Saturday, December 13, 2014
Recently, John Oliver tackled the payday loan industry on Last Week Tonight. It is often assumed that people in financial distress turn to payday lenders because they do not know what a horrible deal they are. This is not so. Towards the end of this clip Oliver refers to a survey by Pew Research which shows that a majority of borrowers say payday loans take advantage of them but they take them out anyway because they also provide relief. As Oliver points out, many people have other options including borrowing from friends or relatives or pawning possessions, and many are driven to do these things anyway once they get trapped in the circle of unending payday loan debt. It is easy to say that this behavior makes no sense, and it doesn't, if you consider no values except the purely financial.
But that is not the world we live in. It fails to take into consideration the value of personal relationships, the very real need human beings have to feel that they are valued members of their communities. For most people, the real agony of being poor is not going without things, even missing a meal or two. It is not even being harrassed by impersonal creditors, as stressful as that is. The real pain has to do with the emotional deficit that is created when a person feels his need to receive help out paces his ability to give help. The real pain has to do with strain on the most valuable personal relationships, the fear of the loss of respect among those one loves and values. The fear of being unable to act as caregiver to someone who one loves. The horrible thought of straining important friendships until they break and leave a person isolated and alone. There is a logic to trying one's best to avoid seeking help. A person facing a short-term financial hardship does a quick cost/benefit calculation which includes not only the interest on a payday loan, but ideas about quality of life. They make the calculation that they would prefer to struggle to repay a stranger than struggling to repay a friend.
Most charities try to meet people's immediate physical needs. They either take the "give a man a fish" approach or the "teach a man to fish" approach, but inevitably they focus on what the poor person needs, not what he can give. I wonder if the vicious cycle of payday lending could be ameliorated by programs that provided people of limited means with opportunities to be generous. If there were a focus on eliminating the giving deficit, by helping poor people to find ways to give and to feel that their contributions made a real difference, then perhaps the calculus would change and people would be less likely to go to a lender they know is taking advantage. Sometimes you receive, sometimes you give, and all is in balance. I don't actually know what such a program would look like. But creating programs that allow people with little money to be the givers, and for those with more money to see them in that light, would go a long way to relieving shame and suffering.