Payday Lenders

I sent this letter to The State. I haven't seen it published yet, and I doubt that it will be published. So, I'm putting it here.

Dear editor,

I do not recommend that anyone turn to a payday lender
to make up for a shortfall in their disastrous
finances. Along the same lines, I do not recommend
that anyone turn to the state government to regulate
or outlaw payday lenders. The legislature can only
make a bad problem worse.

Whenever the government interferes in or outlaws a
free market, a black market always emerges. This was
true during Prohibition when bootleggers and organized
crime became the suppliers of booze. We see this in
the current war on drugs. We also see this in South
Carolina as video poker has gone underground since it
was outlawed or the influx of illegal immigrants
coming to take advantage of the under-the-table cash
economy and creating a black market in labor.

If South Carolina were to outlaw payday lending, it
would be a financial boon to the real loan sharks who
take body parts as collateral. Like it or not, people
with messy finances and little sense will always turn
to these lenders of last resort. A high interest rate
and damaged credit are preferrable to broken knee
caps.

Payday lending may seem distasteful to many, but the
reason payday lenders charge those high interest rates
is to compensate for the risk they take in lending to
morons. Calling payday borrowers "victims" is a bit
disingenuous when it is probably the lender who will
get burned in the exchange. Why should we interfere in
their folly? What will it do for the rest of us?

Finally, if South Carolina is so concerned about the
finances of the poor and the ignorant, the legislature
should outlaw one of the biggest hazards to these
people--the state lottery. It would be hypocritical
for the state to outlaw payday lending but keep
feeding off of the false hopes of the poor.

Sincerely,
Charles Broadway

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