As I've been saying and writing for many years, markets are frequently messy, but they generally get things right in the end if left alone. Liberty in general can sometimes be messy, but any other human condition is intolerable. We all have an inalienable right to make our own market decisions, to do business as we please, as long as the business is above-board and voluntary, with all parties being aware of all of the details.

This includes credit markets. Some credit decisions can be ill-advised; I'm not a fan of the "payday loan" schemes, for instance. I've known too many people who have gotten caught up in an endless cycle of taking out one payday loan, then another to address the shortfall, then another, with the amounts slowly creeping upwards. 

But it's not the government's place to protect people from the consequences of their own decisions, and it's not the government's role to pick winners and losers in any market. But that's what the Alaska legislature is attempting to do with Senate Bill 39, "Loans Under $25,000; Payday Loans."

I wrote on this ill-advised notion a few months back:

See Also: Alaska Legislature Attempting Inadvisable Usury Law - Coming Soon to a State Near You?

The bill proposes to set an annual percentage rate cap on all loans under $25,000, that rate being 36 percent. Now, 36 percent is still considerable. But the "payday loan" industry routinely ends up with loans being set much higher; for example, a loan of $1,000 with a flat fee (as opposed to a percentage) of $25, outstanding for one week, would result in an APR of 130.35 percent.

Now, the legislature may well be stepping on the credit card companies as well, which could reduce credit options for Alaskans:

This week, the average APR for credit cards in Forbes Advisor’s database is 28.72%. Our calculation for the overall average includes airline, hotel, flexible rewards, cash back, student, 0% APR, balance transfer and business credit cards.

The average credit card APR has been creeping up over the last few years. This bill has the potential to price Alaska out of the credit card market as well as reducing options for people needing short-term relief. And there's a reason this is being tried here, in the Great Land, a state that's huge in area and modest in population. Like ranked-choice voting, in this ill-advised legislation is using Alaska as a test bed. As I wrote in March:

The left has, in the last election cycle alone, lost a lot of clout at the federal level. The Democratic Party's polling approval numbers are lower than toenail fungus. But they still have their agenda, they still have their priorities, and most of those priorities are harmful to the American economy. What this attempt in Alaska tells us is that if they can't get something at the federal level, they'll try it at the state level - or the local level, as appropriate.

That still applies. And if it succeeds here, they'll try it elsewhere - and next year, they'll try more anti-free-market schemes. Take note, readers, of what's happening here, because it will be coming to your state, sure as I'm sitting here.

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This bill is a bad bill. If it manages to make its way to Governor Dunleavy's desk, he should wield the veto pen with gusto.

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