suppose I didn’t outright say, that I don’t think society should be in this business, either. If John crashes, let him and his insurance company sort out the cost. His insurance company should be able to mandate seat belt use; if it’s found that he was negligent in that regard, they should have the right to refuse payment.
The employee doesn’t have the “right” to a smoke-free environment, no. The employer’s policy on smoking should be (and usually is) very clear, and this kind of employment is by and large at-will. This type of reasoning leads to absurd statements like “well, we should ban fast food, because it can lead to all kinds of medical problems which, yep, you guessed it, takes money out of my pocketbook and that of every other taxpayer.”
Don’t forget about the principle, too. What you’re saying is that, a few times a year, you can scrounge up enough money to pay for a car repair or other surprise contingency, plus interest on that cost. When such a contingency comes up, costing, say, 400 dollars, you take out a loan, and then a few weeks later scrounge enough to pay $450 that you hadn’t budgeted.
OK, so you’re doing well enough that about twice a year, you can pony up $450 more than you normally expect to. Suppose that, just once, you scrounged that way without needing to. Not as a way of life, just one single month. Instead of putting the $450 you scraped together towards an emergency + interest, you put it into a bank account (or heck, even just hid it in a shoebox under your bed). Then, when the next emergency comes along, instead of taking out a loan for $400 at the time and paying back $450 a couple of weeks later, you can withdraw $400 from your account (or shoebox) now and put $400 back into your account a couple of weeks later. By tightening your belt just one single time, you’ve managed to save yourself $50 every single time in the future that you’re ever in that situation. If you want, you can spend that $50 you saved on something you want, or of course you could put some or all of it into your rainy day fund, so you’re now able to withstand even greater emergencies.
And when John can’t pay the hundreds of thousands of dollars in medical bills, then John becomes a ward of the state. Then, yet again, it’s my pocketbook and your pocketbook taking the hit.
Sure, if a millionaire wants to violate the terms of his or her insurance policy, or not carry injury protection on a car insurance policy, that’s fine by me. But for the other 99% of the population, who will become destitute when faced with astronomical medical bills, what then?
Actually, I can’t get dial-up - the phone lines don’t work in the apartment I live in. I could get them fixed, but why? I would then have to get home phone service. And why would I move in with a relative or get a roommate (I live in a 220 sq foot one bedroom that I love and is quite cheap) to save myself, what, $150 a year in fees? This is my life. I am in my 30s. I do not have amassed debt. I pay my bills. I save up and buy used cars up front when I need a new one. I do not require government assistance. I am not complaining.
What I am saying is that I could save up $450 over the course of a very tight month and a half to two months if I had to, by cutting out all entertainment/nonessential costs (rent, utilities, phone/internet, one tank of gas, beans and rice/staples for food, that’s it) and by working on the weekends at odd jobs, friends’ flea market booths, that sort of thing. That’s not enjoyable, nor is it a way I intend to live my life on a regular basis. It works just fine when there is an emergency. Payday loans allow me to get that cash up front, pay it off over the month/two months, does not cost me all that much, and means I can deal with said emergency right then instead of after the money is saved.
It works for me. Like I said, most of you are paying much more than I do yearly in fees and interest rates on car loans, credit cards, house payments, and the like. In fact, banning payday loans would not prevent me from getting a half dozen credit cards, maxing them out, and REALLY putting myself into dire straits, which I have seen friends do over and over. I don’t need protecting. I understand what I am paying and choose to pay it. I am not alone in this.
What then, indeed? It really shouldn’t be my problem, or anyone else’s. If Joe was following the terms of his insurance contract, let them pay. If he wasn’t, collect from him. I don’t see why I, or anyone else, should be burdened with picking up his bill. I’m fine with paying into hospitals to provide rudimentary emergency care to the uninsured, but beyond that, individuals alone should be faced with the consequences of their actions.
I don’t know where you live, but drinks are on me.
Chronos: Honestly, tell me - do you pay everything in cash, up front? Or do you currently have loans and debt?
Sure. But as Chronos pointed out, you could handle these emergencies even more cheaply by just once scrimping to save up that $450 BEFORE you need it. Then whenever the next emergency comes along, you spend whatever you need from your savings, and scrimp and save again for a month or so to replace what you spent.
In short, you’d be your own payday lender, except you’d be earning interest instead of paying interest on your payday loan money.
If you personally would rather pay interest to a payday lender, that’s fine with me. But it doesn’t strike me as a compelling argument for why predatory payday lending needs to be kept legal. If some people are being victimized by it, and if the non-victims who use it (like you) have cheaper and better alternatives available, then what purpose is it really serving?
His choice is fine with you, but you’d still prefer to regulate what types of voluntary transactions he can and cannot enter into, simply because they don’t sit well with you?
The only people being victimized by payday lending are those who, voluntarily and with full consent, agree to be victimized.
