This is the conclusion of my look at Lawrence Meyers’ critique of Graves and Peterson’s biased academic screed “Usury Law and the Christian Right: Faith Based Political Power and the Geography of the American Payday Loan Regulation.” CLICK HERE if you missed the last segment of this article. Before I move on to Meyers’ wrap-up of the authors’ final odds and ends, I want to hit the reset button on a pertinent topic when it comes to payday loans and “usurious” interest: British philosopher Jeremy Bentham and his utilitarian views of freedom.

Defending usury

Customer satisfaction with and the proliferation of payday loans in society are strong indicators that the product should be here to stay. English philosopher and financial reformer Jeremy Bentham would no doubt agree. In fact, he argues on behalf of usury as an essential element of free trade and financial freedom. The market dictates price, and competition forces a fair price when collusion is guarded against.

Bentham’s ideas about usury have been debated ever since his work “Defence of Usury” first appeared in 1787. Policymakers and the lay public are more conscious of undue regulation of interest on products like payday loans in large part thanks to reformist thinking like Bentham’s. I advise you to check his work out if you are at all interested in liberty and utilitarianism.

Meyers sweeps the floor

Here’s more, straight from the authors’ mouths. Meyers has the broom out, ready for the sweep.

PDLs have exploded into an industry with more than McDonald’s, BK, Sears, JCPenny, and Target combined. For those concerned about the social moral and spiritual well-being of the lower and moderate income Americans, this is a profound, unprecedented and troubling change.

Obesity and heart disease are REAL social issues. The authors have failed to make their case that we should be worried about payday loans. Fast food presents a real and present health risk if consumed too often (as Americans like myself are wont to do). If you want to talk about cost, Meyers argues, how about “rising health care costs, burden on the health care delivery system, as well as to the individual health of those that use those products irresponsibly?” This is far more serious than any minority of customers who default upon their payday loan repayment. As far as the retail outlets the authors mention, I could assay a guess that they contribute to rampant consumerism, and frayed credit ratings, stress and financially challenged families are the result. I’ve been there, too.

Mapping malady

The connections the authors attempt to convey via their mapping of payday loan store locations and their “assault” on the poor and minorities falls utterly flat. Meyers says in no uncertain terms that their strategy “fails to fully develop a broad economic theory of the many possible determinants of payday loan storefront locations.” It goes beyond mere census demographics for areas considered. Meyers suggests there are likely numerous omitted variables here, variables which the authors completely ignored.

According to Indiana Wesleyan Economics Professor Thomas Lehman’s critique of the 2005 D. Saltes study “Race Matters: The Concentration of Payday Lenders in African-American Neighborhoods in North Carolina,” the professor states that “finding an apparent relationship in a regression that actually doesn’t exist can be a consequence of omitted variable bias.”

CLICK HERE for the conclusion of this article…

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