On usury 3

The Christian understanding of what constitutes "usury" has changed. What began as an absolute prohibition against lending at interest has evolved into a vague condemnation of lending at "excessive" interest.

I've argued below that this change is defensible and rational -- that economic ethics from the ancient world needed to be reinterpreted for our modern context, for a world and a marketplace that our forebears could never have imagined.

The refusal or inability to adapt to a changing world can be a dangerous thing. Consider, for example, the so-called "Reconstructionists." This weird, southern-Gothic strand of America's religious right claims to want to establish the civic laws of the Pentateuch. Homosexuals and adulterers, they say, should be stoned. (Religioustolerance.org has a helpful overview of their perspective here.)

The Reconstructionists are an extreme example of the primitivist impulse in American Christianity, which manifests itself in the idea that tradition is suspect and history is irrelevant. This impulse often expresses itself as the noble-sounding goal of "getting back to the New Testament church." My friend Bill jokes that the people who try to reclaim the New Testament church always seem to end up in Corinth. (The context there is that the Corinthians were a bunch of raucous perverts who serve as a good reminder that "early Christianity" could be just as mucked up as the postmodern variety.)

So, on the one hand, the idea it is simple or wise to reclaim the rules and standards of the "early church" can be dangerous.

But on the other hand, the recognition that we're now casually accepting something that was previously regarded as unacceptable should at least give us pause.

One worrisome aspect of the modern understanding of usury, for example, is that the standard for what constitutes "excessive" interest is rather vague. I argued previously that the real standard for usury, the real principle at stake, is whether our lending/investment is a matter of empowerment or exploitation. In making such an argument, I'm essentially attempting to distill the principle at work at the heart of the earlier law, written for a different world, and to apply that principle to the world in which we find ourselves today.

It's interesting that such an attempt encounters little disagreement when the subject is economics and when ancient proscriptions are reinterpreted in a way that permits our 401(k)s and home mortgages. Yet taking the same approach to sexual ethics provokes howls of protest.

This series of posts on the meaning of usury has been a kind of extended holiday into the abstract. I needed such a vacation, as the actual and particular this week -- the vile bankruptcy bill sailing through the Senate -- was too depressing.

But, alas, let's get back to those depressing particulars. The bankruptcy bill is an endorsement of exploitative lending. The immoral is made moral with the full pedagogical and punitive force of law. Usury is endorsed, and will be enforced. The right of usurers to practice their vice is made sacrosanct and the courts and police will be enlisted as agents of their usury.

It is a wholly and enthusiastically corrupt piece of legislation. The task now, for those who care about such things, is to make sure that those senators who supported this insupportable bill face real consequences for doing so. If their reputations, moral standing and electoral prospects are not diminished as a result of this vote then God only knows what they'll be emboldened to do next.

Comments

[pharoute]

I hope this one comes back to bite the republicans good in 2006. They have handed the Democrats an ad campaign that just keeps on giving. Crushing debt is something that everyone understands, even if they haven't experienced first hand. Also could this be the final straw that gets the evangelicals to realize that despite years of republican controlled government none of their pet causes have been passed into law? They are being used so bad.
And to any Democrat that didn't fight this one at every level...you'll get yours too.

[julia]

I'm guessing that it's OK for reconstructionists to eat bacon cheeseburgers in mixed-fiber outfits.

Just a hunch.

[Mabus]

Also could this be the final straw that gets the evangelicals to realize that despite years of republican controlled government none of their pet causes have been passed into law? They are being used so bad.

I recognized that some months ago (though strictly speaking I'm not an evangelical). But from the reception I've gotten here, I don't think the Democrats will be any better, so why should I bother voting for them either?

I'm guessing that it's OK for reconstructionists to eat bacon cheeseburgers in mixed-fiber outfits.

No need to guess. Having read some of their books, I can tell you for certain that they have carefully interpreted away all the laws that don't suit them. Scary folks...heck, anyone who'd call me a heretic is scary. At least from the conservative side of the religious lines.

[Lot_Kamehameha]

The stock market is a usurious institution by its very nature. All things must pass.

