The big problem with legalized usury

In his recent article called "Infinite Debt" (in the April 2009 issue of Harper's Magazine), Thomas Geoghegan connects the dots to point out the terrible consequences of having a nation devoid of interest caps. First of all, this situation is something extraordinarily new. The law against usury had "existed in some form and every civilization from the time of the Babylonian empire to the end of Jimmy Carter's term." In many ways, however, it no longer exists in the United States.

Here's what happened: the financial sector bloats up. With no law capping interest, the evil is not only that banks prey on the poor (they have always done so) but that Capitol rushes out of manufacturing and into banking. When banks get 25% to 30% on credit cards, and 500 or more percent on payday loans, capital flees from the honest pursuits, like auto manufacturing. Sure, GM is awful. Sure, it doesn't innovate. But the people who could have saved GM and Ford went off to work at AIG, or Merrill Lynch, or even Goldman Sachs. All of this used to be so obvious as not to merit comment. What is history, really, but a turf war between manufacturing, labor and the banks? In the United States, we got rid of manufacturing. We got rid of labor. Now it's just the banks.

Geoghegan explains that this is why the middle-class is shrinking. In 2003, financial firms accounted for 40% of the profits that accrue to US corporations. Geoghegan points out that this is more than double the share of the financial industry (18%) when Ronald Reagan left office. As Geoghegan explains, "we use our credit cards to help liquidate our own jobs, the kind we used to have in Michigan and Ohio. By little teaspoons, the people who go into debt for kitty litter pull a bit more capital out of one sector and pour it into another." Geoghegan correctly explains that the dam broke when the United States Supreme Court issued its opinion in Marquette National Bank v. First of Omaha Service Corporation, a decision issued in 1978. In that case, the Court held that Minnesota could not cap the credit card of a Nebraska bank because that bank was subject to the National Banking Act of 1864. Therefore, only the state where the bank is located (headquartered) can set the interest rates charged by that bank. In other words, all you need is a few disreputable states (such as Nebraska) for there to be effectively no interest cap on any bank in the United States willing to set up its headquarters in that state. Given that banks can now charge all kinds of hidden fees and penalties, in addition to interest rates at 25 to 50% (or even 500% for payday lenders), they no longer really want us to pay off those loans. Rather, "they want us to be irresponsible, or at least to have a certain amount of bad character." To put this on perspective, think of the terrible old banker, Mr. Potter, featured in the Christmas classic, It's a Wonderful Life. Mr. Potter drove a very hard bargain. He wanted everyone to actually ay off their loans. What's fascinating is that Mr. Potter was lending out money at the exorbitant rate of 2%. But now Mr. Potter would have more choices. If you could charge 35%, he might not necessarily think, "the law must be repaid"-at least not right away. And if he can charge 200%, he actually may not want the loan ever to be repaid. Therefore, we have a terribly bloated financial sector that employs immense numbers of people to do... what do they do? I do remember only about 1/3 as many people working in the financial sector 30 years ago (or so it seemed). It didn't seem like we needed these kinds of folks back then, certainly not so many of them. I really wonder whether most of these people are adding any value to society by doing what they do, or whether they are simply participating in an insane "arms race," by which they fight to get ahead of each other in order to suck vast amounts of money out of the lives of regular folks. Sounds like it's time to starve the beast by putting a 20% cap on all interest rates. That's what Geoghegan recommends.

Continue ReadingThe big problem with legalized usury

Freedom of Speech as Religion

I think it should go without saying (but of course, nothing does) that anytime someone wants to protect something from "denigration" or other forms of criticism, we should all grab hold of our rights and hang onto them with a death grip. To put this case most eloquently, I offer the following.

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Linking to Wikileaks could cost you $11,000

Well, it will if the Australian government gets its way on its internet censorship bill. That's right. The ACMA seems to have placed Wikileaks on its potential web blacklist and seems set on throwing fines of up to $11,000 at anyone who links to it. I'd happily go all out on this one, but a fellow Antipodean has already got this one in his sights:

