Today’s readings: usury

Last updated on: February 26, 2015 at 11:12 pm by Jane the Actuary

Today’s readings: usury 2015-02-26T23:12:23-06:00 Jane the Actuary

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(I really, really need to get a start on putting labels on my blog posts. For a while, it worked reasonably well to just google myself, e.g., “jane the actuary” Social Security, but this doesn’t seem to work as well; I’m pretty sure I’ve written on this general topic before, but I can’t find it.)

Here’s an except from today’s first reading at Catholic churches worldwide, and other denominations that follow the same schedule:

If you lend money to one of your poor neighbors among my people, you shall not act like an extortioner toward him by demanding interest from him.

Now, people generally have an understanding that goes like this: the Catholic Church used to oppose money-lending for interest, but then they changed their mind, so that proves that they are able to change doctrines when it becomes convenient to do so, such as putting the stamp of approval on (you choose) contraception, remarriage, non-marital sex, abortion, etc.

And what I thought I had previously written is this: the reason why, at the end of the Middle Ages, the Church accepted moneylending was that economy itself has changed and “moneylending” meant something entirely different. I’d have to hunt down the particulars in the basement bookshelves as to exactly when this occurred, but the key point is that only during the Middle Ages did moneylending become a part of trade and business (as well as practiced by the nobility to keep up their consumption); in the Ancient World debt amounted to something more like the “debt slavery” of the Third World today, where, in places like India, you read that poor farmers fall into debt when a harvest fails due to a famine, or to pay a medical bill, or a dowry, and have no hope of paying off their debt. If I’m not mistaken, “debt slavery” refers to places where the debt is passed down to the next generation. Of course, in the Roman Empire (again, going from memory), debt slavery was more literally slavery — in that your debt could cause you to become enslaved. In addition, a peasant farmer in these situations was not able to just “work extra hours” in the future to repay the money — the plot of land you have to farm isn’t going to increase in size and isn’t going to be more productive, so you have no way to increase your income to pay back the debt.

So in those circumstances, yes, it is a sin to basically enslave your neighbor.

What about 2014 America?

Megan McArdle addresses the subject of seemingly-usurious lenders periodically, most recently with respect to rent-to-own firms, before that it was subprime auto lenders, who have begun to install ignition kill switches as a means of “virtual repossession” to ensure they get paid. The basic theme is this: every time we complain about interest rates charged to the poor, and insist that social justice requires that we restrict those rates, we fail to recognize that, if we did so, the poor wouldn’t be able to get the money loaned to them at all which they clearly must desperately need.

In a way, this is circular logic: we need to permit high interest rates because lenders need to charge those rates because, in the end, the payments will be so high that a considerable number of those debtors are going to be unable to pay back the debt — though in this case, unlike Ancient Rome or modern-day India, debtors can declare bankruptcy rather than becoming actual or figurative slaves.

And I’m not saying McArdle is wrong per se — it’s just that there’s got to be a better way.

UPDATE: hmmm. It occurs to me that that there’s a part of the parable of the ten talents that makes me curious of the fuller background. This is the parable where a man entrusts money to his servants, one 5, one 2, and one 1 talent (that is, a monetary unit, which conveniently translates into English as “talent” and fittingly reflects the meaning of the parable). The 1-talent recipient buries the money in the ground and is later told by the landowner: “you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest” (Matthew 25:26). Bankers, eh?

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