The payday loan industry is indefensible

Payday lending, with its grotesquely high interest rates and fees, is indefensible. Who could argue otherwise? In other ages, in every clime, there used to be another name for it — usury — and it was a name that burned on the lips of defenders of the common good from Aristotle to Gandhi. But in America in 2018, where it is a $50 billion industry, it has may defenders. Mick Mulvaney, who is in charge of budgets at the White House, which recently issued its recommendations that women who require assistance in order to feed their children should in the future receive cans of peas and dried milk in the mail instead of being allowed to visit the grocery store, is also the head of the Consumer Financial Protection Bureau. He defends the usurers. Indeed, he has been paid to do so by the usurers themselves. This probably explains why he has just shut down an investigation into an online lender that had been charging customers 900 percent interest.

But not everyone is like Mulvaney. There are also the economists, professional and otherwise, who defend usurers for free. You know the sort of person I mean. There is a style that is universal among economists and the popular devotees of that science, a mawkish, counter-intuitive posture that involves racing to see who can say “Actually … ” with the most evident self-satisfaction. The authors of Freakonomics, who in their bestseller welcomed the decision of the Supreme Court in Roe v. Wade on the grounds that it might have reduced crime, patiently explain that, poor dears, the customers served by the payday lenders have no one else to turn to. Probably they are right. Payday lenders of their charity agree to take advantage of people so marginalized that even Visa and Capital One decline the privilege of exploiting them. Besides, the economists observe, citing a survey, “almost 90 percent of users of the product say that they’re either somewhat satisfied or very satisfied with the product afterwards.” Imagine thinking that this was unanswerable.