What I was GOING to say before NPR cut me off

A couple days ago, my truck’s brakes died on me and I had to put it in the shop. During that time, I borrowed one of the company trucks to be able to get around and do my route. Though I typically listen to CDs while driving, the car I was in was CD-player-less. So I listened to NPR.

Though I got my truck back, I’ve continued listening to NPR the past couple days. This morning, the local portion of the broadcast had a featurette on how Ohio is considering (or has recently) enacted legislation placing a cap on the interest rate payday loan businesses can charge their customers. They then began discussing that idea for Nevada.

The radio host had three guests; two were in favor of such legislation (one was actually the legislator from Ohio responsible for the law) and the other was against. The host himself seemed to favor such legislation as well.

I decided to call in to contribute to the discussion. My call went something like this:

“I’m sure most people listening to this will have the sort of knee-jerk reaction that it is a great idea. I’m not calling to say it’s necessarily a bad one, but with my schooling in economics I’ve come to view policies in a slightly different way. The proposal you’ve been talking about — placing a cap on interest rates — seems like it will have quite a similar effect as a minimum wage, in the way it will affect lower income people. I’m sure there are many low to lower-middle income families and individuals who use these payday loan services…”

At this point the host jumped in and took over. Though I wasn’t asking about the demographics of payday loan customers, I assumed that’s what he assumed, because he then started asking the panel (minus the one opponent, who had mysteriously disappeared) what income-levels were average for payday loan services. According to them, everyone uses payday loans.

Though I never really said that the middle and upper classes don’t use them, I guess that’s what they inferred, because that’s what they talked about for the next several minutes until they shut me off the program.

Had I been given the chance to finish what I was really going to get to, it would have been this:

“For example, we know that minimum wage laws harm the lowest income families and individuals. By placing a ‘cap’ on how little employers can pay their employees, a sort of wedge is created which causes unemployment to go up. So, while some are helped by this (in the form of slightly higher wages), many others are harmed (by not being able to work at all). The reason payday loan businesses charge such exorbitant interest rates is because they are taking a huge risk. If a cap is instituted, these businesses will have to be more selective in whom they give loans out to. In the same way that minimum wage laws create a wedge and harm many of the lowest income people, placing a cap on interest rates will make it so that these lowest income people — the people with really bad credit, the people who need the loans the most, etc. — will not be able to get them. In the process of trying to ‘help’ people with legislation, you will simultaneously create a negative unintended consequence.”