Economists often claim that they would be glad to help poorer families, but that such efforts would either be a waste or would actually make things worse. In the area of credit regulation, for example, the constant pitch from some academics (and echoed by the banking lobbyists) is that any limits regulating credit cards will result in driving the country’s most vulnerable citizens to far more dangerous lenders. The theory, called the substitution hypothesis, has been in vogue for two decades, providing intellectual cover for lobbyists’ efforts to checkmate any serious legislative effort to rein in predatory lending practices.
This is a companion discussion topic for the original entry at https://talkingpointsmemo.com/?p=1250655