Tuesday, 13 September 2016

Garbutt: The Economist letter: Wonga and Kenya pricecaps

Dear Editor

The Economist last week in “Cut Price Logic” page 14 and “Ceiling Whacks” page 68 seems to be overly-taxed in explaining the new Kenya interest rate cap, in not one but two articles.

To describe it as “crude meddling in the market” seems excessive given you cite the World Bank and over 76 nations with similar policies in place including such flimsy economies as Germany, Japan, USA and UK – even 35 out of 50 USA stares with their own specific laws on interest rate caps.

It’s scandalous that The Economist arguing for Wonga payday loans with interest rates over 1,000% (and the UK allowing it for so long) moves beyond free trade to price gouging in a monopoly/limited market.

While the UK before introducing weak price caps on the outrageous payday loans had regulation only on a 25% limit for microlenders and credit unions for distress purchases such as baby clothes or food.

Surely the Economist should be arguing for a UK and EU-wide cap of say 10% as in Germany? As part of my “Stop the Corruption, Stop the Pollution, Stop the Construction” campaign in East Kent I’ve urged this – and the Free Economy of capped utilities, train fares in similar monopoly markets.


The free market can operate under that cap.

While a maximum salary is a viable counterpoint to excessive 123x CEO salaries and moving the Minimum Wage to a Living Wage – Citizens Wages as Switzerland, Finland and Utrecht – and end zero hours contracts to say a minimum 8 hours per week, and 4 day week and standard holidays.

And UK Treasury reform on sneaky fees on electricity meters, rentals and now bank overdrafts is sensible. The investigation into secret fees to SME’s and consumers for currency exchanges, or Mastercard’s £14BN of illegal store fees, is mere criminality - as well as messing up The Economist’s tables at the end of the magazine.

Price caps and such legislation are widely used as they round off the excesses of capitalism for a fairer society and banking system that works for all.
The third Economist article on page 69: “The holdout: Bahamas cocks a snook at the war on tax-dodgers” and the 16 UK tax havens, is more accurate on the task of bank reform.

The bank industry with its LIBOR crimes and the unacceptable faces of capitalism with the BHS scandals of Philip Green and Grabafee Grabiner of One Essex Court or Mike Ashley of Sports Direct and no doubt Wetherspoons, and its zero hours policy, is symptomatic of more and deeper reform.

The Economist writers belief that price gouging so far could be avoided through “transparency about fees, more sources of funding and credit scores is patently bureaucratic nonsense arguing only for the unfair status quo not free and fair trade.

Kenya with a 4% cap above base rate is leading the way in bank reform and leaving UK in its wake, and from these articles the only cap that fits the Economist is that of a dunce.

Tim Garbutt, Ramsgate


Misc points:

* July Updates: http://sincerityagency.blogspot.co.uk/2016/07/misc-articles-updates-july-2016.html

* Working on a misc issues: Magellan Anniversary - Spain and LatAm, Almeria Univerisites links and Kent-Thai orchids

* Also Solomon Islands cruise ships

* Benelux strategy: Panasonic and Phillips - DNA bathroom mirror

* One Essex court and Inns fraud: Grabiner, Glick, Hollingworth, Leavor etc

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