Replace loan sharks with trusting neighbors
Payday loan operations prey on the poor and keep them in poverty. There’s no other way of looking at it. You know the places… they’re on almost every streetcorner on the southside, westside, and near Davis-Monthan, preying on working families and underpaid airmen who need a little help to get by until the next paycheck. For the privilege, they are charged more than 300% annual interest, ensuring that many people cannot ever get out of the cycle of debt.
This problem is not new. In my work in the Southside and Barrio Viejo, working with low-income teens as we interviewed elders to create books of community stories, I heard a lot about how families could not buy food from payday to payday in the 1930s through the 1960s.
The solution then could be the key to a solution now. Back in the day, there were Chinese grocers in every neighborhood. They knew their neighbors, and often lived in the back of the store. When a family was short on money, the grocers got out a little pad of paper and kept a tab. That family could take the food they needed and then settle accounts–at no interest!–the next time they got paid.
These were the “payday loans” of the day, and these Chinese grocers are responsible for thousands of Tucsonans being able to step up out of poverty without being trapped in the cycle of debt. Trust, community, and respect paid off in big ways. Ironically, many of the payday loan operations have set up business in the former location of Chinese groceries.
Why can’t we look to the past for inspiration for how we can defeat poverty in the future? Let’s encourage small microloan co-ops in each neighborhood that needs them and empower neighbors to help neighbors when times are tough. The model works well today in many parts of Mexico and India, and can be just what it takes to provide a creative alternative to payday loan sharks.