Payday lenders are hated by many, and understandably so. I have mixed feelings about them, though. They make money off a failure of society, and one that feels very avoidable: millions of Americans living paycheck to paycheck, unable to afford an emergency. Higher wages and an improved social safety net could eliminate the need for these institutions, but nobody with power seems interested in making that happen. To that extent, payday loans can be seen as an unnecessary ‘necessary evil.’ Abolishing them, without these aforementioned changes, would hurt those who lack alternative ways to get quick cash. That’s what payday lenders hang their hat on: it’s horrible, but it’s honest. Hence, I am able to imagine—and wish for—a world without payday lenders, and I have some idea of how society gets there. Earnin is a company that comes from a new generation of ‘quick cash solutions,’ and they need you to think that they’re ethical. Something about that makes me viscerally upset, not only at the company, but also at the culture that spawned it.
The way Earnin presents itself, you would think it’s either a charity or a mutual aid fund. For example, they brag about the fact that there are no fees to use the app and no interest charged on the money you borrow. Instead, they rely on a system of purely voluntary tipping to stay afloat. They call this ‘giving back to the community.’ According to NBC, they suggest that you tip around 10% of what you borrow.
It sounds cuddly, almost. All this talk about volunteerism, community and reciprocity might make you overlook what 10% interest on a short-term loan looks like. If you repay that after a week, which is a long time for a payday loan, 10% works out to an annual percentage rate (APR) of 521.43%. Unless you live in Texas, Nebraska, or Idaho, that is a worse deal than your average payday loan. If a friend asked for $10 back after I borrowed $100, though, I might just give it to them. That feels sort of fair. And Earnin, above all else, tries to make you think of them as a friend.
It is here that we see the subtle toxicity of “giving back” to Earnin. Did you wonder how this business got startup capital? I’m guessing that they had done extensive research, showing that most people would want to “give back” to a company with their brand marketing. They probably identified that $5, $10, felt like a reasonable tip in most peoples’ minds, even if it isn’t. On top of that, this model allowed them to avoid classification as payday lenders, excusing them from regulation, which is a very nice value proposition. Some might call it cynical, manipulative, maybe even evil. That’s before we point out the requirement that they track you all the time (to make sure you’re working). And that’s on top of their access to your bank account, which has allowed them to send customers into overdraft so often that they faced a class-action for it (although they do offer to pay overdraft fees). We see, then, that behind the fuzzy exterior is a terrifying company, every bit as exploitative as their predecessors. I’m reminded of the phrase “wolf in sheep’s clothing.”
Still, Earnin insists that it is built around ‘not leaving people behind,’ and claims to be bolstered by a strong, diverse community. What that does is add insult to injury. The CEO of Earnin claims that he came up with this solution when his employees, at another company, couldn’t pay their bills. Fronting them cash became the proof of concept for Earnin. By then, I couldn’t help but ask, “If your employees cannot pay their bills that often, why not pay them more instead?”
And this is where I turn my horror to society broadly. Earnin, in its absurd attempt to recast payday loans as activism, feels like performance art. It could serve as a satire of an issue that I see cropping up everywhere, namely: our need to always feel as though the choices we make are moral, even when they aren’t. The way I see it, this impulse pushes us in one of three directions whenever we choose to act against our moral compass. There is 1) imagining that we have no other choice, although we often do, 2) imagining that this is the most moral choice we could’ve made when that is rarely the case and 3) deciding that whatever problem we’re contributing to does not actually exist.
In the case of Earnin, we see an attempt to make payday lending ethical, or at least to depict it as such. Implicit in Earnin’s messaging is a belief that poverty is a fact of life, there will always be a market for lending to the desperate, and so they will be the nicest people in that space. Unlike traditional payday lenders, they make you feel as though their existence is inevitable, there is no better world to imagine. You feel powerless, and they console you with the fantastical notion that they can make money off the struggles of the poor without causing harm. The poverty of imagination, combined with the wealth of illogic, is depressing. It’s like seeing a 10-foot wall and praying you’ll fly over it, ignoring the open door 10 feet away.
We see this everywhere. In fact, payday lenders are only honest because they have been a media pariah for at least a decade—they cannot help but acknowledge the truth. In the case of Duke, we can think about the ways in which people “sell out.” Ultimately, most of us justify it by saying that we have no other choice, proclaiming that we’re “built different,” or finding ways to imagine doing the job without any of the moral hazards that accompany it. Nobody wants to admit that they’re making a choice that is some shade of gray.
What is the consequence of that? Look to Earnin: in our need to always be ‘Good, Actually,’ we deny all opportunities to reflect on the choices we made. An ethical short term lender cannot exist, it’s almost a contradiction in terms, so Earnin re-imagines a world where that can happen: a world where poverty will never go away, and where there is no moral hazard in asking for a 500% APR from a poor person. Without some self-delusion, how can anyone making murky choices cast themselves as totally moral? One might even point out that, by accepting to live in an unjust society, we are failing to be moral every day, and thinking otherwise is an act of delusion, too. The consequence of this self-deception is clear and terrible: we preclude the possibility of changing the world for the better.
After all, if working a questionable job, or participating in a questionable institution, is unbearable without the belief that you are ‘Good Person,’ then you must find ways to ignore or deny moral hazards. At that point, how do you become a part of the solution? You either don’t believe that the problem exists, or you have convinced yourself that you’re already doing the best you can! Without reflection, honesty to oneself, change is impossible.
What, then, is the cure? I think we must learn to accept that we can’t be unambiguously good. At the end of the day, it is almost impossible to avoid participating in some form of injustice. We make understandable—though not justifiable—decisions which go against our ethics almost every day. To give an example: we really ought to be pushing for climate legislation every day, but most of us have other things that we’re more worried about. That doesn’t excuse making the wrong choice, and that isn’t an invitation to nihilism, either. Rather, it is a call to admit that we are all hypocrites to varying degrees, and that we must continue to question why we aren’t doing more.
Admitting, without qualification, that you are making a selfish choice keeps the door open to changing. At some point, you’ll be able to decide that you either can, or must, be better. Until then, honesty will keep you lucid. Wanting to be the hero will make you contort your world-view, your beliefs about reality and morality, into something unrecognizable, just so you can get out of bed. Needing to be a ‘Good Person’ will see you take the language and spirit of activism and awkwardly force them to agree with the work you do. Having to think like this is how you end up with a college kid writing a column, expressing horror that you just called payday lending an exercise in mutual aid.
Dan Reznichenko is a Trinity Junior. His column runs on alternating Mondays.
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Dan Reznichenko is a Trinity junior and an opinion managing editor of The Chronicle's 118th volume.