Economics

Household debt lowers wages

This is something I recently realised, that I haven’t seen before, and, based on a quick google search, doesn’t seem to be common knowledge on the web.

Debts must be repayed: Failing to repay debts has bad consequences, such as repossessions and higher debt; Debt repayments are a cost to individuals, and, as there is nothing in return, lower standards of living; Because there is a higher cost of living including the repayments, work is needed more, increasing the supply of labour, which increases competition over jobs and over-time, and therefore lowers wages.

I don’t know why this isn’t more well established economic knowledge. There is very little difference between the notion that lowering unemployment benefit will increase work and decrease wages and, what is the same, increasing a cost such as paying off debts will do the same.
I suspect it may be that the wealthy, who set policy, don’t wish to reveal their advantage. It wouldn’t be popular to tell people they will have higher debt and lower income. And the economists are generally in love with the rich, and wish to present them as kind and helpful in all they do. Ultimately, they will see this as an increase in productivity.

Student debt (in many countries) is different, as it doesn’t last forever and is only paid by those on relatively high earnings. This is paid in proportion to earnings over a threshold, and so works as a tax. It should, therefore, disincentivise work over the threshold, and so increase wages (before tax & debt repayments).

Mortgages can be particularly bad, as the cost of missing repayments is extremely high, even if just a short period is missed.

Interest is the key problem here, as receiving a loan would initially improve cash-flow and help absorb falls in income. But as more will have to be paid back due to interest, the dependence on wage-slavery is increased, overall, rather than decreased.

Basically, the important thing about capitalism is that the more needy a person is, the less they are given and the more is demanded of them. And the capitalists still dare to refer to themselves as kind benefactors (however, occasionally one genuinely is).

God bless you.

Mortgages

Once upon a time, lending money at interest was completely illegal (for religious reasons). Later, it was legalized for Jews only, which led (among other factors) to strong anti-semitism. Eventually, it was legalized for all.
Those who couldn’t afford a house right away, took the chance to have a mortgage (roughly translated, a “death-pledge”), in order to have the house they couldn’t immediately afford. This helped the poor.
But, of course, the practice spread. And with everyone able to pay more thanks to mortgages, prices rose. So what once helped a few poor, came to enslave nearly all.
Today, most people in the “developed” world are unable to buy a home without accepting decades of debt, with half the real house price going to interest payments. The worst part is, those least able to repay are charged most of all and run the risk of having their house repossessed.
Without this system of mortgages, would we be better off? We would be paying less in the long run, because of no interest. We would be paying less excluding interest, because of reduced demand. Society would be far more egalitarian without the banks taking interest.
Economists might say that the reason for the reduced demand and prices was everyone being less able to purchase, so people would be without what they wanted. But what is forgotten, is the egalitarianism of no bankers, would reduce the land wasted by the usurers, so that supply would increase for the needy and average man. Even if this didn’t fully compensate, cooperative systems of lending and giving and sharing, in and between families could fill the role, and ensure proper housing and freedom for all.

So what’s the practical conclusion? We should withdraw our money from the bank, to stop lending at interest. We (Christians, anarchists, socialists) should attempt to form new, fair, egalitarian systems of living, taking many varied forms (perhaps based around Churches or other associations). No anti-interest law is necessary if we all reject and replace it. Refuse the old world, and build the new in its shell.
These societies may lack at first, but after a while without interest, they are bound to prosper.

Here are some scriptures on money lending and usury.

The rich over the poor ruleth, And a servant is the borrower to the lender.
Proverbs 22:7

a servant—wast thou called? be not anxious; but if also thou art able to become free—use it rather
1Corinthians 7:21

To no one owe anything, except to love one another
Romans 13:8

His silver he hath not given in usury, And a bribe against the innocent Hath not taken; Whoso is doing these is not moved to the age!
Psalms 15:5

Thou dost not lend in usury to thy brother; usury of money, usury of food, usury of anything which is lent on usury.
Deuteronomy 23:19

In usury he hath given, and increase taken, And he liveth: he doth not live, All these abominations he hath done, He doth surely die, his blood is on him.
Ezekiel 18:13

At this point I should clarify: I don’t believe having money in the bank or being a banker is a ticket to hell. We live by grace now. But, I do believe charging interest is unjust (although it’s irrelevant if we’re forgiving debts as God forgives our debts). [Note from 2nd May 2014: I don’t know what I meant exactly by “We live by grace now”, but I think I may have meant our actions don’t matter to God any more. Just to note, I don’t believe that now.]

