The weekend's interesting reads

"'Pay day' loans exacerbate housing crisis" from Reuters:

I've actually seen this topic discussed a few times over the last few months. The first was an op-ed in the WSJ in favor of pay day loans (I can't find it right now; if I do, I'll add it later). The second was this unfavorable op-ed in the WSJ by Bill Clinton and Arnold Schwarzenegger, which in turn prompted these letters. In searching for the first op-ed, I found this article in the WSJ that was unfavorable.

The thing that caught my eye with the Reuters article was that it said it would make the housing crisis worse than it already is. It actually never made the case for "exacerbat[ing] the housing crisis;" it only made the point that payday loans are a bad thing. All it did to support the title was simply to quote someone from an "umbrella group of housing counseling agencies" as saying, "We expect pay day loans will make the housing crisis worse," followed by no explanation of why. I think payday loans are in fact prolonging the housing crisis by allowing homeowners to continue to borrow to make ends meet, putting off foreclosure and keeping them in houses they can't afford. I wonder if that's what article's writer had in mind.

I can understand everyone trying to make life easier on those who have to use payday lending, but banning payday lending isn't the answer. People go to payday lenders because they need the money and these types of lenders are the only other legal source to do it. Banks won't lend them money if they don't an ID or permanent address in addition to the fact the banks can't charge them an interest rate that reflects the risk of the loan (due to usury loans). I think it's fair to assume they've borrowed as much as they can from family and friends. If they don't have payday loans as an option, the next choice is to borrow from illegal sources, such as loan sharks than have equally illegal methods of collecting payment, or to turn to illegal activities to get the money.

This reminds me of an article on The Library of Economics and Liberty by Russ Roberts called "Pigs Don't Fly: The Economic Way of Thinking about Politics". He had a section called "Bootleggers and Baptists", in which he argues that bootleggers actually support bans on Sunday sales of alcohol because if people have fewer options to purchase alcohol legally (on Sunday at the grocery store), they'll turn to buying alcohol from illegal options (from the bootleggers). Payday lenders probably support usury laws because it pushes more clients in their direction as banks are not able to (directly, at least) charge the higher interest rates payday borrowers would require. Likewise, illegal loan sharks probably support crackdowns on the payday lenders because, again, it pushes more clients in their direction.

"Clarence Thomas: Mr. Constitution", WSJ Commentary: The Weekend Interview. Just a few quotes I liked:

"My job is simply to interpret it." In that process, the first place to look is the document itself. "And when I can't find something in that document or in the tradition or history around that document, then I am getting on dangerous ground. Because that's when you drift so much more towards your own policy preferences...

"Simply following your own preferences is both flawed and illegitimate, he says. "But if that is difficult, does that difficulty legitimate just simply watching your own preference?" By doing that "I haven't cleared up the problem, I've simply trumped it with my personal preferences...

"This insistence by the Justice on judging based upon the law, and not on who the parties are, presents a stark contrast with today's liberal orthodoxy. The liberal approach -- which confuses law-driven judging with compassion-driven politics, enthused with a heavy distrust of the American political system's fairness -- was recently articulated by Democratic presidential candidate Barack Obama, who emphasized the need for judges with "heart" and "empathy" for the less fortunate, judges willing to favor the disempowered...

"And why doesn't he ask questions at oral argument, a question oft-posed by critics insinuating that he is intellectually lazy or worse? Mr. Thomas chuckles wryly and observes that oral advocacy was much more important in the Court's early days. Today, cases are thoroughly briefed by the time they reach the Supreme Court, and there is just too little time to have a meaningful conversation with the lawyers. "This is my 17th term and I haven't found it necessary to ask a bunch of questions. I would be doing it to satisfy other people, not to do my job. Most of the answers are in the briefs. This isn't Perry Mason.""

"We Need a New Bargain With Big Oil" WSJ op-ed by Joseph P. Kennedy:

I love how everyone likes to go after those with deep pockets. If they're making money, they must be doing something unethical to do it. Taxing "big oil's" profits would simply be taxing the profits of every person who owns these companies in their investment accounts or 401(k)'s. The best line in the article was this:

"More than a century ago, President Theodore Roosevelt, a Republican reformer and environmentalist, raised the wrath of his own class in taking down Standard Oil and the petroleum oligarchs for the good of the nation. The new social compact did not destroy the industry, it simply managed it for the good of our country." My emphasis.

This prompted Don Boudreaux to write a letter in response, quoted here. I also heard a podcast with Don Boudreaux here as well as an interview with Milton Friedman here that talks about how most of our anti-trust policy over the years has been misguided. Instead of targeting companies with monopolies that raise prices, it's targeted companies that lower prices to a level that precludes competition. Mr. Kennedy's Standard Oil example is just one of those anti-trust targets.

"Certifying Parents" WSJ editorial:

"A California court ruled this month that parents cannot "home school" their children without government certification. No teaching credential, no teaching. Parents "do not have a constitutional right to home school their children," wrote California appellate Justice Walter Croskey...

That so many families turn to home schooling is a market solution to a market failure -- namely the dismal performance of the local education monopoly. According to the Home School Legal Defense Association, the majority of states have low to moderate levels of regulation for home schools, an environment that has allowed the option to flourish, especially in the South and Western U.S. Between 1999 and 2003, the rate of home-schooling increased by 29%.

For some parents, the motive for home schooling is religious; others want to protect their kids from gangs and drugs. But the most-cited reason is to ensure a good education. Home-schooled students are routinely high performers on standardized academic tests, beating their public school peers on average by as much as 30 percentile points, regardless of subject. They perform well on tests like the SAT -- and colleges actively recruit them both for their high scores and the diversity they bring to campus."

I think this is ridiculous. I mentioned this to my mom who said that she agreed with it because of someone else she knew that was in eight grade and being home-schooled despite not being able to read. I think there are plenty of anecdotes we could come up with to support either side. At the end of the day, I think people should be free to educate their children however they choose, for whatever reason they see necessary.