Payday Loans and the Church

In between ‘that’ baby and the tragic events in Spain this week, another story has been brewing that once again exemplifies the Church of England’s tendency to reach into areas of life that it really should leave well alone.

The new Archbishop of Canterbury may be gearing up to christen the new prince, but the week of the royal birth is one that Justin Welby will probably want to forget.

“We’re not trying to legislate you out of existence; we’re trying to compete you out of existence” was the excruciating message delivered to the boss of one commercially savvy organisation by the head of one that is rather less so; to complete the irony, the revelation was made in that other great meeting place of religious minds – Total Politics magazine.

Archbishop Welby believes that by expanding credit unions, he can help steer many thousands of people back onto the straight and narrow when it comes to their personal financial affairs, and in doing so bring down a business that was turning over 9-figure sums long before it was brought into the public spotlight.

The Church appears to believe that the only reason that Wonga is able to thrive is because the market is not sufficiently competitive; were there to be more options (yes, even more options) available to those needing to borrow, the fundamental business model of payday lending would no longer be viable. They thus appear oblivious to the idea of supply and demand.

Do businesses like Wonga get a bad press? Yes. Do they deserve it? Maybe. Do people ignore the fact that – as with so many of the perils that society’s spokesmen get high and mighty about – the single biggest factor that maintains them is our own tendency to feed them? Absolutely.

While the moralist would bemoan the cynicism of Wonga’s heavy marketing at a time of high unemployment and low wage growth, the rationalist would praise its business sense.

True, the equivalent annual percentage rates on these loans would make even the most hard-headed economist baulk – and the average headline writer salivate – but then payday loans are not intended to last for anything like that long.

That as many as 1 in 10 recipients do end up saddled with spiralling debts, as one missed repayment is compounded by another, is not the fault of the company offering the service.

If used prudently, a short-term loan can help an individual avoid missing repayments on far less forgiving loans. If the Sage had the option to avert the risk of a visit from the bailiffs, he is fairly sure ethical concerns – even if he believed them – would be low on the list of priorities.

But whatever the rights and wrongs of Archbishop Welby’s point of view – one he has not hesitated to express since the early days of his tenure – his misery was complete when, within hours, it turned out that his own Church had invested tens of thousands of pounds in a fund that had bought into the very company he wanted to destroy.

To a long-term sceptic of the Church and its many misplaced social missions, such a rapid and devastating fall from grace offers a certain sense of satisfaction. For the fledgling Archbishop, it’s hugely embarrassing and humbling.

Yet he is now committed to this project to cure the world of nasty money men, hence his attempts to modify his message – tolerating the world’s ills whilst retaining his resistance to them. The Church is an expert at lame stances, but this one’s right up there.

Perhaps the Archbishop should stick to the day job – christenings and all.

Egypt Self-Destructs

What a difference a week makes.

The weekend before last, Mohammed Morsi was preparing to mark a year in office as Egypt's President. Although that landmark had not exactly been arrived at seamlessly, and it was known that a demonstration was planned by his growing ranks of opponents, few could have imagined what came next – or that it would all happen so quickly.

Today, with the deposed leader still (as far as anyone can tell) under house arrest – ousted by an army that was supposed to defend him, and replaced by an unelected official for an ominously unspecified period – a country that two years ago was a beacon of democratisation and progress is once again in turmoil, governed by mob rule, and arguably more polarised than it was at any time under the authoritarian leadership of Hosni Mubarak.

The ramifications for the future of the nation, and the whole of the Middle East, are dire.

In the Arab Spring of 2011, as societies throughout the region fought to have their voices heard, it was Egypt - the heartbeat of the Arab world - that led the way, grabbing the biggest headlines and inspiring the greatest optimism across the globe.

A year later, elections were held, then a constitution was (however controversially) drawn up and approved, and Egypt finally seemed to push on and realise the massive untapped potential that it undoubtedly possesses – and in doing so prove to its neighbours and the West that this great experiment of 21st-century development could be a success.

Now, not only does that process seem wasted, but the appeal of democracy to other Arab societies has been destroyed – the dream shattered – courtesy of the apparent ease and speed with which a vocal minority (albeit relatively large and extremely well-organised)  has been able to ride rough-shod over the democratically expressed wishes of the electorate as a whole.

What message will that send to other peoples in the region?

After all, to put the result of last year's presidential vote in context (a poll which Western monitors were satisfied was free and fair), it's worth pointing out that Mr Morsi won a larger majority than President Obama did when he was re-elected last November.

Talking of whom, what has been Washington's response so far? Suffice to say, Mr Obama is outdoing himself by prevaricating even more than he did when his country's long-time friend and ally was under siege two years ago – and this time, the UK is joining in too.

The reason – although the West was happy to see Egyptians choosing their leaders, they weren’t comfortable with the leaders they chose. We may now never know for sure, but the Muslim Brotherhood might well have been banking on a strategy of gaining legitimacy before attempting to succeed in Egypt where Iran has thus far failed – becoming a stable Islamic state.

No-one, though, would wish to defend the events of the past few days, in which apparently innocent supporters of the banished President have been shot and killed by armed forces, who claim that they were provoked. It’s unlikely we’ll ever get to the truth.

Meanwhile, the army’s PR operation is in full swing, claiming that they will respect peaceful protest, and have no wish to remain in power – only to help build a lasting democratic state by installing a technocratic government before paving the way for fresh elections.

However, those words are falling on deaf ears. Even those who supported Morsi’s removal have withdrawn from this process in disgust at the army’s brutality. With the politics stalling and the economy facing paralysis, the likely outcome is continuing social unrest for many days and weeks to come – and almost certainly more bloodshed.