Here’s Peter Maurin’s Easy Essay, ‘Mortgaged’. You can see all his Easy Essays by clicking here.

Mortgaged

1. Because John Calvin legalized money-lending at interest the State has legalized money-lending at interest.

2. Because the State has legalized money-lending at interest, home owners have mortgaged their farms; institutions have mortgaged their buildings; congregations have mortgaged their churches; cities, counties, States and Federal Government have mortgaged their budgets.

3. So people find themselves in all kinds of financial difficulties because the State has legalized money-lending at interest in spite of the teachings of the Prophets of Israel and the Fathers of the Church.

God bless you.

The money in the bank

A while ago I wrote that I do not believe Christians should lend at interest (here’s the original post where I said it, it’s called ‘Jesus’ Economics’). I based this simply on Jesus’ command that,

to him who is asking of thee be giving, and him who is willing to borrow from thee thou mayest not turn away.’
Matthew 5:42

and that if you may charge interest on this, you make his word worthless. And of course, Jewish law did not allow lending at interest either.
I applied this in my day to day life, to the extent I was given the opportunity to. However, I left a small amount of money in the bank (mainly because it’s awkward to get it out), gathering interest.
I can no longer keep my money there. It was being part of the system of greed and extortion, while I could have been giving/lending in love.
Plus, in removing my money from the bank, they have that little bit less power to take from those least able to pay, and to get a living off of the work of others. Yes, my money is probably negligible to the bank, but what if all the anarchists, or socialists, or Christians did likewise? What if just a fraction? The entire economy would be transformed. Even if just me, I will use my money to produce a micro-transformation in my micro-economy, even at a personal loss.

If many people did this with me, what would happen? Banks might collapse with people withdrawing money the banks don’t have. People would be there to help.
When people lend freely, (theoretically) there will be inflation. People won’t value money as highly. Perhaps people will stop valuing anything they have as their own, and share possessions as happily as they lend money.
Poverty will be profoundly affected. I should note here, that Jesus also said

‘But love your enemies, and do good, and lend, hoping for nothing again, and your reward will be great, and ye shall be sons of the Highest, because He is kind unto the ungracious and evil’
Luke 6:35

So this wouldn’t result in harsher punishments for those who fail to repay their debts. We would forgive our debtors, as God forgives us our debts.
I would even venture to say, that if we used our money in such a way, it would not only touch the fabric of society; it may also begin the withering away of the state, as people rely more on human kindness, and so less on state thievery.
There is a remarkable idea among economists, that all working for themselves is for the best of all, and any helping others is harmful to all. I don’t buy it. We are the most naturally sociable of all creatures, and must function best with and for one another.
I’ll pop to the bank for this tomorrow.

God bless you.

P.S. I’ve now done it. However, I did leave 92p in my account, because when I asked to withdraw it all, it was given in pounds, and I didn’t want to bother with the trouble of asking for such a tiny amount. I also don’t know if accounts can be kept without any money in.
I understand that I will need a bank account, because few employers are willing to pay cash. I plan to withdraw money as it goes in.
I’m writing this because I don’t want to seem like something I’m not. Perhaps also so that my actions may be tested against my own standard.

God bless you

[19th of September 2014: I do currently keep my money in the bank. I have been considering lending my savings via a microfinance organisation (such as Zidisha), but I’m not sure if I’ll need it sooner than that will allow. This post was kind of silly, because it seems to propose just having cash, which is obviously foolish.
I don’t really like having money in the bank still, but it is the prudent thing to do, and I’m intent on being a good steward. I’m also still intent on living the virtue of poverty, but I’m not yet sure how…]

Jesus‘ economics

Jesus, as you probably know, didn’t talk much about economics. He was more into the way we use our own resources, rather than how they are allocated nationally and internationally.
But he does say a few significant things.

