It's almost as hard to escape the many 'payday loan' advertisements that flood virtually every advert break in the TV schedule these days as it is to access any strand of public service that hasn't been flogged off to the private sector. I was amazed by two adverts I saw recently, one offering an APR of over 2000%, the other more than 5000%! The payday loan market is a pernicious one, an industry that illustrates much that is wrong with the ideologically slanted, and economically disjointed way in which we view the distribution of wealth.
Governments of all political hues have consistently taken immense pride in promoting the virtues of financial markets that are at best histrionic in their reaction to the most mundane international event, and at worst positively criminal in their dishonest pursuit of short term riches and baulk-worthy bonuses. The system makes everything cheaper for those who can afford to pay for services, and generally don't actually need them, but works hard to ensure that those without the means to pay for basic financial facilities, either through illiterate government policies that have eroded regional industry, the far reaching effects of globalisation, blind austerity programmes, or personal circumstance are charged massively for them. This represents a fertile breeding ground for profiteering, given that the working poor, the vulnerable, and those without disposable income or capital are the ones most likely to need short term finance.
The payday loan market is both the last bastion of the consumer who cannot afford the cheapness of high street banking, and a prism through which the light of our nation's economic performance is shone and distorted, given that these transactions are counted not as the symptom of fiscal and industrial failure that they clearly are, but as fuel that drives our GDP. It is politically cynical, socially counterproductive, and is confidence trickery at its very worst, and most legitimised.
Banking, and payday lending also provides a fantastic analogy for the privatisation of our services. Despite there being a cheaper and more logical way for us to administer the services that we as a society rely on, we are continuously sold the lie that proclaims the neoliberal free market as a wondrous panacea to every issue affecting nationalised functions, just as those on the fringes of the economy are sold the lie that proclaims it to be sound wisdom to take out loans with an interest rate that would make the Greek Finance Minister turn his nose up in disgust! Simply put, if we must bear the cost of effective, modern and accessible welfare and municipal services, why should we increase that cost by inflating the share prices of multinationals, and the bank accounts of predatory lobbyists and heads of business?
Given that the reserve of privileged, white middle class professionally beige politicians we currently endure have been educated in exclusivity, and at great expense, I find it depressingly predictable that our representatives are so obsessed with ignoring basic mathematics by giving our public services the 'Wonga' treatment, subjecting taxpayers to the extortionate APR rates charged for the privilege of farming out essential services to the golfing buddies of cabinet ministers*
Once any system is privatised, every constituent component attracts a commercial value, as do the interactions that take place between those components. This simply does not happen within a nationalised setting, thereby reducing cost, avoiding duplication of management, and encouraging economies of scale, yet still we seem to bumble along in a permanent trance, hypnotised by the massed media to believe that nothing is worth doing unless it is done for the profit of big business. Despite the best efforts of the neoliberal devotees within the Conservative Party, and New Labour to distort the truth, the fact remains that the issue with nationalisation has always been poor implementation of an inherently efficient and effective model, whereas the issue with privatisation has generally been the efficient and effective implementation of an inherently poor model.
Rail privatisation, Gas, Water & Electricity privatisation, Postal privatisation, and the abomination that is PFI have all proved the folly of sacrificing national assets for ideological purposes. The Coastguard, and huge tranches of the NHS amongst others are currently following suit, despite history teaching us a very clear lesson about the risk of running essential service for profit. All this makes it more infuriating to read the weasel words of politicians who wring their hands over the perpetual misery that is payday lending. The very same people advocate the supposed 'benefits' of taxpayers subsidising private companies running our public services, whilst hunting political capital by attacking the companies that survive by playing the same trick on the poor and economically disenfranchised.
We need to take action to stop the cancerous spread of these loan companies, just as we need to take action to reform politics and encourage more ordinary working people, trade unionists and community campaigners to stand for parliament, thereby preventing the neoliberal zealots occupying Westminster from growing ever fatter on the back of a downtrodden and apathetic electorate. Payday lenders capitalise on dysfunction and misery. They are the root cause of long term damage to credit ratings, and need to have their toxic grasp weakened by statutory limits on the amount of interest chargeable on any loan. However, they are no worse than the huge conglomerates running prisons, schools and hospital cleaning departments, who also need to be prevented from suckling at the teat of the exchequer, oblivious to the damage their activities cause. After all, they continue to exist only by profiting from the needs of the same unfortunate and marginalised patrons.
(* Other payday lending companies are available. Wonga is not the only one whose rates could be used for such an analogy.)