The recently enacted ban on payday lending discussed here on Carolina Journal is a typical exercise in political grandstanding. Many politicians are constantly looking for ways to make themselves look caring and concerned in the eyes of a voting public that is, for the most part, not well informed on political issues. Voting for bills that seem to help or protect people makes for good campaign ads and rhetoric — even if the actual results of the legislation are detrimental. A state legislator I once knew said that “politics is theater” and that is exactly right. It’s acting to impress an audience. The difference is that plays don’t make people worse off in the real world, whereas politics does.
In this case, payday lenders who performed a service that quite a few people want to take advantage of — remember that voluntary trade only takes place when both parties expect to benefit from it –are driven out of business (at least in North Carolina) and their workers out of jobs. The people who used to count on them for cash are denied that option. The politicians claim that they’re “protecting” poor people from making a bad choice, but how do the politicians know that? Do they understand the circumstances of all workers so well that they know that it’s never rational for them to take advantage of the payday lenders? That’s preposterous. Or are they saying that they know that sometimes it is unwise for workers to use their services? If so, why take freedom away from everyone just to protect a few against their own folly?
The economist Thomas Sowell points out in several of his many books that you don’t make people better off by taking away their options. Unfortunately, our politicians have just deprived people of one option. It’s a typical (and disgusting) case of political grandstanding.
