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Your rights under law matter. I bang on about the idea of a MOOP - where our daily behaviour is monitored (by phones) and then can be used to improve our lives

Your rights under law matter. I bang on about the idea of a MOOP - where our daily behaviour is monitored (by phones) and then can be used to improve our lives - from basic budgeting to helping us with communication styles and relationship advice (94% of husbands with marriages rated happy would stop now and not continue this argument. Press any key) But to do that demands medical levels of trust around the behaviour data - a d that needs both law and culture to be relentlessly clear about the trust levels. A leak of your argument rate with your kids should be seen as similar as a leak of your heart rate. And because all these things are linked, perhaps your credit rating should be seen as protected as your medical records. Anyway, this is a form of predatory lending - they cannot charge 1000% APR so charge it implicitly through the threat of losing a phone. Only the desperate will apply - which should be a very good reason for not giving the loan. (Then again, perhaps putting the app out there is a good signal that the lender should go to jail immmediately and be banned from financial industry. )

robertlagrant 6y ago
I think the loan rate is the only predatory thing here. They're putting this app on phones for a reason: people would just keep the phones without paying and it's impossible to retrieve them cost-efficiently. Most services stop working if you stop paying.
- lifeisstillgood 6y ago
  But a predatory loan is a predatory loan. This is something about society's attitudes to protection of its citizens. The short answer is I prefer Liberal to Libertarian. The long answer is probably a book length.
  - rsj_hn 6y ago
    Loan rates are high because default rates are high. Take a look at auto lending. At the bottom you have like a 15% default rate (e.g. the worst subprime auto loans), for these you are going to get (say) a 20% interest rate. Now it's true that as rates go up, so do default rates, so the same people who would only default at a rate of 10% of the time if the lending rate was 8% are going to default at 15% of the time at a lending rate of 20%. That's the cold, hard, mathematical truth of how risk works -- those who are already safe bets are lent to at very low rates, but those in a precarious position are lent to at higher rates. No amount of hand-wringing or preaching from soapboxes is going to change the math. Now this can be a strong argument in favor of locking the poor out of credit markets. The argument goes: if they have a history of poor decision making or inability to maintain stable incomes, then we can protect them from making a poor decision about a loan by removing the possibility of getting a loan. I think this argument has a lot of force, but it also catches people who had bad credit due to sheer bad luck, and not poor decision making, and it makes life a bit harder for them. Another cold, hard truth - often to help a majority you have to hurt a minority. So we try another tack -- make those with good credit subsidize those with bad credit by forcing everyone to pay the same interest rate for a car. That is basically a law against credit analysis. Don't take things like payment history or income into account, every loan is made at 10%. Here the problem is that there are wealthy people who obviously pose little risk, and they will be able to borrow from other markets at a lower rate, and will exit the auto lending market, thus driving default rates up and the average interest rate up and again the net result is shutting down the entire auto-lending market rather than just keeping out those with bad credit. For this lending business to work, we need the best credit analysis possible, and attempts at making credit analysis less accurate create dead weight costs for everyone. Really this is an object lesson in an old economic dictum: don't mess with prices to stabilize incomes. If you want to help the poor, give them money. Don't try to regulate the prices the poor pay for things.
    - lifeisstillgood 6y ago
      I think I agree. I fully support using price mechanism as a signalling device, it works and has been shown to work for centuries. I suspect I am upset that debt has become the way people fill-in for low wages, lack of social support etc. And worse, in say the 1930s, debt was accessible to (some) poor via low cost housing loans (Savings and loans). This seems to have vanished as everyone is now a bank not a mutal. Plus, it is very clear that there is a lot of the lending market actively searching out poor credit risk in order to get them to sign up - they have a win win - the law is on their side to force repayment, or the credit risk makes huge efforts to repay. I don't want to adjust the price - but actively seeking out people who see debt as a simple fix ... knowing its going to hurt them. Yeah its a socially problematic activity. So as you say the solution seems to be - freeze the credit markets at some (arbitrary) level (of x % APR) and start ensuring there are decent wages and decent social safety nets. You can see why price-fixing is so attractive
