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> I do think that the default assumption is that people are better with more choices

The problem is that the default assumption is not a universal truth. It's a rule of thumb.

If someone is in bad financial shape and I offer a loan to them, they'll probably take it because they have immediate pain that they want to fix. They are not likely to consider that the loan may ease their immediate problem, but will cause the problem to come back, but worse, later on. This is basic human behavior -- we care more about what is real right now than what will become real later on.

Lenders, however, know this (or should), and to give such people the "choice" of making their situation worse later on in exchange for temporary relief right now is simply inhumane. I don't think it's unfair to characterize that lending behavior as "predatory".

Exactly. Hardline capitalism assumes that everyone is a rational actor, and that therefore nobody offering a product or service can be at fault for harm coming to their customers. The problem is that people are often not able to be rational actors:

- People can have bad or incomplete information: misleading advertising, lack of expertise in every subject area that affects their decisions, etc.

- People can lack freedom to act: monopolies, lock-in, etc.

- People can have their rationality itself undermined through desperation, emotion, or addiction

Some of these problems have been patched over with laws. False-advertising law, nutrition labels, terms/agreements. Many have not. The third, and to a lesser degree the first, are the most relevant to the OP.

Hardline capitalism assumes rational actors act with the information they have and assumes information asymmetry. The only way a price is agreed upon is with information asymmetry and rational actors: the buyer values obtaining an item in a certain way and the seller values getting rid of the same item a certain way. It matters not what those reasons are, nor that each side know the details of what leads to a narrow spread, only that the desired price itself be made public, shared with the other party. Hardline capitalism assumes the only important piece of shared information is the price.

Rational actors and own-self-best-interest isn't about common, specific, long-term positions that an entire population might share (like increasing debt load is bad, or that having the most cash saved is good), only that the choice of price is set based on a number of variables, both internal and external to the actor. A desperate buyer might set their offer price high in order to attract sellers when there are none, despite not being able to pay (which is handled, positively or negatively, in other ways). A desperate seller might set their ask price really low because they have to get rid of inventory. Getting something "for a good price" is about the utility that comes about from having the exchange takes place vs not having the exchange takes place and each party being worse of. An addict might not be making the best decision for themselves and their livelihood but is making a rational decision if their goal is to get high.

But hardline capitalism isn't necessarily the thing we want, because of the chance for abuse of the information asymmetry and that, while everything is encoded in the price, extracting and understanding those details and position of the other side is impossible.

1. There is no lower-bound on wealth at which people stop needing loans. Arbitrarily poor people can benefit (a lot) from loans. The main issue is that people who are poor in rich countries are more likely to be people who make poor choices.

2. You did not address my point that if there is no way to stop people from getting illegal loans (loan sharks), it's better to give them loans at the market rate rather than the even higher rate loan sharks must charge because they operate outside the law. This consideration is very similar to legalizing drugs.

> You did not address my point that if there is no way to stop people from getting illegal loans (loan sharks), it's better to give them loans at the market rate

I don't think this is a good argument at all. In both instances, vulnerable people are being hurt. Arguing that it's OK for you to hurt them because you'll hurt them less than the other guy seems dubious to me.

OK, but lots of people would disagree with you, e.g., in the context of supervised injection sites.

Suppose it were unambiguously clear from data that (1) society as a whole and each individual were better off when marijuana was legal and tightly regulated; and (2) individuals would be better off not using marijuana. Would you then vilify marijuana providers? (I generally would not, although I would hold them to a stricter moral standard than I would for sellers of products that are generally beneficial to the user.) What if we replaced assumption (2) with assumption (2')?: 80% of individuals who use marijuana are better off (say, because they use it only socially and the negative motivational effects turn out to be small), and 20% are worse off (because they abuse it).

> I don't think it's unfair to characterize that lending behavior as "predatory".

Any loan that carries interest in its terms is, by definition, predatory.

I don't have an ethical problem with the concept of charging interest for loans, and I don't think they're automatically predatory.

I think the problem comes when you are giving loans (and particularly high interest loans) to people who have little to no hope of being able to repay them.

>> When I was at Capital One, I wanted to understand if it was possible to keep loans as an option for the people who have exhausted all their better alternatives—without also causing suffering for those who would be better off forgoing purchases or borrowing money from friends and family. After five years, I concluded it was more or less possible to achieve that goal—to do the good loans without doing the bad loans.

>But I can't see why she thinks that.

The answer, which is this clearly the author's position, is self-evident if one moves from assessing the situation from the profit-motive lens: a stop to the practice of predatory lending.

Earlier, the argument was "Isn't this consistent with poor people needing loans": they don't need loans, they need a livable wage (which I know is a whole different story so won't go into that), but since they can't don't have a livable wage, they need financial support to tide them from non-livable paycheck to non-livable paycheck, that does not cost an arm or a leg, as they make sacrificial decisions as to what to make do with/without.

The argument that people are being given more choice is a lie - there is literally no choice here.

The lending is literary predatory as it is i) from a lender of last resort and ii) comes with interest and fees that would be intolerable to anyone with options.

Non-predatory lending is just one part of what the writer describes as ".. do the good loans without doing the bad loans."

Even many people with livable have spending addictions that ruin the lives of themselves and people who care for them.

So, you leave me conflicted..

... on the one hand, I want to yell "Strawman!" "Strawman!" "Come out and see the Strawman!" from the hills but I do not want to come off as aggressive or preaching ...

The point you make here is certainly true but it is neither the point of my argument or the point of the author's piece.

I guess there is no way to receive satisfaction here.

The other bit of evidence she cites but doesn't quantify is that marketing new cards causes incremental debt.

That said, I largely agree with your sentiment that the article doesn't provide sufficient quantification. You also might want to consider that the author might have experience seeing that quantification and making decisions based on it that can't be shared in The New Republic without violating confidentiality agreements.

One lens through which to view this: Is a culture that tends to view its customers as mathematical entities likely to make the best decisions either for their customers or themselves? That's the real tragedy and is half of the explanation for the paradox that such genuinely intelligent and kind people do things that hurt others (and in some cases themselves).

Disclosure: I also worked at Capital One and briefly encountered Elena there

It's fine to give people the choice to borrow money, if you also give them the choice to not pay it back. But, bankers have lobbied government to remove that choice for poor people, but not for rich capitalists.

The Mortgage Bankers Association defaulted on its own mortgage while trying to ban personal defaulting.

https://en.wikipedia.org/wiki/Mortgage_Bankers_Association

Personal bankruptcy rights has been consistently er

> Personal bankruptcy rights has been consistently er

Was there more to your post?

This is a hilarious example. Also, bankruptcy exists for a reason: the injustice of debtor's prison.

Student loans should also be discharged in bankruptcy.

>Student loans should also be discharged in bankruptcy.

That would kill student loans because most students would declare bankruptcy as soon as they have graduated.