I'm posting this on my American blog because the Australian government, through the Australian Communications and Media Authority is fining people on Australian sites who give the links below the fold $11,000/day. Pretty well everything I feared about censorship by the internet filter and heavy handed government action is coming true. First of all, it transpires that only one bureaucrat at ACMA is required to block and ban a site, with no further oversight or redress. Second, it turns out that yes, ordinary and popular pornography sites are being blocked, so that if the filter becomes mandatory, these legal sites will effectively become censored for no apparent reason (other than political whim or special privileges). Thirdly, the whistleblower site Wikileaks is blocked by the ACMA blacklist.
John follows with the excerpt from a Crikey article:
Like New Labour in the UK, the ALP has now abandoned that [civil liberties movement], for a number of reasons. Once it committed itself to neoliberal economics ("social capitalism") Labo(u)r became freaked about the social dissolution and rupture, the desocialisation created by turning the polis into a giant market of winners and losers. The tough answer to this is genuine social democracy, in which people have a social being not entirely defined by whether they're a "winner" or a "loser". The easy answer is to let the market rip, allow it to change the culture, and then seek to control and reshape people's behaviour, selling it to them as "protecting the many against the few".

Continue ReadingLinking to Wikileaks could cost you $11,000

Cloning is a Silly Issue

As with Prohibition and Abortion, the Stem Cells and Cloning issues are handy distractions from real issues of national import, like infrastructure, economy, and war. The War on Drugs is every bit as successful now as was Prohibition in the 1920's. Abortion is a medical procedure that blatantly favors the rights of the host over the cluster of human cells growing within. Although abortion is periodically effectively outlawed, its incidence is never significantly reduced. Oddly, to mention stem cells brings a knee-jerk retort of "Cloning!" from some quarters. Cloning is only a dangerous issue to those who don't actually know what it is. Let's suppose that the technology were developed to create a healthy baby genetically identical to an existing adult. It would be an expensive procedure, and necessarily take as long as a normal gestation. But mutations occur with every cell division, so the original cloned blastocyst would be subtly different than the donor's original blastocyst, however perfect the methodology. The clone would also be raised in a different family, so we are now slightly farther apart then identical twins raised apart. Much more significantly, the gestation would be in a different environment (womb, timing, nutrition) creating many significant physical developmental differences between donor and clone. I laugh when movie clones have all the same freckles, scars and other developmental marks as the donor. A perfect clone would resemble the donor much like a normal sibling raised separately. Why would anyone bother? Even with livestock. The genetic and health dangers of monoculture tree and vegetable farming are bad enough as a cautionary tale. Most people well enough educated to develop cloning know enough about the principles of evolution to know that duplication of a genome (however ideal it may be) in bulk is a Very Bad Idea. But cloning research is a different issue. The research has very high potential for serendipitous results. As with the accidental discoveries of antibiotics and Teflon, one can only find things by looking for something in the same area, but rarely for the thing itself. Some of the possibilities include: * Growing cloned organs in vitro or in a host. Crichton wrote Congo based on the idea of cloned organs raised in host animals. * Learning enough about gestation to create artificial wombs would be of enormous benefit to premies and other medical problems. * Knowing how to start and stop cell and organ development could well lead to regrowing limbs and teeth and other organs directly in the host. Some legislators are moving to block such research, in case it may lead to the possibility of someday making a clone. But why? Soul? Find me two theologians who completely agree on when and where a soul is created and when it enters a body. Now find me as many who agree as scientists who agree that the soul is a product of biological structure and heuristic experience, a quickly growing number.

Continue ReadingCloning is a Silly Issue

Herr Ratzinger continues the massacre

HIV/AIDS is possibly the worst health crisis to hit this planet. It's also arguably the worst thing to happen to the African continent since white people were regularly kidnapping its inhabitants and trading them like farm machinery. But the one hopeful thing about the whole situation is this: while there's no cure yet, AIDS is easily preventable. Ridiculously easily preventable. Avoiding the sharing of needles & using contraception are the two most effective ways to avoid the long, tortuous, wasting death we've all come to associate with this horrendous epidemic. And if you're not an intravenous drug user (or you studiously avoid sticking sharp, blood-stained things in your body), there's 50% of your prevention pretty much sorted already. So ... how the hell are you supposed to react when the gold-robed, paedophile-protecting dictator-for-life of the Catholic Church continues to threaten people with eternal torment for using contraception during sex (based on a very, very, um, interpretive interpretation the Bible) and instead tells people "just say no" to sex? In this story (BBC) Pope Oberstumbannfuhrer Herr Kaiser Ratzinger (I refuse to use his picked-out stagename, he's not Axl Rose for crying out loud) once again proves to the world that not only is his outlook anachronistic, unrealistic & laughable, it's also flat-out fatal. To millions upon millions of people.

Continue ReadingHerr Ratzinger continues the massacre