[Mary]

I did a study yesterday about the Senators that voted for this bill as well as some that helped or had before and found this on Diane Feinstein's site about why she voted against this bill:

Senator Dayton moved an amendment which would limit interest rates on credit cards to 30 percent. The amendment was summarily defeated. The fact of the matter is that with penalties, with other charges, with high interest rates and many companies have interest rates well -- believe it or not -- in excess of 30 percent, a minimum payer cannot ever repay the full debt because the interest on the debt, if combined with certain penalties and/or fixed payments, becomes such that it overwhelms the principal. Now, many people don't know that.

The fact is that 40 percent of credit card holders pay off their debt every month, 40 percent make only the minimum payment, and 20 percent are kind of 50/50 in that category. But for those 60 percent who are generally people who are not as informed, not as able to pay back their bill, who may have one, two, three, four, five, six different credit cards, who live -- because this is a credit economy -- on their credit card, credit card companies have been able, with very little interest to the payer of the debt, to solicit huge fees, penalties, and interest rates. And I think this is just plain wrong. And I really believe that if we're unable to correct it, which I had hoped would be corrected by these amendments that have been presented, I just can't vote for this bill as long as these inequities -- and I think gross injustices -- remain.

Let's just for a moment look at the 30 percent interest rate. It's very high. Inflation is about 2 percent. The interest rate on three-month Treasury bills is 2.75 percent. The national average lending rate on a 30-year mortgage is 5.59 percent. And yet an amendment to limit interest rates on credit cards to 30 percent went down dramatically.

I mentioned there are companies that are charging high annual interest rates. Some charge 384 percent, 535percent. Amazingly, one Delaware-based company has charged 1,095 percent. And that's according to the Minnesota Chapter of the National Association of Consumer Bankruptcy Attorneys.

We do need to hold the politicians accountable for their vote for this travesty.

[pharoute]

Mabus: I'm hoping they sit the next election out! :-) Serious tho.' I'm not advocating that evangelicals should vote Democrat, it's clear that there is too big a divide between them but the mixing of one's religious beliefs with political beliefs always require some sort of (internal) compromise. Which is more important to evangelicals: stopping abortions or worshipping false idols (e.g. money, and I'm not naive enough to believe that Democrats don't bow down at that same idol as Republicans) What have the Republican done for them? The basic ad campaign is "Look at how bad the world is now, imagine how worse it would be if Democrats were elected?" but at what point to those who profess to live their life on Biblical precepts go "um...but you guys have had the power for 4 years, where's the improvement? Where's the caring for the poor and (war) widows? Where's the loving thy neighbor? Where's the hunger for justice?"
I'm not teeing off on you Mabus but which party right now is more likely to walk the walk vs. talk the talk? Democrats might not be evangelicals but the Samaritan wasn't a Judean either.

[covington]

A little example of this move - I know someone involved with the huge, broadway-style passion play put on by a local megachurch. This year they decided to replace the "money-changers" with pagans selling sacrificial animals, because people complained that it didn't make sense that Jesus was attacking bankers.

[Mabus]

pharoute> Thanks for the comments, and I increasingly agree with you. This credit bill (though I understand why there's hostility toward abusers of credit) is a travesty, as is the Social Security "reform".

My basic problem is that to my way of thinking, there is a difference between morality relating to "mercy" and that related to "justice". Mercy, by its nature, isn't something you can legislate; by definition it is "better than the law requires". In many cases, Democrats have the moral high ground in my view, except that they are trying to legislate mercy, with the result simply being injustice. IE, it is moral for someone to voluntarily give their money to the poor, but taking someone else's money for the poor is not moral--even if done legally. By contrast, Republican "moral initiatives" tend to be based on the idea of justice (without necessarily being truly just)--making them at least theoretically appropriate.

[tlowe]

Nice article.

But -- I recently had my entire Econ 101 thinking totally turned around by *The Future of Money* by Bernard Lietaer, one of the world authorities on currency. Lietaer makes a powerful case that the structure of the monetary system has a profound, if not determinative, effect upon morals, economic development and the character of a civilization. His argument, based to some extent upon historical examples going back to ancient Egypt, is a bit lengthy to summarize here, but he suggests as a possible solution the creation of multiple complementary currencies for communities, states, regions, etc. In many places, these complementary currencies are already being successfully used and they work differently than official money.

The book, unfortunately, is not published in the U.S.A., but is available from amazon.co.uk. Shipping is reasonable.