The news is, yet again, pretty darn awful. Nothing dramatic enough, I suppose, but it also means the same old tired squabbling on social media. (Wasn't there some sort of quote, talking about how some people are able to learn from other people's experience, and others just have to experience it for themselves? I'm not sure how much of it is that, and how much of it is good old fashioned denial, but there are a lot of people that still, still, seem to think we're all overreacting.)
Anyways, I figured I'd write a bit more about my earlier topic, and I figured I'd start with something to show just how complicated all of this.
Someone once discussed how (lack of) access to credit and loans and things can have a negative impact on people trying to get out of poverty. Just think of how bad black communities were hurt when banks flat out refused to provide any mortgages to their communities, and how hard it made it to buy or maintain a home.
So lending can be important, and people don't want to lend you their money if they're not going to make a profit on it... so we have calculations of 'risk', and it effects the interest rate that you get. High risk people get higher interest rates, so that the people willing to lend them money actually get some sort of benefit out of doing so.
That's all pretty standard economics/finance, whatever. And since access to credit is so important, for a variety of reasons, this can be a good thing.
But there's a flip side to this. Consequences that ultimately make this a less palatable solution. Because the result of that policy is that someone living in poverty, with low credit, will often have far higher bills than someone who can easily afford it.
For example, I know someone who bought a used car. One worth far less than my brand new (at the time) Ford Escape... but because of her credit history, the interest rate was enough to make her car payment almost the same as mine. And she was working two or three jobs just to make ends meet, and struggling to get by.
Oh, and since her car was used, it was less reliable. Which meant she also had to worry about whether an issue was covered by warranty, and getting it to the shop, and possibly not being able to make it in to work and keep those two or three jobs. All while paying almost as much as I was.
There's a wide swath of research that talks about similar problems. How someone who is homeless, for example, might wind up staying at a hotel for a week or so... which ends up costing them even more than rent or a mortgage.
If we think about it from a capitalist point of view - well, they generally don't talk about in terms of human cost, do they? Still, it doesn't change the major point, which is that if you try forcing people to limit the interest rate to something 'reasonable' one side effect will be that credit will dry up entirely for those who are considered the most risky.
I'm not throwing all this out there to provide an answer, yet. I wanted to show how complicated each and every issue can be, and that there are valid points to be made for various different perspectives.
Oh, and btw, I find it interesting that usury was a big thing in the Bible, one that most Christians really ought to care about, and yet nobody ever really talks about it anymore. Just further proof of how far the most politically active have fallen from the core of the New Testament (i.e. social justice, helping the poor and needy, etc).
This is not me advocating to reinstate laws against usury - multiple religions have banned it, and yet it somehow keeps happening in some form or fashion. Probably for the economic reasons I layed out earlier.
I lay the problem out there like that, because this is pretty typical of any challenging issue. There are multiple perspectives, multiple stakeholders... And also multiple potential answers. Each with varying strengths and weaknesses.
It's part of why I focus so much on decision making, and the processes we use in order to resolve issues.
It's a bit like, well... ordering a pizza for a group of friends. One person is vegetarian, one prefers meat lovers, another likes Hawaiian pizza, and a fourth prefers a supreme. Or sausage and mushrooms. Whatever.
Each group will negotiate their pizza order differently, and come up with different solutions. Maybe they order two or three smaller pizzas, maybe the person who prefers a supreme isn't that attached to their choice, and is okay with the meat lover pizza. Maybe they get one large pizza, and make half of it cheese and half meat lover.
What's decided on tends to depend on a variety of factors - how much money people are willing to spend, how attached they are to their preferences, and so on and so forth.
I mostly went with the 'nice' options, where this group of friends is trying to find a solution everyone can accept. Which means the negotiating process can take a ridiculously long time, and people may not get things exactly the way they want, but in general everyone's preferences are taken into account.
You could also have someone say "I'm paying for it, so we're getting what I want. You can take it or leave it." You can also have one (or two or three people) dominate the decision and refuse to accommodate the others. Maybe they decide to get half Hawaiian and half meat lover's, and screw the vegetarian.
To bring this back to loans, interest rates and usury... you can have people say "it's my money, I'll loan it to who I want, and if you put a cap on the interest rate I just find another way to make a profit off my capital." or you can have others say "making people who are already struggling pay ridiculously large interest rates is wrong, we don't care about your side of things. We're making it illegal to charge more than 10% interest."
Either way, it doesn't really fix the problem. Just means one side or the other is able to dominate the debate, and push the option of their choice.
I suppose this is where I should throw out some brilliant answer that gives the best of both worlds, but again... I'm writing more about the process. The answer can be different for different places, it's the process that really matters.
I'd rather see about facilitating discussions between those stakeholders, and various levels of community, so they can find their own answer. Maybe the residents of one city refuse to cap the interest rates, but decide to come up with their own non-profit program to help those with poor credit. Or maybe they do cap the interest rate, but offer some sort of incentive to lenders in their community to make up for it.
Empower the lowest level possible to come up with their solution.
