Final Word from Monday, August 13, 2018

A society that moves away from personal responsibility will inevitably move toward restriction of personal liberty. If people don't know how to behave, they must be corralled into behaving properly. And so it is with consumer lending. No one can afford a loan with an annual percentage rate of 200%, yet few of those who commit themselves to such loans even realize what they're doing. They haven't been taught enough personal responsibility to make an informed decision. Instead of trying to fix this fundamental problem, some MPs want to reduce personal liberty by putting a cap on annual interest rates. If they're successful, the end result will inevitably be the opposite of the stated objective. Sure, they'll eliminate loans with annual rates of, say, 200%, but they'll ultimately contribute to a further consolidation of the market. Those left will be the mega-sharks with a CNB seal of approval who excel at using "low" interest rates but high penalties to suck their victims dry. [Czech Republic National Bank RPSN APR]