In her Columbus Dispatch letter to the editor published Saturday, Ohio House State Rep. Joyce Beatty proposes a litany of legislation to stop loans that "victimize people who show either desperation or lack of understanding of financial discipline."
Her two main solutions: Continue her "long battle to help public-school students attain financial literacy"; and, end loans that "take advantage of people's desperation," including rent-to-own shops, tax preparation services that advance money based on future income-tax refunds, etc.
Solution One: Look, public schools have existed for over 150 years; they are not going to improve. And, they are not going to adequately educate students with regard to personal finances any more than they are going to reduce the number of overweight Americans through increased health and physical education classes. Haven't we been here before, time and time again? Haven't we given this failing system enough chances, and enough money?
Let's accept the fact that no change, whether proposed by Beatty or anyone else, is ever going to correct the course of government-run education.
Teach students to be financially literate?!? Come on, the system can't even teach students to be literate.
Solution Two: There are always those at the margin who need cash or consumer goods today. And, they are willing to take whatever interest rate the market offers. Yet, there is nothing wrong with someone taking a high interest loan, just as there is nothing wrong with someone providing such a loan.1
In the end, Beatty is proposing lagislation that will make it illegal for poor people to get loans unless they have a high credit rating. But, as a state representative, she obviously feels that she knows best. That is the evil of omniscience -- the belief held by government officials that they know more than their constituents.
Beatty will not only punish companies that provide loans, she will also punish the poor seeking these loans. Nice job!
1. There is a history of biblical rules that apply if the loans are charitable - then usury cannot be taken, and the principal forgiven if unpaid. But, I will assume that the greater majority are not charitable in nature.