These solutions, and discussions, can honestly be any mix of public, business, and charity... the point is that the community as a whole comes together to craft their own.
There's a lot more to it than that, but I've written enough for one night. Stay safe, and stay home as much as possible!
Anyways, I figured I'd write a bit more about my earlier topic, and I figured I'd start with something to show just how complicated all of this.
Someone once discussed how (lack of) access to credit and loans and things can have a negative impact on people trying to get out of poverty. Just think of how bad black communities were hurt when banks flat out refused to provide any mortgages to their communities, and how hard it made it to buy or maintain a home.
So lending can be important, and people don't want to lend you their money if they're not going to make a profit on it... so we have calculations of 'risk', and it effects the interest rate that you get. High risk people get higher interest rates, so that the people willing to lend them money actually get some sort of benefit out of doing so.
That's all pretty standard economics/finance, whatever. And since access to credit is so important, for a variety of reasons, this can be a good thing.
But there's a flip side to this. Consequences that ultimately make this a less palatable solution. Because the result of that policy is that someone living in poverty, with low credit, will often have far higher bills than someone who can easily afford it.
For example, I know someone who bought a used car. One worth far less than my brand new (at the time) Ford Escape... but because of her credit history, the interest rate was enough to make her car payment almost the same as mine. And she was working two or three jobs just to make ends meet, and struggling to get by.
Oh, and since her car was used, it was less reliable. Which meant she also had to worry about whether an issue was covered by warranty, and getting it to the shop, and possibly not being able to make it in to work and keep those two or three jobs. All while paying almost as much as I was.
There's a wide swath of research that talks about similar problems. How someone who is homeless, for example, might wind up staying at a hotel for a week or so... which ends up costing them even more than rent or a mortgage.
If we think about it from a capitalist point of view - well, they generally don't talk about in terms of human cost, do they? Still, it doesn't change the major point, which is that if you try forcing people to limit the interest rate to something 'reasonable' one side effect will be that credit will dry up entirely for those who are considered the most risky.
I'm not throwing all this out there to provide an answer, yet. I wanted to show how complicated each and every issue can be, and that there are valid points to be made for various different perspectives.
Oh, and btw, I find it interesting that usury was a big thing in the Bible, one that most Christians really ought to care about, and yet nobody ever really talks about it anymore. Just further proof of how far the most politically active have fallen from the core of the New Testament (i.e. social justice, helping the poor and needy, etc).
This is not me advocating to reinstate laws against usury - multiple religions have banned it, and yet it somehow keeps happening in some form or fashion. Probably for the economic reasons I layed out earlier.
I lay the problem out there like that, because this is pretty typical of any challenging issue. There are multiple perspectives, multiple stakeholders... And also multiple potential answers. Each with varying strengths and weaknesses.
It's part of why I focus so much on decision making, and the processes we use in order to resolve issues.
It's a bit like, well... ordering a pizza for a group of friends. One person is vegetarian, one prefers meat lovers, another likes Hawaiian pizza, and a fourth prefers a supreme. Or sausage and mushrooms. Whatever.
Each group will negotiate their pizza order differently, and come up with different solutions. Maybe they order two or three smaller pizzas, maybe the person who prefers a supreme isn't that attached to their choice, and is okay with the meat lover pizza. Maybe they get one large pizza, and make half of it cheese and half meat lover.
What's decided on tends to depend on a variety of factors - how much money people are willing to spend, how attached they are to their preferences, and so on and so forth.
I mostly went with the 'nice' options, where this group of friends is trying to find a solution everyone can accept. Which means the negotiating process can take a ridiculously long time, and people may not get things exactly the way they want, but in general everyone's preferences are taken into account.
You could also have someone say "I'm paying for it, so we're getting what I want. You can take it or leave it." You can also have one (or two or three people) dominate the decision and refuse to accommodate the others. Maybe they decide to get half Hawaiian and half meat lover's, and screw the vegetarian.
To bring this back to loans, interest rates and usury... you can have people say "it's my money, I'll loan it to who I want, and if you put a cap on the interest rate I just find another way to make a profit off my capital." or you can have others say "making people who are already struggling pay ridiculously large interest rates is wrong, we don't care about your side of things. We're making it illegal to charge more than 10% interest."
Either way, it doesn't really fix the problem. Just means one side or the other is able to dominate the debate, and push the option of their choice.
I suppose this is where I should throw out some brilliant answer that gives the best of both worlds, but again... I'm writing more about the process. The answer can be different for different places, it's the process that really matters.
I'd rather see about facilitating discussions between those stakeholders, and various levels of community, so they can find their own answer. Maybe the residents of one city refuse to cap the interest rates, but decide to come up with their own non-profit program to help those with poor credit. Or maybe they do cap the interest rate, but offer some sort of incentive to lenders in their community to make up for it.
Empower the lowest level possible to come up with their solution.
These solutions, and discussions, can honestly be any mix of public, business, and charity... the point is that the community as a whole comes together to craft their own.
There's a lot more to it than that, but I've written enough for one night. Stay safe, and stay home as much as possible!
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