Before the COVID pandemic struck, America was experiencing robust economic growth and some of the biggest beneficiaries of that growth were minorities who were seeing their wages increase and their unemployment rate drop to historic lows. Opportunity is an important part of the American dream. More and more Americans were experiencing that dream. That sort of news puts a smile on the face of every red-blooded American!
But once the pandemic struck and the lockdowns and shutdowns hit full force, the once robust economy began to rapidly contract. That meant record unemployment and job loss and financial difficulties appeared almost overnight. Now with the economy in the doldrums, most Americans see economic uncertainly, and minorities and the working class have been among the hardest hit.
Progressives see the present situation as the perfect time to roll out their untested ideas. Naturally, they promote their programs and ideas in terms of benefiting minorities and others who have been “left behind.” For example, the National Consumer Law Center’s website claims it is fighting for economic justice and battling against predatory installment lending. That might sound good if facts and results don’t matter. But the truth is that this George Soros-backed group seems more focused on denying options to consumers and small business than promoting anything that could possibly be called justice and opportunity. Limiting options rarely benefits the proverbial little guy.
The truth is the wealthy can afford big government and can operate in a world filled with mandates and government imposed limitations. The wealthy have the resources to figure out work-arounds and to lobby for carve outs to benefit themselves. But the little guy doesn’t have those advantages and doesn’t have access to million-dollar lobbyists. What the little guy needs is opportunity, and government regulation rarely expands freedom or opportunity.
So if the pandemic took your job and you’re struggling and you’ve decided to build your own small business or even rebuild it after it was destroyed by lockdowns, you may need access to funds to buy equipment to make your dreams possible. But if you’ve been unemployed for 18 months thanks to big government shutdowns, or have a poor credit score, or don’t have collateral to secure the loan, how do you borrow money through traditional sources?
If you’re wealthy, you have thousands of options to obtain funding. But if you’re not an inner-city working-class minority, you have far fewer practical options. And if the extremist left and groups like the National Consumer Law Center have their way, those struggling to rebuild after the pandemic destroyed their job or business will have even fewer options. On a very practical level, reducing options to those trying to build a better future is not far removed from telling them they cannot have a better future.
Obviously, going to a loan shark isn’t a good idea, but there are banking options that will take a chance on entrepreneurs who are just starting out. But the extremist left wants to shut them down, forcing the desperate to go to a loan shark.
Tragically, when the extremist left seeks to shut down options, it does so by pretending to protect consumers from what they call high-interest loans. And it is done with a mathematical trick. For example, if I borrowed $5,000 from an online lender and then repaid the loan two weeks later and paid a $500 fee for the unsecured loan, the “Annual Percentage Rate” would be 300%. A rate of 300% sounds horrible, and if it was a 30-year mortgage secured by your home or a six-year car loan secured by your car, it would be. But this loan is entirely unsecured, meaning you provide zero collateral. For a modern-day Henry Ford, this unsecured loan could be a dream come true.
But if the extremists have their way and are able to cap APR at 24% or less, the lender would have to agree to lend you $5,000 for a charge of no more than $46. So effectively, these extremists are saying you can’t borrow money because who in their right mind is going to lend you $5,000 without collateral for only $46.
The truth is if your circumstances allow you to borrow money at a lower rate, you’d do that. But if your circumstances don’t make better terms possible and you’ve got a dream that you’d like to fund to get things started, paying a $500 fee isn’t a bad idea.
That’s the problem with the extremist left busybodies – they always think they should make choices for you and that you can’t be trusted to make wise choices. Ultimately the poor and minority communities pay the price.
George Landrith is the president of Frontiers of Freedom.