How things work out if government doesn't get in the way

Sudhir Venkatesh has a fascinating article about his experience with "loan sharks" - people who loan money to desperate penniless borrowers at high interest rates.
[C]ontrary to popular perception, very few cases of failed payment led to physical harm. Instead, you could be forced to pay in kind — e.g., with a television set — or with food stamps and welfare checks (which also function as collateral).
It is sad to see that regulators - well, and people in general - are so f***in stupid as to fail to realize that the setting of maximum interest rates is what prevents poor people from getting legal loans. Which, in turn, helps keep them in poverty.

Loaning people money is a form of betting. Some loans will not be returned, so if you want to make ends meet, you have to charge interest - or loan to nobody.

The riskier (the more peniless, the more desperate) the borrower, the higher the interest needs to be in order for the equation to work out. If the equation doesn't work out, the lender is out of business, and no one gets a loan.

Loan sharks are heroes who bring loans to the poor despite oppression from the government, which is so stupid as to limit interest rates at levels which have the effect of outlawing loans to the poor.

Similarly, marijuana dealers are heroes who risk their personal freedom to bring this relatively harmless substance to everyday people not much different from you and me, who simply like to use it - despite the government's braindead efforts to outlaw this.

We should portray these people more like what they are - heroes, as opposed to the jackbooted thugs with uniforms and badges, who are often sent to oppress people and take liberties away.


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