The proposal to limit payday lending rates raises a nice contrast between the libertarian and statist lefts.
The issue here is not that APRs of 4000% are extortionate. For one thing, it's not clear that it makes sense to annualize the rate on what should be short-term loans, any more than it's sensible to say the FTSE 100 rose at an annualized rate of almost 10,000% this morning.And for another thing, such rates reflect high default risk; there might be good reasons why "legitimate" lenders don't undercut the likes of Wonga.
Instead, there are three issues here that have general applicability to the distinction between the statist and libertarian left.
1. The yuk factor. Those who want payday lending curbed think it repulsive that some should profit from the desperation of the poor. To them, the argument against payday loans is similar to that against markets in human organs; markets are unlikely to have acceptable outcomes if one party is desperate.
To libertarians, the yuk factor is less important than the fact that even apparently unequal transactions can be mutually beneficial; paying 4000% APR is unpleasant, but it's less unpleasant than having your electricity cut off or having to borrow from folk like Rick Neelan.
2. Should we protect people from themselves? The danger with payday lending is that the availability of credit will tempt people to spend more than they can afford and so such loans - rather than being a rare last resort in an emergency - will become regular, and thus onerous.
Libertarians don't respond that people are fully rational; few of us are wholly immune from akrasia or projection bias (pdf). Instead, they don't believe the state should protect people from themselves - especially when doing so comes at the cost of depriving some people of (occasionally?) beneficial loans.
3.Should political change be piecemeal or radical? Left libertarians say the best way to help the worst off is not to restrict payday lending, but rather to raise their incomes, for example through a high citizens' income.The statist left replies that this option is not available.Practical politics thus requires more modest but attainable policies, such as curbing payday loans. The same reasoning leads to other anti-libertarian policies such as the minimum wage.It's no accident that gradualists tend to be statists.
Which brings me to my worry. There's a danger that good practical politicians such as Stella Creasy, concerned to advance the interests of the poor one law at a time, get distracted from the need for more radical reform. And this can - entirely inadvertently - help encourage the closing of the Overton window against such policies.
* Ms Creasy is sound on one of the great scourges of our age.