Sorry for the lack of posts lately, but after I started getting e-mails from folks reading posts, I came to a frightening realization—people are actually reading this! So, chalk up the recent dearth of posts, to some stage fright, and let’s get to a topic or two.
There has been a lot of talk in this town (and across the country) about various lending practices to the poor, students, first-time homebuyers, etc., and it brought to mind an important characteristic of markets that is often overlooked. As markets are made up of people, they reflect what these people want. Markets do not judge; they provide. Therefore, a market is not “immoral” but amoral. Now, folks can want some pretty unpleasant stuff sometimes, so this is not to say that some markets shouldn’t be subject to some pretty hefty restrictions or prohibitions (kiddie porn comes to mind). However, we must recognize that if people want something and are willing to pay for it, then someone will usually be willing to provide it. The lending of money is no exception.
Poor people—like everyone else—want credit, with which the market provides them. If actions are taken to curtail the lending of money to the poor via usury laws or other methods, then this will not change the fact that poor people will still want to borrow money. So if the local “payday” loan store is shutdown, or the usual lenders refuse to lend at legal (artificially low) rates, then poor folks will find a willing lender in the form of the local loan shark. The problem with the local loan shark is that he will not only ignore the usury law, but is also likely to discard those pesky bankruptcy laws if debtors default. Liquidation proceedings could mean just that.
Anyway, the point is that folks who are quick to blame “immoral,” “unscrupulous,” or “unrestrained” markets often fail to recognize that what they are observing is simply the market trying to provide people with what they value—for better, for worse, moral, immoral, and amoral.
Comments