That social part of our society has cottoned onto the idea that for the poor among us the game is rigged--and that it is not merely rigged but it is being played such that the information necessary to know about the choices to get out of it show up far too late to be of use, or not at all.
And while that is speaking of a just government, and ours is frequently unjust--sometimes it gets something right.
While the government thinks they just saved people from an evil corporation, all they've done is completely prohibit such customers from acquiring loans.
If there is opportunity for arbitrage, you or I or anyone could step in and create a seemingly profitable business while also providing a social benefit.
The moral hazard introduced by the government is the issue.
It could also be that undercutting that 36% rate does not make you competitive (instead of profitable) against less scrupulous actors (they can advertise more and lobby more; convincing society that they are necessary). Also, it is a kind of business that has a very very high barriers to entry (enormous amounts of capital, regulatory, etc.).
Competition alone can not solve profitable abuse (particularly on those with no options). The less scrupulous you are the more you can abuse, the more you can profit, and the more you drive your competition to implement your practices. The only limit is that fine-tuned equilibrium of casinos: only constrained to the point that allows the larger proportions of your customers just get by earning & spending (as long as minimizing the ones that get under the bus does not reduce the income generated by the majority kept at equilibrium).
This is still consistent with profitability. If you're not competitive, you can't earn customers. Businesses are thought to set prices at the level where the margin cost of acquiring a new customer is 0.
However, if you could find a more efficient way to deliver value, reduce costs, etc. you could do so and flourish at a price lower than your competition.
> Also, it is a kind of business that has a very very high barriers to entry (enormous amounts of capital, regulatory, etc.).
Part of the barriers to entry are exactly the regulatory hurdles in place, which are totally unnecessary in my opinion.
Two parties could draft a contract and sign it voluntarily, without government oversight, and petition the courts if any grievances occurr. Keeps government out and lowers costs, likely lowering the necessary apr charged.
> Competition alone can not solve profitable abuse (particularly on those with no options).
This completely violates the idea of a market economy. There are laws against collusion to fix prices. Such laws exist precisely because competition is the mechanism to prevent abuse.
> The only limit is that fine-tuned equilibrium of casinos: only constrained to the point that allows the larger proportions of your customers just get by earning & spending.
While true, this is still not a problem. People are voluntarily transacting at the casino. It's not for a 3rd party to determine if they can or cannot give it a shot to get under the bus.
Would you be opposed to a sole proprietor offering loans at 200% apr?
The people who are going to take those loans because they can't get one at 150|100|50|whatever% are going to have a huge challenge, if they are even (blood from a stone) able to.
And while you as the lender may "enforce" repayment with guns and violence, you can only hurt someone so much, and the dead don't repay loans. You can't visit that violence on family and friends, because that is a crime, even if in the most wild west environment you're being allowed to enforce repayment from the lendee with violence. And in the end, while beating the shit out of someone delinquent may be psychologically satisfying to your psycopathic or sadistic ways, you're still out your principal.
The wise lenders will rapidly find the sweet spot between repayment and default.
Awfully suspect that people start coming out of the woodwork with arguments from “principle” coincidentally with them having a vested economic interest in a weak dollar/weak state generally (or at least thinking they have interests in those things).
Meddling in the affairs of any corporation that handles just a single US dollar transaction is the opposite of interpersonal freedom. I am not sure how you can get this far into thinking about the subject while holding such a bizarrely cognitively dissonant belief.
What evidence do you have for it being profitable (to whom?) to exploit (how?) the American people (by whom?)?
Americans do not take kindly to voluntary transaction meddling by the government because who is the government to say what two private parties agree on so long as it does not infringe on the rights of others?