I just put an ad on the site, for payday cash advances; you can see it if you scroll down a bit on the right. I had mixed feelings about putting it there; I don't need the money so badly at the moment and anyway it isn't much, but I was so curious about how advertising on blogs works that I wanted to do it just as an experiment. The thing is that I'm wary of payday lending. But I suppose it's an occasion for setting down my views on usury laws.
The medieval Catholic church forbade "usury," which at one point included all interest; Islam forbids it, nominally at least, to this day. Gottfried Feder, an ideologist of the Nazi Party, also passionately opposed interest, and abolition of interest was a Nazi slogan. The prohibition has been common to many civilization. To a contemporary economist, all this opposition to interest is nothing but a simple-minded fallacy. Interest seems "unfair" because the lender receives back "more" than he gives. But economists know that funds-at-time-t are not the same good as funds-at-time-t+1. Funds-at-time-t are typically more valuable, since the economy usually grows and there are always opportunities to invest. So the lender is not "exploiting" the borrower; they are engaged in a mutually beneficial exchange.
Recently, though, behavioral economists have started to observe that people tend to have "hyperbolic" preferences, a particular mathematical form of preferences over present and future consumption that is characterized by "time-inconsistency": one tends to favor consumption right now over future consumption in a way that is inconsistent with one's relative valuation of future dates that are far enough away so that one is not biased by the pressures and impulses of the moment. While I'm suspicious both of some of the methods by which this result is obtained and of some of the implications that are drawn from it, it's probably true that people have a systematic bias in favor of instant gratification, which it takes willpower to overcome.
In that case, lending at interest may, after all, be predatory in some cases, though certainly not in all cases: it frequently happens, too, that people have very good reasons for having different relative valuations of funds-at-time-t and funds-at-time-t+1, and that some people will quite rationally go into debt to finance some plan or project and be glad in the long run that they did. What you would want morality, and probably law too, to do is to discourage or forbid the kind of lending that exploits instant gratification, while tolerating and approving the kind of lending that finances valuable education and judicious entrepreneurship. The tools available to players in the sphere of private morality, especially churches as well as families, schools, clubs, etc., and those available to policymakers, are quite different. Private morality could exhort lenders to examine their consciences, to take into consideration the effects on their clients, etc.; and could try, perhaps, to identify exploitative lenders and shame, ostracize, and expose them. Policymakers have the difficult task of defining the legal boundaries of exploitative and entrepreneurial lending. No specific interest rate could mark the difference. A rational entrepreneur might sometimes have good reasons for borrowing at 10% or 20% or even 50%; a loan made at 7% might still be a case of instant gratification. Usury laws can presumably never be written just right and will always ban some good lending and permit some bad lending. But it's still probably worth having them on the books.
I don't vouch for the advertiser below; I know nothing about them. I'm just curious as to whether the mechanics of e-commerce, in whether money will actually show up in my PayPal account on the basis of having a link on my site. Another interesting thing: even though I haven't been posting here regularly, traffic doesn't seem to have gone down. I guess there's a certain inertia in internet traffic.