      - rsj_hn 6y ago
        > I suspect I am upset that debt has become the way people fill-in for low wages, lack of social support etc. Yeah, that's the flip-side of extending credit. It used to be that houses were a smaller multiple of the average salary because only short term (e.g. 3-5 year) loans were available. Of course homeownership rates were lower. Then banks began offering 30 year mortgages and homeownership increased but house prices rocketed up and it became common for working people to carry 30 years of massive debt. Then downpayment requirements were weakened from 20% to 10% to 3.5%. Now you even have interest only loans. So locking people out of certain credit markets, or banning certain lending instruments, certainly has an appeal. I wouldn't mind if the federal government stopped insuring home loans and student loans and we returned to 3-5 year loans for homes and maybe 1-2 year loans for autos. We should not be in the business of subsidizing all this household debt, and we should be discouraging it a bit.
        lifeisstillgood 6y ago
        Interesting - there is a series of lectures (ref to follow) on UK economy - they try to show the biggest component of house prices is land and the biggest contributor to land is people just bid up using mortgage funds. On the other hand why should leverage be freely available to "the rich". I am tempted to solve it on the demand side - I am willing to bet one major difference in money management is just daily awareness of total spend and wealth. Something like Mint for everyone might actually move the needle (it's kind of where the EU / UK open banking is headed)
  - refurb 6y ago
    Predatory is only a thing if you don’t believe in treating people as adults. I mean, people are free to smoke, drink excessively, sell their bodies for sex (in some countries), participate in clinical trials, etc. I have no issue with requirements that loans conform to some standard the average person can understand, but saying “you can’t be trusted to determine if a loan is right for you” is too paternalistic.
    - moistbar 6y ago
      It's more like "we can't trust lenders not to hide language in their loans that ruins your entire life."
      - refurb 6y ago
        That’s clearly not the case as people are saying these loans shouldn’t exist at all.
    - cloudfifty 6y ago
      People have been indirectly coerced through necessity to work in life threatening working conditions for the last few hundred years or so. Yes, they are "treated as adults" and allowed to accept those conditions. Some societies have luckily evolved and outlawed those working conditions. To first accept the inherent inequality of capitalism and then also allow people to prey on less fortunate at the bottom is just wicked and evil.
      - robertlagrant 6y ago
        This is mostly not to do with societies evolving and all to do with technology and science making certain jobs unnecessary. In some cases, like the English banning slavery across their Empire, where moral prerequisites were genuinely enforced, but even that was from a wealthy perspective (i.e. those setting the laws weren't directly affected by their enacting).
        cloudfifty 6y ago
- freebuju 6y ago
  Your argument totally ignores the fact that this pre-installed app reads the user's data and communications from any app they use on that device. So they are not only effectively losing their privacy, but the app is also surveiling them since it transmits the GPS location to the device owner/lenders. There are also other human costs. E.g having your conversation on WhatsApp etc. being cut off midway due to a late repayment. I'd argue the weight of this falls more on the compliance methods & tactics used than the loan financing rate itself.
Cederfjard 6y ago
> relationship advice (94% of husbands with marriages rated happy would stop now and not continue this argument. Press any key) The idea of interacting with people whose actions are governed by some computer (from some profit-driven company, no less) is deeply unsettling to me and I hope this concept will never see the light of day as an actual tool. I married my wife, not some algorithm.
- lifeisstillgood 6y ago
  The point is to learn from the mistakes / success of others. And not from a profit driven company - see the medical level in f protection that i think we need for almost all data collected about us. Data about us should be presumed protected at all times. Only if we allow its use for let's say well regulated research it will provide huge benefits. The obvious ones are medical (reactions to this drug and lifestyles) but just imagine the benefits of basic behaviour improvements on a scale of millions. More exercise, better relationship advice,

