State Rep. Steve Pylant’s HB 961 would force municipalities that receive more than half of their revenues from speeding tickets to post signage on state roads around their borders advertising the municipality is a “speed trap.” If they failed to do so, money from these fines would head to the state. It passed committee although with some dissent, albeit of the less than thoughtful kind.

State Rep. Terry Landry argued that to allow this would put a “stigma” on the municipality, and state Rep. Barbara Norton said it was a motorist decision to go too fast and thus there appeared to be no reason for a municipality to have to pay extra for a sign. But Pylant said if the main objective was to stop speeding, then that would be accomplished by putting yet another warning out there, and additionally this would have the salutary effect of impeding municipalities trying to finance salaries and positions beyond any genuine need by squeezing out as much revenue from non-residents (he claimed residents typically were let off with warnings) as possible. For example, in Pylant’s backyard is Baskin, estimated population 252, that nevertheless paid in fiscal year 2013 a part-time mayor over $12,000 a year and spent over $143,000 last year on public safety on fine revenues of over $285,000 (down nearly $100,000 from the previous, probably because they got wind that Pylant was going to move this legislation), or 78 percent of its total revenue.

This is nothing more than government finding every means possible to extract wealth from the people. And if the bill meets both public safety needs and giving citizens the means by which to fend off such aggressive governing that feeds the “three felonies a day” mentality becoming more and more prevalent in government, that’s a welcome check on government. Never forget that, because it holds coercive power over individuals, that government itself must be regulated – by other parts, other levels, and by constitutional rights – or else by its own nature as it is run by people and not angels, it becomes predatory.

By contrast, government should not interfere with voluntary transactions among individuals that do not produce harm greater to society than the sums of the liberties lost by individuals through that interference, but which a couple of bills filed do. HB 239 by state Rep. Ted James and SB 84 by state Sen. Ben Nevers would impose strict regulations on the short-term lending industry, mirroring to some degree those operative in some other states, on instruments colloquially known as “payday loans.”

When James and others decry this industry as insufficiently regulated and propose fixing that by capping annual interest on these small loans at 36 percent, they miss the entire character of a payday loan transaction. Thirty-six percent is just a fraction of what could be charged if the borrower strings out the process by not repaying on time, as these are loans of short duration. Using that word “predatory,” they demonstrate they don’t know its proper definition. Predation has no voluntary aspect to it. Nobody compels someone to take out a payday loan, unlike government that can expropriate property in tangible form or, more commonly, by confiscating wealth from people. As previously noted, payday lending largely is an industry where most customers have no problem in paying back despite premium rates for some need they feel compelling and where most customers are satisfied with the current state of regulation.

And not only would this increased regulation cost jobs by forcing significant industry retrenchment, it would disserve individuals who utilize the industry. Without the ability to take out a payday loan, many either face bankruptcy or other adverse financial consequences, or they seek illegal mechanisms to borrow that might put them into much greater danger than what happens if they took out a legal loan. The vast majority of responsible borrowers therefore are put into worse situations and probably few of the irresponsible ones without legal access to appropriately risk-priced instruments would be discouraged from trying to access such illegal instruments.

For the reason some people get into an unvirtuous debt cycle is not because of the lenders, but because of themselves. Many have poor credit records to begin with, which is why they can’t get money legally elsewhere, and some don’t even have pressing bills to pay. And lenders have every incentive to choose borrowers that they judge able to pay, because it is self-defeating to have defaults, so they have little incentive to risk assets on risky people in the hopes of trying to squeeze as much from them as possible rather than have them default.

The over-regulation promised in these bills in a practical sense will deprive some of a chance to make a living and others a chance to access a service that may prevent much greater costs to them in the future. In a philosophical sense, it assaults liberty by needlessly depriving these people to engage in this voluntary exchange that both parties feel benefits them, and dehumanizes those claimed to be protected by such laws in their treatment of them as creatures incapable of taking responsibility for their own decisions so they have to be “protected” from themselves. As such, it creates an overbearing government yoke that, as opposed to its use under HB 961 that turns government power against itself to protect liberty, threatens liberty.

Always useful to recall that government unchained is far more prone to evil tendencies than business, and thereby its activities merit closer scrutiny and control. Just as HB 961 needs passage, HB 239 and SB 84 need defeat.

by Jeffrey Sadow