House of Comments - Episode 81 - The Calculus of Differentiation
Episode 81 of the House of Comments podcast "The Calculus of Differentiation" is out. Myself and Emma are joined by Lib Dem blogger Jennie Rigg to discuss the Lib Dems on Free Schools and policy differentiation in general, Plebgategategate, rendition and Labour's pay day lender tax policy.
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Or you can listen to the embedded episode below here:
Any feedback welcomed in the comments below.
PS: A big thanks to Audioboo for hosting the podcast for us. We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.
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1 comment:
Much emotion about pay day lenders and very little understanding of the reality.
Passing laws against pay day lenders has all the hallmarks of good intentions making bad law. Not that I'm supporting them, but I would like to see more understanding of the issue by those pushing for more laws.
As we need to subsidise Credit Unions to make them cheaper than pay day lenders it implies that the pay day lenders aren't making those super margins everyone bangs on about. A lot of the massive percentage repayment figures that are bandied about are an artefact of the way that APR is calculated, mostly driven by the cost of setting up the loan and this will (should) also apply to Credit Unions.
I would like to see the true cost of the loan, including any tax payers subsidies reflected in the costs of the loans that these credit unions make, even if they are not passed on to the borrowers. If we don't do that we will be deluding ourselves that we have fixed the evil capitalists when all we've really done is increased the burden the tax payer. Not that I object to it, just I would like to know where my money is going and it is not being wasted when the market has fixed a problem.
Providing that subsidy to Credit Unions by hypothecating a tax on pay day lenders is plane stupid and shows a lack of economic understanding, so I hope I misheard that bit.
Consider this; you work out how much tax you'll get when setting up the legislation. Hopefully making some assumptions about how much the pay day lender's profits will drop once the Credit Unions kick in.
So what will you do if a) the tax is less than expected or b) the tax doesn't cover what is really needed to make the Credit Unions viable?
Much better to divorce the two: Work out how much you can realistically extract from the pay day lenders without killing the market* and go for it.
Work out how much Credit Unions need and go for it.
Don't make the success of the project contingent on the combined effect.
(*Some people may still prefer to use them and we need a way of keeping the Credit Unions honest.)
I have another problem with this proposal, but that's my libertarian bent. We are going to give the Credit Unions tax payers money. Great. But all parties, but Labour in particular, are centralisers of the first order. I fear that in order to make it seen to work they will impose central diktat and excessive bureaucracy. If the rules and bureaucratic cost lead to failure, they all fail. Much better to let them all experiment and and meet the needs of the local area. Accountability can come through open accounts, which could even be seen on line, with individual loads redacted.
Furthermore, I fear these credit unions will become sinecures for the for the great and good and become open to political meddling. As I've said elsewhere on this blog, we need to remember that in Spain the main financial problem was the Cajas, which were in effect politically controlled mutuals.
On final comment on a different topic discusses. I like the idea that the LibDems spiked a lot of the Tory's more right wing policies and give it far more credit that Emma thinks they will get, but then I'm also interested in politics, but maybe not a reliable bellweather.
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