It seems to me I’ve heard this song before. Should we control so-called payday loans? Should we effectively run them out of Arizona? Should we or should we not approve Proposition 200 on the Nov. 4 ballot?

My Libertarian heart argues the transaction is between two consenting adults. It’s none of our business. We should leave them alone.

But my mind tells me the consent of the borrower is influenced by desperation. Such a borrower demonstrates the business acumen and mathematical skills of a child — a very young child. As such, the borrower needs to be protected from institutionalized financial imposition.

The payday lender is little more than a con man, a lender hoping his borrower won’t understand how much he is paying for that loan or be able to repay it when it is due so he can take him for another ride on the bankruptcy express.

The economic principle that the borrower is unable or unwilling to cope with is that by borrowing his next paycheck, he will have already spent the money by the time the next paycheck arrives.

Unless the borrower is certain of a windfall he will receive within the term of the loan - like winning the lottery - he is guaranteed to be in bigger financial trouble by taking his paychecks in advance and paying through the nose and ears and other orifices for the privilege.

The last time this issue came up, in 2005, I found the website that payday lenders used to recruit additional payday lenders into the business. I found such confessions as "A typical 8-day paycheck advance. . .will yield an annual percentage rate on your money of 805%!" (I didn’t add the exclamation point.)

Should we countenance a business in which the lenders rake in such huge profits from people who either don’t understand what it’s costing them or are so desperate they don’t care? They figure they’ll worry about repaying the loan when in comes due — in a few days.

What they don’t know is that no matter how desperate they are, they will be worse off financially for having taken the loan than if they had not.

The government has a responsibility to protect undereducated graduates of the government school system and its dropouts. Those people are hardly on a level playing field to negotiate their loan with the professional shark who can mentally calculate his return to the sixth decimal in less than a second.

There is nothing unique about passing laws that prohibit gross imposition. If they were not cloaked in the respectability of a business license issued by the government, these lenders would be seen for what they are, unprincipled slicksters.

As you might expect, Proposition 200, which they wrote, benefits the lenders and provides only illusory protection for borrowers. The provisions can be avoided by clever manipulations of the transaction by lenders.

What isn’t said is that if Proposition 200 fails the special legislation that allows payday lenders to exist expires in 2010 and loans in Arizona would be capped at 36 percent interest. Approving Proposition 200 would allow payday lenders to continue operating, charging interest rates up to 400 percent.

That’s the real thrust of Proposition 200. That’s why the lender industry is spending more than $9 million to try to ram Proposition 200 through.

One of the most dangerous provisions of Proposition 200 is one permitting lenders to debit borrowers’ bank accounts directly. While this is promoted as a convenience for borrowers, it is valuable to lenders because it facilitates their taking additional fees right out of a borrower’s bank account.

Proposition 200 is a wolf in sheep’s clothes and deserves to be defeated.

E-mail comments for publication to editor@azbiz.com. Contact Lionel Waxman at territorial@waxmanmedia.com. Waxman’s Flashpoint commentaries are published in The Daily Territorial.