Just the tip: Payday loan companies are the poster-child for what’s really wrong

Payday Loans Postmedia file

Postmedia file photo

If you’ve ever walked into a payday loan company to get something to tide you over to the end of the month, you’ll know you’re lucky if you come out with your shirt. It takes less than half an hour to get a $300 loan, but it can take years to get it all paid off. Ontario allows interest at 21% over the short duration of a payday loan. Add in fees and interest over a year and you’re paying north of 300%.

There’s a word for that: “usury” and it’s a practice that should have disappeared with fourth Century. Pope Francis calls it something else from the fourth Century: “the dung of the devil.”

He puts it into this context: “The new colonialism takes on different faces. At times it appears as the anonymous influence of mammon: corporations, loan agencies, certain ‘free trade’ treaties, and the imposition of measures of ‘austerity’ which always tighten the belt of workers and the poor.”

He’s talking about the unfettered pursuit of money world-wide and its consequence: the subordination of the sovereignty of nations to multi-national corporations. But he knows it’s always a short step from the global to the personal.

Colonized, or at least indentured, is how you feel when your two or three part-time jobs leave you in poverty; when even the food banks don’t have enough on their shelves; when you’re spending nearly half what you earn on a crappy basement apartment.

And to top it off, you’re subsidizing your boss. Or as Francis puts it, talking like a boss: “I will pay you this much, without vacation time, without health insurance … but I will become rich!”

Don’t worry, says government, the money will trickle down.

Recently Ontario tried to make things better. It sent around some options for legislation that would lower the short-term interest rate payday loan companies could charge from 21% to 19% or 17% or 15%.

In what world do the Liberals think this incremental, nearly infinitesimal change will make things better? All it will do is blunt the impetus for fundamental change by giving a smoke-screen of legitimacy to a vampiric practice.

Vampire Lugosi (anim)

With vampires you need a big wooden stake, strategically placed through the heart. So allow me to suggest some serious changes the Ontario government can make right now that will make things a little easier for those of us with wounds in our necks.

First, raise the minimum wage to the average Ontario living wage – somewhere around $15 an hour. And offer no impediment to municipalities to raise it further, to match the living wage in their jurisdictions.

Second (and Ontario may need some help from their federal colleagues for this) create or authorize a financial institution to make short term, high risk loans at a rate people can, with a little credit counselling, actually pay back. Ontario used to have the perfect tool for the job – Ontario Savings Offices. But, in spite of a $10 million annual profit, the Harris government sold off their assets in 2003.

Third, allow this same financial institution to provide micro-loans to low-income people who are able to show they have an innovative, marketable idea.

But the Pope is talking about more than payday loan companies. He is talking about the way the economic order of things works on people. Payday loans are a scourge on the working poor. They are not a filling a need. They are helping to create a need that they then feed off.

They are the neighbourhood storefront for the “new colonialism” the Pontiff talks about. It’s all around us, but we don’t see it. We know that something’s out of whack, but we can’t quite put our finger on it.

How is it that certain people and large companies around the globe can stash some $30 trillion in tax havens, and so withhold billions in tax revenues from people who desperately need them? Is that not a public subsidy of private profit? And why do our governments let them get away with it?

$ CA mid-class income lowest in 50yr

Canadians are dropping out of the middle class as their share of the income drops.

Why has the burden of taxation been shifted from corporations onto a middle class that is already overburdened with debt and losing members to the economy? People used to have good jobs; where are they? And what is our government doing about that, other than signing free trade agreements and hoping jobs trickle out of them?

Can we not ask, even if it’s only ourselves, “Does this game seem rigged to you?”

Well, as it happens, citizens all over the world are beginning to ask that question and the answer they’re coming up with is, “yes.”

The followers of Podemos in Spain, of Syriza in Greece; many of the supporters of Brexit, of Bernie Sanders in the US primaries, and of Donald Trump – especially of Donald Trump because those folks have been cheated of their American Dream.

It’s not government that’s stooping to scoop the “dung of the devil”. It’s not the Church, for all of the worthy Pope’s exhortations. It’s the people. And people are using the only tool they have – their vote.



This post was originally published in the ‘Forum’ Section of Postmedia’s Ontario dailies on the weekend of August 2, 2016

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About David McLaren

David McLaren is an award-winning writer. He has worked in government and the private sector, with NGOs and First Nations in Ontario. He is currently writing from Neyaashiinigamiing on the shore of Georgian Bay and can be reached at david.mclaren@utoronto.ca. In February 2015, he won the nomination for the NDP to represent the riding of Bruce-Grey-Owen Sound in the 2015 federal election. See that page for writings during the campaign.
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