Oregon Senator Jeff Merkley made his bones by removing Oregon payday lenders from the state by limiting their potential revenue to the point where they couldn’t do business. The result was a loss of several hundred jobs, millions in labor income, and many more millions in GSP.
And it didn’t change a single thing about payday loan usage in Oregon. Just like Prohibition, demand for the product didn’t just vanish, but supply did. And just like Prohibition, people were forced to go to other sources for the product they wanted, and pay more for it. You cannot limit demand by limiting supply, and if you’ve watched five minutes of “Boardwalk Empire”, you’d know what I mean.
Unlike Prohibition, during which people didn’t really need to drink, you can only go so far in modern society without access to credit. Very few products lend themselves as well to a consumer making an informed choice as acquisition of credit. Like other staples (food, gas), people must have credit for some reason or another. Folks are going to be smart about where they get their food and gas, choosing options that make the most sense to them. They do the same thing for credit, because it’s also something they routinely need.
