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Actually, morality and debt do not intersect at all. Graeber covers this very point in his book "Debt". It's fascinating. We all have moral obligations to th
by alejohausner 6y ago
Actually, morality and debt do not intersect at all.
Graeber covers this very point in his book "Debt". It's fascinating.
We all have moral obligations to the people around us: to our families, our friends, our neighbors, the people in our lives. We are generous to our friends, and moral obligations will make them return our generosity.
However, when you borrow money, you are making a gamble. If you manage to repay the loan, you will be allowed to borrow again. If you fail to repay, you will lose something: either the collateral (as in a mortgage), or low interest payments (if you become a "bad risk"), or the right to borrow at all (if you declare bankruptcy, you will have trouble borrowing for 7 years).
The lender is also making a calculated bet. If they ask for collateral, their risk is lower, and they will charge less interest. If they lend you money without collateral (eg a credit card), the interest will be higher. The very fact that unsecured loans charge higher rates means that the lender expects, on average, to make a profit, because the higher interest will make up for the occasional default.
There is no personal relationship between lender and borrower. There is no moral obligation. It's just business and probabilities.
Unfortunately, people confound the two kinds of obligations, personal and financial. Lenders benefit from this confusion, because borrowers will have trouble being cold-blooded about the agreement they are entering into.
- mjparrott 6y agoWhile this is interesting and I'm sure technically correct from an academic standpoint, it falls flat in the discussion. To say the way debt is treated in the us is not 'immoral' means you haven't learned enough about it yet.
- alejohausner 6y agoWell, let's discuss it. Why do riskier loans command higher interest rates, if not because the lender is making a calculated bet, and the borrower knows that he might default?
- zajio1am 6y agoThe fact that risker loans command higher interest rates and lenders making calculated bets is obvious, but it does not follow from it that borrowers do not have moral obligations to repay loans. Risk-surcharge just reflect the fact that even if borrowers have full honest endeavor to repay debts, they may sometimes fail. If we considered to be ok to not repay debts because a borrower just does not feel obligated to do so (and does not need more loans from that lender), then risk-surcharge would be extremely larger.
- harryh 6y agoThis is wrong. High trust societies where individuals can be expected to fulfill their obligations tend to prosper. Low trust societies where individuals cannot be trusted in this way tend to languish. Paying back debts according to an agreed upon timetable is one of the important ways that high trust societies are built.
- lupire 6y agoThe Mortgage Bankers Association defaulted on its mortgage. Everyone from the bankers themselves to the POTUS knows that paying off debts is only for suckers. Let the billionaires pay their debts and their taxes first. https://en.wikipedia.org/wiki/Mortgage_Bankers_Association#Default_on_headquarters_loan https://en.wikipedia.org/wiki/Mortgage_Bankers_Association#D...
- Woberto 6y agoWhich is why our society is languishing
- taneq 6y agoWhen you borrow money, you make a commitment to repaying it under the terms of the lending agreement. If you don't pay it back according to that agreement, you're breaking your word. What definition of 'moral' doesn't intersect with 'keeping your word'?