When I was in college, I frequently struggled with budgeting. This didn’t apply just to money — I also frequently overcommitted myself on time, which friends and colleagues will agree is a habit I’ve long since outgrown, honest, no, really, stop looking at me like that — but cash was something I sometimes found myself short of at times when I couldn’t do much about it.

One winter, I had exhausted my financial aid and, as my employer was also on winter break, I had an empty bank account and no immediate source of income. Unfortunately, I still had bills to pay, and because no bank would loan money to a monetarily flaky college student with no income, I made the same choice many Nevadans make and secured a payday loan.

In many ways, I was an ideal payday loan customer. I had a reliable source of income once winter break was over, plus financial aid coming in soon. And while I probably paid somewhere in the neighborhood of $16.50 per $100 borrowed — effectively a 430.18 percent Annual Percentage Rate — I only paid it once, instead of on a recurring basis like many payday loan customers. Also, like a lot of the commercials say, payday loans are cheaper than “vendor financing.” Landlords and utilities would much rather you borrow from anyone else than them (and apply late charges accordingly) — so, of the options available to me that winter, it was arguably one of the least bad ones.

Now, at this point, you may be thinking that you’re reading another “Payday loans are awesome!” article. It’s a popular genre among Libertarian and pro-market writers, after all — you can see a representative sample at Reason, the Cato Institute, the Mises Institute and the Heritage Foundation, among other places. The basic premise is the same: The target market is high risk, that degree of risk has to be priced profitably, yet high risk borrowers do sometimes need access to credit, so payday loan companies, being the only ones willing to loan to these customers, deserve all the — pardon the expression — credit in the world for making life easier for poor people through the power of the free market.

This, to me, smacks of vulgar libertarianism. Yes, payday loans might be initiated via voluntary market transactions, but that doesn’t make them right. Slavery, after all, also happened in a market economy. Not only were slaves bought and sold in marketplaces, the goods they produced at low cost were bought and sold in the market as well, encouraging other producers of cash crops to buy slaves to remain competitive. As F. A. Hayek pointed out in, “The Use of Knowledge in Society,” markets are simply a means of communicating information. “The particular circumstances of time and place” that Hayek speaks of, however, are not just the product of knowledge of unique information of surplus stocks; they also include the political and cultural circumstances of each time and place.

After all, we live in a society. A market for slavery existed because the political and cultural circumstances through most of the 19th Century in the United States not only defended but almost demanded the existence of slavery. Even if a slave owner wanted to opt out, the political and cultural circumstances of the time made it far too easy to justify being a part of the system while telling themselves they were doing it for the “good” of the slaves. Given all of that, it’s entirely fair to ask: Are there political and cultural circumstances that cause loans to the poor to be far more expensive than loans to everyone else?

Well, yes. Kind of.

Politically, the circumstances are, as they frequently are, complicated and contradictory. On the one hand, regulation of the banking sector is getting so onerous, it’s reducing or removing access to banking services in entire countries. On the other hand, the FDIC has been encouraging banks to compete against the alternative finance industry since 2008 through its Small-Dollar Loans Pilot and the biennial National Survey of Unbanked and Underbanked Households, while the state of Nevada explicitly exempts banks from being regulated under the same provisions as other providers of high-interest loans (defined in statute as loans that charge more than 40 percent annual interest). Then again, the Truth In Lending Act, which “does not generally govern charges for consumer credit,” does apply to businesses that offer a line of unsecured credit that can be paid back in more than four installments. Meanwhile, the usual provider of small loans in other countries - the post office - has been statutorily prohibited from offering small loans since 1966.

Clear as mud? Let me summarize: A lot of politicians don’t like payday lenders, so they have been trying for years to regulate them more tightly than the banking sector, including here in Nevada, while simultaneously encouraging banks to compete against them. (A lot of politicians don’t like banks, either, so they have been trying for years to regulate them more tightly as well.) The result is a series of arbitrary rules.

Why is a loan offered at an annual percentage interest rate of 40.1 percent a “high-interest loan” but a loan offered at 39.9 percent not? Why is a lender that offers a line of unsecured credit that is repaid in five installments regulated under the Truth In Lending Act, but a loan that is repaid in three installments is not? The result of lawmaking in this area is an ambiguous regulatory space in which banks decide between the potential profits of lending to someone and the costs in regulation-imposed paperwork incurred by doing so, and leave those customers that aren’t worth their time for the alternative finance industry.

Culturally, meanwhile, banks have rarely been popular, something which the Great Recession and Wells Fargo’s account fraud scandal (a scandal that’s not unique to Wells Fargo, incidentally) certainly hasn’t helped. Unfortunately, as George E. Burns, Commissioner for the Financial Institutions Division pointed out on KNPR, banks can’t profitably make small, short term loans without charging interest rates that are uncomfortably close to predatory — a negative perception they’d prefer to avoid. Additionally, products marketed to poor people have a stigma — one that banks don’t want to be tainted with and don’t have to be tainted with because they can make more money with less labor and paperwork by loaning to better off customers. Put the two together and you have a pair of cultural forces working in concert to disincentivize banks from loaning to poor people in general, and unable to loan to poor people profitably.

So, if we stop stigmatizing poverty and payday lending and stop drowning the industry in government-imposed bureaucratic red tape, banks will lend to the poor at more affordable rates and payday lenders will go out of business — right?

Maybe not.

It turns out it’s not just poor people who are using the products of the alternative finance industry. According to the FDIC’s 2015 FDIC National Survey of Unbanked and Underbanked Households, 23.1 percent of households in Nevada making at least $75,000 per year are “underbanked”, meaning “that the household had an account at an insured institution but also obtained financial services and products outside of the banking system.” These services include, “money orders, check cashing, international remittances, payday loans, refund anticipation loans, rent-to-own services, pawn shop loans, or auto title loans.” Curiously, some of these are services banks routinely offer, oftentimes for free if you’re already a customer, like money orders, check cashing, and international remittances. Others are services that banks offer competing products for, like bank-issued credit cards and personal loans — loans that, presumably, banks would love to make to people making over $75,000 per year.

Clearly there’s a market for these services outside of the banking industry, even among the better off.

Another thing that’s clear is that banning alternative finance lenders doesn’t help. Georgia and North Carolina tried that in 2004 and 2005, respectively. A few years later, the Federal Reserve concluded that:

Compared with households in states where payday lending is permitted, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate. North Carolina households have fared about the same. This negative correlation—reduced payday credit supply, increased credit problems—contradicts the debt trap critique of payday lending, but is consistent with the hypothesis that payday credit is preferable to substitutes such as the bounced-check “protection” sold by credit unions and banks or loans from pawn shops.

This isn’t unsurprising. The political and cultural forces that prevent banks from offering short term loans to the poor, affordable or otherwise, are still in place. All banning alternative finance did was remove the last remaining option. If we want to actually help the poor avoid the payday loan trap — and it is a trap — we have to stop shaming the poor. That, however, is something best left to the individual, not the government.