One of my pet hates are the plethora of payday loan companies that have sprung up in the last few years, who are probably on a par with arms dealers in the morality stakes. So I watched with interest a Guardian video featuring an interview with the co-founder of Wonga, one of the more famous names in the exploiting those most vulnerable short-term credit game. Errol Damelin’s attempts to answer the charge that his company is essentially a ‘legalised loan shark’ are fascinating. Risible and frankly nauseating, but fascinating nonetheless.
Damelin doesn’t make the honest case and say what he really thinks, that in a free market these things should be accepted. If there is demand, it should be satisfied and the social consequences be damned. People don’t have to take the loans out. It’s a choice.
The Guardian interviewer points out the ludicrousness of the Damelin wishing ‘to avoid discussing individual cases’ even though the cases being discussed are ones that Wonga themselves used to highlight the success of what they are doing (which turned out to be rubbish, predictably). Damelin can’t answer him without descending into waffle. A central plank of Wonga’s propaganda is that they aren’t targeting the poorest people, but are in fact just helping out ordinary, median-income households who just need a short-term loan to tide them over once in a while. The evidence suggests that that contention is a million miles away from the truth, although to be honest it was pretty obvious already. We know who Wonga and firms like Wonga are targeting. Just watch the adverts.
The interviewer also points out the ludicrousness of Damelin’s contention that somehow Wonga are on a moral mission to make the world a better place. They are performing a public service, apparently. Damelin is acting in the interests of humanity and is in business to help people.
I’m not sure how one can view such statements in the light of the obscene interest rates that Wonga charge and the vast profits (nearly £17 million on a turnover of just under £74 million in 2010, and that is only likely to increase inexorably) they make. In what possible sense is that performing a public service? Does anyone really honestly believe that the exercise here isn’t to make money, wagonloads of it, money that is earned off the backs of those with the least? In what possible sense is setting up a company that is clearly making so much money because of the woeful economic situation and therefore taking advantage of the misfortune of others an act of public-spiritedness? Who does Damelin think he is fooling?
We already have something that although far from perfect is much better at helping people out who are in dire straits financially. They are called credit unions. Instead of standing idly by and allowing these bloodsuckers free reign, the government should instead be working to make these institutions as accessible as possible and giving them the muscle to help those who most need it, and not cutting government funding to them.