By that method, I’d have to do the scrimp thing one extra time, to save up the $400 or whatever to start with. I’d still have to scrimp after paying it, to replenish. The fee is the smallest part of the money that I’d be trying to get my hands on, right? The extra $50 is not what makes it take up to two months to save up. Yes, it would save me money. No, it would not save me time. Yes, I could spend that $150 a year on something else. I know that. But I would rather have the time than the money, frankly, in this case.
Not to say that some people don’t get into nasty cycles with payday loans. I’ve seen people getting them that, frankly, can barely read. But the majority of the people I have encountered in payday loan situations are just doing what it takes to get out of an emergency situation. As I said before, you can get in much bigger trouble by stacking credit cards, and no one’s banning those.
That makes as much sense as saying society should protect people like John from people who want to charge him $500 for a couch. You fail to realize that the value of money is not necessarily the same as the numbers printed on those dollar bills being borrowed. Value is subjective. For some people, $100 today may be worth $500 in two weeks (actually, it’s more like $115 in two weeks – that’s the rate payday lenders were charging in Ohio). Sometimes you need cash in a hurry and its value to you is far in excess of the actual amount of money being borrowed.
Let me try and illustrate by using an example of value from my own life. I work from home and I rely on my Internet connection for my work. I have to turn in something every morning by 8:00 a.m. for me to get a paycheck. It’s vital that I turn this stuff in every morning or I’ll lose my job. I pay $30 a month for my Internet connection. One morning I had to drop my mom off at the airport at 7:00 a.m. So in order to do that as well as get my job done, I used the airport’s wi-fi to complete my work at the airport. I paid $9.99 for a couple hour’s worth of wi-fi usage. If I did that for all 20 working days in a month, that would be around $200, far more than I pay for Internet service. But for me to keep my paychecks rolling, the value of that wi-fi at that time was worth well in excess of $9.99. I was willing to pay a much higher price for that service than I normally pay because of its value to me at that time.
The same reason I paid $9.99 for two hours of wi-fi is the same reason people take out payday loans. If you can’t understand the basic concept of value then you shouldn’t be part of this debate.
I notice you totally sidestepped my comments upon your theory of government.
Unless you desire that government cease to exist, all acts of government interfere with the right of some group of people to exercise what I suspect you consider “freedom” to be. So, to take your theory to its logical conclusion, no act of government should ever be allowed to happen, since such an act is the will of the majority imposing itself upon the freedom of the minority.
You will, I hope, agree that’s a stupid concept.
Now, we can debate quite thoroughly the question of whether this particular governmental act should be allowed to occur. We can weigh the benefits to society versus the infringement upon the freedoms of some group of individuals. We can try to apply some theory of political science that allows us to determine which governmental acts are ok, and which are excessive uses of power. And that’s the nature of politics.
But your argument does none of these things. It is based solely upon an attack at the very root nature of government. Accepted as true, it would mean that there should be no government. This, I think, we all reject.
Derail? It’s the whole point of the discussion. It’s the kernel. The core.
Let me ask it another way. Suppose there was an offering of credit to you. A certain APR, certain fees, certain terms and conditions. Pick whatever numbers you want for purposes of discussion. 40% APR, $100 fee. 1% APR, no fee. It doesn’t matter to me. Pick a strawman at your leisure.
Do you feel you are competent enough to decide whether to accept that offer, or decline it?
And why was that? Why did the banking system collapse affect all of us? I’d like you to walk through that in a little detail, if you don’t mind.
For example, if depositors give a bank $100, and the bank lends out $100, and it goes bad, and they can maybe only recover $30 of the $100, the depositors only get back $30, right? And then it’s over. The bank made a bad decision, and the depositors (and perhaps the banks’ shareholders) lost money, just like any other business. It’s confined to them.
Right? Isn’t that the way it works? Oh, wait. It doesn’t work that way. Banks seemingly can be exposed for far, far more than their depositors funds.
How can that be? And even if they lose money on bad loans, the depositors are insured. How can that be, as well? I’m confused.
Hmmmmm. It seems that banking is dramatically different than nearly all other industries in the US that go bankrupt when they make bad decisions.
How can this be? Who would create such a system that operates on fiat money and allows fractional-reserve banking, which in the technical sense could be argued allows banks to operate as bankrupt at all times? Did that just spring out of the ether? Was it the free market that did that? Did banks agree to go off the gold standard of their own volition (which would provide a natural check on much of their recent activity)?
Who created that system? Who controls the fiat money supply, which is the blood coursing through it’s veins? Who outlaws the use of a commodity-backed currency? Who regulates such entities?
It must the free market. The free market did that. Right?
In Calcutta, destitute people die in the streets. I’d rather not have that here.
Since India’s economy is far more socialist than ours, I assume you are saying you’d like India to reduce the heavy burden of government on its citizens so businessmen can create jobs and people can find work. I agree with you wholeheartedly.
I just wanted to add this, as the only person here who has so far admitted to using payday loans: I’m not saying it’s a great idea or should be used all the time. It does cost money. I’m just saying that sometimes it’s handy and worth it to me, and I like having it as an option.