Elias addressed what would happen if payday loans were limited to 36 percent APR.

“What would people do for credit in that circumstance? They would forego unnecessary expenditures, they’d borrow from family members or perhaps they wouldn’t pay for cable TV for a month. One-third of the people in the country don’t have access to payday loans because they’re illegal in the state they live in. This payday debt trap should not be going on in this state either,” said Elias.

Why do payday opponents always believe they know how best to budget other people’s money?

At a time when so many Americans are facing unprecedented financial difficulties, it seems out of the question to take short-term loan options away from consumers—especially when many of them have few alternatives as it is. But for self-righteous individuals who would prefer to make decisions for all of us, protecting choices (or offering more of them) is a low priority.

While Mr.  Davis’s piece is mostly about the housing crisis, some of what he says has relevance to the payday lending debate.  From the piece: 

“While bad times may increase urgency and force quick reaction, paternalism should not be the medicinal remedy for any situation. In its best-case scenario, it would stop some Americans from unwittingly entering into situations that will hurt them in the end. At the same time, it will severely limit those Americans who wittingly play the American market to their advantage through smart investments.”  

The  Payday Pundit agrees.  

“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.”

“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.”

But McGovern goes beyond the mere mechanics of how banning or restricting payday advances hurts consumers.  He offers insight into the very foundations of individual liberty and how it’s engrained in American society and culture:

“Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society.”

At the risk of getting too classical, your Payday Pundit is reminded of this gem from Italian statesman and poet Dante Alighieri which well parallels the sentiments in McGovern’s WSJ piece:

“Mankind is at its best when it is most free.  This will be clear if we grasp the principle of liberty.  We must recall that the basic principle is freedom of choice, which saying many have on their lips but few in their minds.”

Seems we could use a little more 14th Century wisdom in the 21st Century.