George McGovern isn’t the type of public figure you’d expect to find as an advocate for payday loans. The 1972 Democrat Party Presidential candidate has some interesting things to say about the Payday Loan Industry- things we’ve been saying all along, but things many misguided politicians seem to ignore in an effort to win a few pats on the back. 

While the article is a few months old, and can be found in it’s entirety here, his points remain valid and are worth repeating here at CashWise: 

Economic paternalism takes its newest form with the campaign against short-term small loans, commonly known as "payday lending." With payday lending, people in need of immediate money can borrow against their future paychecks, allowing emergency purchases or bill payments they could not otherwise make… Anguished at the fact that payday lending isn't perfect, some people would outlaw the service entirely, or cap fees at such low levels that no lender will provide the service. Anyone who's familiar with the law of unintended consequences should be able to guess what happens next.

Researchers from the Federal Reserve Bank of New York went one step further and laid the data out: Payday lending bans simply push low-income borrowers into less pleasant options, including increased rates of bankruptcy. Net result: After a lending ban, the consumer has the same amount of debt but fewer ways to manage it.

His conclusion?

Why do we think we are helping adult consumers by taking away their options? We don't take away cars because we don't like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don't operate mindlessly in trying to smooth out every theoretical wrinkle in life.

The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

The truth always seems to have a nice ring to it, doesn’t it? You can read the full article here.