‘to him who is asking of thee be giving, and him who is willing to borrow from thee thou mayest not turn away.’
Matthew 5:42(Young’s Literal Translation)

That’s two pretty radical commands. There are said to be two billion Christians alive today. Imagine the impact on the world economy if we lent to whoever was willing.
First thing I‘d expect is the rapid and egalitarian growth of “developing economies“. Poverty would soon only be relative.
The rich or crafty could theoretically take advantage and also borrow. I think this would be small though, because of self-respect, hatred of debt, and the awkwardness of getting money from many Christians. When those in need ask for help, we spread the word, but there’s no desire to share the request of the rich or crafty.
And (unless we‘re willing to render Jesus‘ words pointless) we must assume that, in accordance with Jewish law, it is lent without interest.
And giving clearly helps people, and simplifies Christian life.

‘And forgive us our debts, as also we forgive our debtors.‘
Matthew 6:12

We forgive our debtors now. This is wonderful liberation. Did you know that 16,000 people commit suicide in the USA each year because of debt problems? Our forgiveness is just a fraction of God‘s, and our debts to each other are nothing compared to our debt to God, but it can still save lives.
So if there’s easy forgiveness, and zero interest, where’s the deterrent to borrowing? None (apart from pride). So, many Christians would have to simplify their lives and live with less.

‘Give back the things of Caesar to Caesar, and the things of God to God’
Mark 12:17

Before this, Jesus was asked whether they should pay tax to their Roman occupiers; Jesus asked who‘s inscription and image are upon the coin (a denarius); They answer Caesar‘s.
Caesar was worshipped under the state religion as a god. His image was an idol. The inscription Jesus looked at, proclaimed Caesar as son of a god. So to Jesus, this was a matter of false god vs true God.
So, in asking about the image and inscription, he points to their idolatry. In saying to give back to each, he questions which god owns what, and whether we are indebted to either.
If you are in bed with Caesar and that is how you have his money, you should give it back. He is not the lord of the righteous. If you have taken anything from God (and everything is God’s), you should return it to His service.

‘and I say to you, Make to yourselves friends out of the mammon of unrighteousness, that when ye may fail, they may receive you to the age-during tabernacles.’
Luke 16:9 (follows the parable of the unrighteous steward, Luke 16:1-8)

Jesus said that we‘ll be received into age-during tabernacles because of making friends from “the mammon of unrighteousness”. Is the mammon of unrighteousness all money? I do not know. What friends are we to make, who can receive us to age-during tabernacles? I would assume the poor and needy, as Jesus says that our treatment of them is our treatment of the King (Matthew 25:40, 45), and links that to judgment.

Now, my last two points are not directly from Jesus, so have somewhat less authority. But, I believe they followed him vigorously, and were taught by the Holy Spirit, so they’re certainly worth our attention.

and all those believing were at the same place, and had all things common, and the possessions and the goods they were selling, and were parting them to all, according as any one had need.
Acts 2:43

In the spirit of brotherly love, the early assembly in Jerusalem, led by the apostles, shared all things, ignoring their private property, and supporting all the needy.
And it was all voluntary. This is the image of Christian love expressed through all our belongings, for His service and glory.

To no one owe anything, except to love one another.
Romans 13:8

Should this be taken as a general command to pay off our debts then take no more?

The rich over the poor ruleth, And a servant is the borrower to the lender.
Proverbs 22:7

a servant—wast thou called? be not anxious; but if also thou art able to become free—use it rather;
1Corinthians 7:21

with a price ye were bought, become not servants of men;
1Corinthians 7:23

In the freedom, then, with which Christ did make you free—stand ye, and be not held fast again by a yoke of servitude
Galatians 5:1

[The last quote is about legalism, but I believe it applies elsewhere too]

If you know any other passages on being free from all bondage if possible, please share them with me.

In summary, Jesus taught us to be free and free others economically, and use our wealth in love.
God bless you.