Are payday loans like unprotected sex?

Sometimes you read a Tyler Cowen post and you think to yourself, simply: Did he really just say that? Here’s Cowen on payday loans and unprotected sex:

The unprotected sex is riskier and less prudent than borrowing money at an annualized rate of two hundred percent.  Why prohibit one and not the other? Many of the borrowers are being fooled, but others have legitimate reasons to seek the money, such as wanting to buy a birthday present for a visit to one’s child, living with a separated spouse.

On a prima facie level, I think it’s fairly obvious that making love to a woman (or a man) is not quite like taking out a high interest loan from a payday loan boutique. There are a lot of ways I can think that sex differs from 200% APR loans…but the way that counts here is basically a category issue. In short: loving making is not a market transaction.

For one, you shouldn’t assume that your consensual partner is pursuing a profit or pleasure maximizing strategy. Some partners might be, but they’re the exceptions that prove the rule. For the most part, lovers are couple-regarding: they’re interested in maximizing the pleasure of both parties, not themselves alone, and especially not one at the expense of another.

That’s obviously not true of payday lenders, whose very business model depends on the suffering of their clients. They exploit information asymmetries and pray on the people least able to make good decisions, in order to maximize their revenue. With sex, risk is a byproduct of something otherwise wholesome and demonstrably positive sum; with payday lending, one party’s suffering is a core feature of the larger system it exists within.

This whole rather ridiculous debate speaks to a larger issue with economics as an analytical tool. The fact is, transaction models are not the appropriate metaphor for love, or love-making, or friendship, or any of that. No matter how many books Cowen writes, that still will be true. The very fact that danger incurred by one partner in unprotected sex is shared by the danger incurred by the other, in a roughly symmetrical way, indicates the larger point that sex between men and women / men and men / women and women is consensual and other-regarding in a way that buying something from a firm can never be. To capture the essence of that non-utility maximizing connectivity — that Oneness, as some might call it — you need to get very far away from economics, towards something like art or religion.

Maybe the best way to end this is to just quote at length from Mark Greif’s piece On Repressive Sentimentalism, from N+1. (Harvard Magazine’s take on the journal here, if you’re unfamiliar). To me, this piece is deeply flawed in a number of ways, but he’s dead right when he says the following. Note, this gets us very far away from payday loans…but that’s sort of the whole point, isn’t it?

You have to defend sex because we still have no better model than the actual, concrete sexual relation for a deep intuitive process opposed to domination. We have no better model for a bodily process that, fundamentally, is free and universal. It does not produce (there is no experiential remainder but pleasure) nor consume. It is cooperative (within the relation of the lovers) and, in that relation, seems to forbid competition. It makes you love people, and accept the look and difference of their bodies. Production comes back in with pregnancy and “labor”—that’s why contraception means so much. Competition can come back in with the conquest of partners, and a brutality or technical objectivity in lovemaking that allows men to remake cooperation as if it were struggle—hence utopians’ funny, sentimental insistence on love in the act. Sexual cooperation is the other side of our basic human nature, and matches and disarms economic competition….

“Sex without consequences” becomes the metaphor for cooperative exchange without gain or loss. For basing life on the things that are free. For the anticapitalist experience par excellence.