Usury – Intro

Note: I expect maybe a little series is brewing here.  I thought this was going to be The Post, and instead it’s just an introduction.  Oh dear.  Well, it should be fun, anyway.  Talking about usury is always fun.  We’ll sidetrack into the family jewels and the waging of wars next post, as all good usury discussion must.  Then it’ll be back on topic in post #3.

***

So back to usury. Dante complains, as Mark Shea explains:

Well, for Dante, since fruitfullness can only proceed from Nature or Art (or, as we would say today, “raw natural resources and manufacture of goods and services”), it follows that mere chicanery by which dead gold or silver are made to “breed” by manipulation of interest rates by those who lend at interest is another form of perversion.

The argument is that money-lenders aren’t producing anything.  But somehow they’re getting rich anyway.  Suspicious.  Very suspicious.

Now we can take the classical view of the situation, and argue that bankers are “renting out” their money.  Same as you might rent an apartment, or a car, or a tuxedo.  The banker owns something you need to use for a while.  You get the use of the item, and in exchange you pay a fee, in addition to returning the item when you are done with it.    All very above-board, frankly.

As with housing, the renting of money only comes under fire when there’s a perceived abuse.   We want there to be a certain amount of real estate and money available for rent.  (And tuxedos.  But no one gets too excited about tuxedo-sharks.) What we do not want is for one lucky super rich guy to lord it over us, and the rest of us have to live in his tenements or his mill village and pay ridiculous fees just to cash our paycheck, with us constantly in crisis and owing money we can never pay back.

–> The ‘rental’ model of banking works pretty well until you attempt a moral analysis.  Suddenly you’re stuck: The difference between a modest mortgage and a horrendous title loan is only one of degree, not of kind.  Surely there should be no objection when both parties engage willingly?

If you are happy with loan sharking, it’s not a problem.  But suppose you have this nagging feeling that all is not right?  And suppose you are comfortable with a certain amount borrowing and lending — perhaps there’s even a favorite financial instrument you have rather come to know and love?  Then you’re super-stuck, because you can’t just outlaw all lending at interest, because there goes your baby out with all the rest of the wash.  Trouble trouble.

What I’d propose is that we take apart the types of loans and financial investments that are out there, and see what makes them work.  Is it all just an indistinguishable mass of “money for rent”?  Or is there something qualitatively different going on?  And if different (as I will argue), what kinds of transactions are good, and which kind are that financial chicanery that Dante would have been right to detest?

***

Next up: Disclaimer about kings and their wars.  Then back to answering the question.