robertlagrant 6y ago

I think the loan rate is the only predatory thing here. They're putting this app on phones for a reason: people would just keep the phones without paying and it's impossible to retrieve them cost-efficiently. Most services stop working if you stop paying.

lifeisstillgood 6y ago
But a predatory loan is a predatory loan. This is something about society's attitudes to protection of its citizens. The short answer is I prefer Liberal to Libertarian. The long answer is probably a book length.
- rsj_hn 6y ago
  Loan rates are high because default rates are high. Take a look at auto lending. At the bottom you have like a 15% default rate (e.g. the worst subprime auto loans), for these you are going to get (say) a 20% interest rate. Now it's true that as rates go up, so do default rates, so the same people who would only default at a rate of 10% of the time if the lending rate was 8% are going to default at 15% of the time at a lending rate of 20%. That's the cold, hard, mathematical truth of how risk works -- those who are already safe bets are lent to at very low rates, but those in a precarious position are lent to at higher rates. No amount of hand-wringing or preaching from soapboxes is going to change the math. Now this can be a strong argument in favor of locking the poor out of credit markets. The argument goes: if they have a history of poor decision making or inability to maintain stable incomes, then we can protect them from making a poor decision about a loan by removing the possibility of getting a loan. I think this argument has a lot of force, but it also catches people who had bad credit due to sheer bad luck, and not poor decision making, and it makes life a bit harder for them. Another cold, hard truth - often to help a majority you have to hurt a minority. So we try another tack -- make those with good credit subsidize those with bad credit by forcing everyone to pay the same interest rate for a car. That is basically a law against credit analysis. Don't take things like payment history or income into account, every loan is made at 10%. Here the problem is that there are wealthy people who obviously pose little risk, and they will be able to borrow from other markets at a lower rate, and will exit the auto lending market, thus driving default rates up and the average interest rate up and again the net result is shutting down the entire auto-lending market rather than just keeping out those with bad credit. For this lending business to work, we need the best credit analysis possible, and attempts at making credit analysis less accurate create dead weight costs for everyone. Really this is an object lesson in an old economic dictum: don't mess with prices to stabilize incomes. If you want to help the poor, give them money. Don't try to regulate the prices the poor pay for things.
  - lifeisstillgood 6y ago
    I think I agree. I fully support using price mechanism as a signalling device, it works and has been shown to work for centuries. I suspect I am upset that debt has become the way people fill-in for low wages, lack of social support etc. And worse, in say the 1930s, debt was accessible to (some) poor via low cost housing loans (Savings and loans). This seems to have vanished as everyone is now a bank not a mutal. Plus, it is very clear that there is a lot of the lending market actively searching out poor credit risk in order to get them to sign up - they have a win win - the law is on their side to force repayment, or the credit risk makes huge efforts to repay. I don't want to adjust the price - but actively seeking out people who see debt as a simple fix ... knowing its going to hurt them. Yeah its a socially problematic activity. So as you say the solution seems to be - freeze the credit markets at some (arbitrary) level (of x % APR) and start ensuring there are decent wages and decent social safety nets. You can see why price-fixing is so attractive
    - rsj_hn 6y ago
      > I suspect I am upset that debt has become the way people fill-in for low wages, lack of social support etc. Yeah, that's the flip-side of extending credit. It used to be that houses were a smaller multiple of the average salary because only short term (e.g. 3-5 year) loans were available. Of course homeownership rates were lower. Then banks began offering 30 year mortgages and homeownership increased but house prices rocketed up and it became common for working people to carry 30 years of massive debt. Then downpayment requirements were weakened from 20% to 10% to 3.5%. Now you even have interest only loans. So locking people out of certain credit markets, or banning certain lending instruments, certainly has an appeal. I wouldn't mind if the federal government stopped insuring home loans and student loans and we returned to 3-5 year loans for homes and maybe 1-2 year loans for autos. We should not be in the business of subsidizing all this household debt, and we should be discouraging it a bit.
      - lifeisstillgood 6y ago
        Interesting - there is a series of lectures (ref to follow) on UK economy - they try to show the biggest component of house prices is land and the biggest contributor to land is people just bid up using mortgage funds. On the other hand why should leverage be freely available to "the rich". I am tempted to solve it on the demand side - I am willing to bet one major difference in money management is just daily awareness of total spend and wealth. Something like Mint for everyone might actually move the needle (it's kind of where the EU / UK open banking is headed)
- refurb 6y ago
  Predatory is only a thing if you don’t believe in treating people as adults. I mean, people are free to smoke, drink excessively, sell their bodies for sex (in some countries), participate in clinical trials, etc. I have no issue with requirements that loans conform to some standard the average person can understand, but saying “you can’t be trusted to determine if a loan is right for you” is too paternalistic.
  - moistbar 6y ago
    It's more like "we can't trust lenders not to hide language in their loans that ruins your entire life."
    - refurb 6y ago
      That’s clearly not the case as people are saying these loans shouldn’t exist at all.
  - cloudfifty 6y ago
    People have been indirectly coerced through necessity to work in life threatening working conditions for the last few hundred years or so. Yes, they are "treated as adults" and allowed to accept those conditions. Some societies have luckily evolved and outlawed those working conditions. To first accept the inherent inequality of capitalism and then also allow people to prey on less fortunate at the bottom is just wicked and evil.
    - robertlagrant 6y ago
      This is mostly not to do with societies evolving and all to do with technology and science making certain jobs unnecessary. In some cases, like the English banning slavery across their Empire, where moral prerequisites were genuinely enforced, but even that was from a wealthy perspective (i.e. those setting the laws weren't directly affected by their enacting).
      - cloudfifty 6y ago
freebuju 6y ago
Your argument totally ignores the fact that this pre-installed app reads the user's data and communications from any app they use on that device. So they are not only effectively losing their privacy, but the app is also surveiling them since it transmits the GPS location to the device owner/lenders. There are also other human costs. E.g having your conversation on WhatsApp etc. being cut off midway due to a late repayment. I'd argue the weight of this falls more on the compliance methods & tactics used than the loan financing rate itself.

Cederfjard 6y ago

> relationship advice (94% of husbands with marriages rated happy would stop now and not continue this argument. Press any key) The idea of interacting with people whose actions are governed by some computer (from some profit-driven company, no less) is deeply unsettling to me and I hope this concept will never see the light of day as an actual tool. I married my wife, not some algorithm.

lifeisstillgood 6y ago
The point is to learn from the mistakes / success of others. And not from a profit driven company - see the medical level in f protection that i think we need for almost all data collected about us. Data about us should be presumed protected at all times. Only if we allow its use for let's say well regulated research it will provide huge benefits. The obvious ones are medical (reactions to this drug and lifestyles) but just imagine the benefits of basic behaviour improvements on a scale of millions. More exercise, better relationship advice,