Essentially everybody who actually understands economics agrees that rent control is bad for those seeking housing (or whatever “rent” is being controlled). That is: rent control is bad for the very people it is envisioned to help.

Payday lending, predatory lending, and other lending interest rate controls are no different than rent controls. By capping the rate that can be charged for whatever kind of loan is given, those seeking loans – for whatever reason – will suffer. They might not be able to get loans or perhaps they’ll be forced to pay in some non-traditional (non-regulated) fashion. It will happen. The market always finds a way to get the risk-reward profile approximately correct. (Because if it didn’t get the risk reward profile correct, the market for that good/service/whatever would not exist.) Capping prices (or restricting transactions entirely) causes some kind of black market.

So when the Times calls for capping rates as a way to help service members and poor people, what they’re doing is proposing a new system of rules that will make those people’s lives harder. One might put it differently: the Times wants service members and the poor to suffer.

-JD Cross