I highly recommend George Leef’s guest column over at CJO back in January on the issue of payday-lending regulation. I just re-read it after following some links from a Business Week story on the consumer-credit crunch. George does an excellent job demolishing the idea that if you take away a consumer’s options, he is better off.
To the extent that payday lenders weren’t accurately conveying the terms of their loans to borrowers, that would be fraudulent, and entirely legitimate for the state to police. But simply to forbid this kind of loan, based on the preferences of people who aren’t parties to the loan, is inherently to do harm.
