By Andrew Morrison, Sun Loan Company
An excellent and provocative article by David Leonhardt in the NYT this week, looks at the gains made by Republicans among minority working class voters and identifies the reasons behind them as the Democratic Party’s biggest weakness going forward. Seeing these gains, it is no longer plausible to dismiss the appeal of the GOP message to this sector of society.
Clearly, the messaging from the Democratic Party leadership on various issues is not resonating with its traditional base, and some are walking across the aisle. What are the issues around which this alienation is taking place? Leonhardt identifies social issues, upon which minorities tend to be more conservative, and, perhaps ironically, policing, as major areas where the working class voters felt abandoned or patronized.
This got me thinking. How will we know if the new administration has taken notice of the issues raised by Leonhardt? There are many aspects to monitor, but, couldn’t a useful touchstone, a litmus test for whether the new Administration and its supporters in Congress are embracing this new political reality, be access to credit, specifically, small dollar credit?
Anyone with a modicum of knowledge of small dollar credit knows that there is an inverse relationship between cost and APR, that lower APR loans cost more than higher ones, and that such rate caps only cut off access to the lowest cost forms of credit.
Imposing these kinds of rate caps might make a few politicians feel good, but they cause immense harm to lower income Americans.
Nobel Laureate, Muhammad Yunus has said that, for too long, safe, affordable credit has been the preserve of the privileged (Banker to the Poor 1999). Instead it should be seen as a basic human right. The United Nations agrees: access to credit is one of the essential services, the lack of which identifies people as living in poverty.
Rate caps return credit to the privileged and deprive the poor of hope. I used to be astonished that any Democratic politician would support them. Perhaps, though, Mr. Leonhardt is right and it’s just par for the course.