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New Study Shows How Overregulating Short-Term Lenders Harms Consumers

We at CFIF have consistently highlighted the peril of federal, state and local government efforts targeting the short-term consumer lending sector.

Less than two years ago, we specifically sounded the alarm on a New Mexico law artificially restricting interest rates on short-term consumer loans.

Well, a new study entitled "A New Mexico Consumer Survey:  Understanding the Impact of the 2023 Rate Cap on Consumers" that surveyed actual borrowers confirms our earlier warnings:

Key findings include:

•Short-term,small-dollar loans help borrowers manage their financial situations, irrespective of the borrower’s income.

•The rate cap has failed to improve the financial wellbeing of New Mexicans, specifically those who had previously relied on short-term, small-dollar loans.

•…[more]

November 27, 2023 • 03:57 PM

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Crony Capitalism Looms Large Over Pennsylvania Special Election to Replace John Murtha Print
By Ashton Ellis
Wednesday, April 28 2010
The people of the 12th district have been disserved by decades of crony capitalism, and their economic lives are about to change no matter who wins the May 18th special election.

As with any contested race, there are plenty of differences between Republican Tim Burns and Democrat Mark Critz, the two men vying to replace the late Rep. John Murtha (D-PA), in the May 18th special election.  For all the boilerplate disagreements, though, one issue has the potential to define not just the candidates, but their national parties as well: job creation. 

Specifically, the source of job creation.  To Beltway insiders, John Murtha was known as a member of the congressional version of the “college of cardinals” – a reference to his perch as a powerful subcommittee chairman on the House Appropriations Committee.  When these subcommittee chairmen speak, their colleagues listen.  In Murtha’s case, so did defense contractors.  As chairman of the defense appropriations subcommittee, Murtha funneled $2 billion to his Southwestern Pennsylvania district, directing funds to companies that set up shop in his hometown. 

Some might call that pork barrel spending.  But Murtha’s fellow residents of Johnstown, PA, could be forgiven if they viewed the ex-Marine and Nancy Pelosi confidante as a job creator.  Technically, he was responsible for wooing Concurrent Technologies Corporation and the National Drug Intelligence Center to locate near his hometown.  As of 2007, the companies employed 800 and 300 local workers, respectively. 

So, maybe that’s the dog whistle Murtha’s former staff member, Mark Critz, is trying to blow into the ears of 12th district voters.  Critz is running television and YouTube ads touting his experience as Murtha’s Director of Economic Development, a position it would be hard to interpret as much more than coordinating no-bid contracts to coincide with corporate relocations. 

But Critz’s line of attack is sharpening against his Republican opponent, Tim Burns, a self-made businessman who might be vulnerable on the job creation issue.  After starting a medical technology company in his basement, Burns sold his business for millions only to watch many of the 400 jobs he created be transported overseas by the new owners.  With polling data showing the race to be a toss-up, Critz could make headway if he starts strongly implying that private sector jobs are too illusory when compared to the stability offered by taxpayer-funded, congressman-directed “economic development.” 

That would put Tim Burns in a tough situation.  No politician wants to inform the working public that job creation in a free market responds to the same price signals that communicate good and bad opportunities for other actors.  If the price of doing business in Pittsburgh is more expensive than operating overseas, businesses will relocate.  Ironically, it’s the same incentive structure that made John Murtha the number one job creator in Johnstown.  Except that in Murtha’s case, he was responsible for both the supply and the demand. 

Of course, the problem with allowing politicians to impose contracts the military doesn’t want in areas where they otherwise wouldn’t be performed is that it corrupts the appropriations process, and by extension, the practice of taxation.  While government-generated job growth seems like the gift that keeps on giving, the 12th district’s employment largesse comes at the expense of every other American taxpayer.  And since Murtha-style earmarks are mostly only possible when an enterprising congressman wields a chairman’s gavel, Johnstown residents shouldn’t be surprised when the next “King of Pork” gets rent-seeking defense contractors to relocate to another district.

Not that Burns needs to denigrate major local employers to make the point that what Murtha termed “job creation” and Critz suggests is “economic development” is any more stable than a small business grown in a free market.  Instead, Burns should consider turning the Democrats’ public-private partnership model on its head, arguing that jobs will multiply when companies see the federal government cleaning up its regulations to be clearer, simpler and less hostile to wealth creation. 

Conservatives like Tim Burns owe their voters the truth about the damaging effects of market distorting government interventions.  The people of the 12th district have been disserved by decades of crony capitalism, and their economic lives are about to change no matter who wins the May 18th special election.  Critz lacks the power to keep the contractors near Johnstown, and Burns is unlikely to become the avatar of John Murtha.  In the final push towards Election Day, conservatives would be wise to help Burns test out a theme that will have national appeal come November: congressmen don’t create jobs – entrepreneurs do.   

Notable Quote   
 
"Joe Biden made cracking down on tax-cheating millionaires a centerpiece of his presidency, even securing the funds to hire new IRS agents and auditors. On Thursday, his Justice Department branded first son Hunter Biden as a quintessential tax cheat who chose to underwrite an 'extravagant lifestyle' with millions in foreign monies rather than pay his debts to Uncle Sam.In a sweeping grand jury indictment…[more]
 
 
— John Solomon, Chief Executive Officer and Editor in Chief of Just the News
 
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