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Sorry, I'm confused by this. Almost no one in the United States owns their homes. Can't the poor farmer in Azerbaijan finance this just like we do? The payme

Sorry, I'm confused by this. Almost no one in the United States owns their homes. Can't the poor farmer in Azerbaijan finance this just like we do? The payments on a 30 year loan like we have for $4,000 would be like $10 a month before interest.

kragen 9y ago
No. Generally speaking, this kind of low-cost financing only exists in rich countries. In poor countries, interest rates, default rates, and often inflation rates are high and unpredictable. (There may be exceptions, and in particular I've never been to Azerbaijan, but I don't know of any exceptions.) One element that contributes to the unavailability of financing is the unpredictable nature of many people's land tenure; I wrote a bit about that in https://news.ycombinator.com/item?id=16569078 https://news.ycombinator.com/item?id=16569078
- jimnotgym 9y ago
  Then wouldn't a low cost way to introduce proper land title and efficient banking systems to third world countries be a better use of our first world technology/skills/knowledge?
  - kragen 9y ago
    As it turns out, invading "third world" countries, overthrowing their existing institutions, and installing "proper" systems designed in "first world" countries has been tried. It was, broadly speaking, the foreign policy of Europe toward poor countries during roughly the period 1600 to 1950. It was called "colonialism", and it caused the problems we see there today, as well as much worse problems (up to and including the extermination of entire populations) while it was going on. I do not think that attempting to re-establish colonialism, as you propose, would be a good use of our technology, skills, or knowledge. However, Peter Thiel and the current government of Honduras seem to disagree.
    - jimnotgym 9y ago
      I'm really glad you replied. I hadn't realised that it was impossible to offer help and technical support without invading. Strawman-of-the-month-award goes to....
      - kragen 9y ago
        It's not a strawman. You didn't propose offering help and technical support. You proposed introducing “proper” systems of banking and land title. If you can decide how a country’s systems of banking and land title work, you are governing that country. Thus, your proposal is that “third-world” countries be governed by people from “first-world” countries. That's nothing more or less than colonialism. It is a terrible idea. Perhaps you think that poor countries don't have existing systems of land tenure or credit. We do. We aren't monkeys banging on rocks. The problem is that those systems suck. You might think they suck because nobody here knows how better systems work. But in fact, not only do we have internet access and universities, many of us have studied overseas in rich countries and even worked there, some even in banking and real estate. They suck because of resistance to change by the people in power, who are not entirely wrong, because change often looks like the Congo Free State, the Khmer Rouge, the Second Opium War, or Donald Trump.
        deleted 9y ago
        [deleted]
- deleted 9y ago
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AnimalMuppet 9y ago
One problem in some less-developed countries is that you can't get secure title to the land. So if you build a $4000 home on it, and someone else takes the land, you (or the lender) is out $4000. That makes the lender much more reluctant to make the loan. (Note: I do not know if Azerbaijan is one of the countries where this is a problem.)
ddingus 9y ago
Far better to enable so they can do it on a labor investment, debt free to the maximum extent possible. If tech is indicated, invest in that in ways that encourage, local reproduction, again as debt and capital free as possible. Doing those things means improving their ability to labor to a better state of affairs, and as they are worth more, able to do more, it also means they get the returns, and agency that goes along with them. Over time, we get an economic peer, not another nation of debtors.
jeffreyrogers 9y ago
They don't have well developed financial systems.

kragen 9y ago

No. Generally speaking, this kind of low-cost financing only exists in rich countries. In poor countries, interest rates, default rates, and often inflation rates are high and unpredictable. (There may be exceptions, and in particular I've never been to Azerbaijan, but I don't know of any exceptions.) One element that contributes to the unavailability of financing is the unpredictable nature of many people's land tenure; I wrote a bit about that in https://news.ycombinator.com/item?id=16569078 https://news.ycombinator.com/item?id=16569078

jimnotgym 9y ago
Then wouldn't a low cost way to introduce proper land title and efficient banking systems to third world countries be a better use of our first world technology/skills/knowledge?
- kragen 9y ago
  As it turns out, invading "third world" countries, overthrowing their existing institutions, and installing "proper" systems designed in "first world" countries has been tried. It was, broadly speaking, the foreign policy of Europe toward poor countries during roughly the period 1600 to 1950. It was called "colonialism", and it caused the problems we see there today, as well as much worse problems (up to and including the extermination of entire populations) while it was going on. I do not think that attempting to re-establish colonialism, as you propose, would be a good use of our technology, skills, or knowledge. However, Peter Thiel and the current government of Honduras seem to disagree.
  - jimnotgym 9y ago
    I'm really glad you replied. I hadn't realised that it was impossible to offer help and technical support without invading. Strawman-of-the-month-award goes to....
    - kragen 9y ago
      It's not a strawman. You didn't propose offering help and technical support. You proposed introducing “proper” systems of banking and land title. If you can decide how a country’s systems of banking and land title work, you are governing that country. Thus, your proposal is that “third-world” countries be governed by people from “first-world” countries. That's nothing more or less than colonialism. It is a terrible idea. Perhaps you think that poor countries don't have existing systems of land tenure or credit. We do. We aren't monkeys banging on rocks. The problem is that those systems suck. You might think they suck because nobody here knows how better systems work. But in fact, not only do we have internet access and universities, many of us have studied overseas in rich countries and even worked there, some even in banking and real estate. They suck because of resistance to change by the people in power, who are not entirely wrong, because change often looks like the Congo Free State, the Khmer Rouge, the Second Opium War, or Donald Trump.
      - deleted 9y ago
        [deleted]
deleted 9y ago
[deleted]

AnimalMuppet 9y ago

One problem in some less-developed countries is that you can't get secure title to the land. So if you build a $4000 home on it, and someone else takes the land, you (or the lender) is out $4000. That makes the lender much more reluctant to make the loan. (Note: I do not know if Azerbaijan is one of the countries where this is a problem.)

ddingus 9y ago

Far better to enable so they can do it on a labor investment, debt free to the maximum extent possible. If tech is indicated, invest in that in ways that encourage, local reproduction, again as debt and capital free as possible. Doing those things means improving their ability to labor to a better state of affairs, and as they are worth more, able to do more, it also means they get the returns, and agency that goes along with them. Over time, we get an economic peer, not another nation of debtors.

jeffreyrogers 9y ago

They don't have well developed financial systems.