My analysis of the root flaw of capitalism could be phrased as "all lending (at interest) is predatory". There are degrees, of course, what we normally call predatory lending is just such an egregious case that we can't help but see what's going on there. But fundamentally all lending at interest (and rent more generally, as interest is just rent on money) is of the same qualitative character: those who have wealth to spare can profit at the expense of those who need to borrow it just to keep going. — Pfhorrest

Lenders or renters may give more than they receive in order to help others, make a fair trade, or take advantage of those in a weaker position.

You seem to be claiming that lending is inherently predatory in nature.

Some people just love things that I don't. I recently talked to a guy that loved drag racing. Is that irrational given the risk? You tell me (I personally think it's insane but I don't know the kind of pleasure he gets from it.) Personally, I love poker and I've been playing for a while which also entails a degree of risk. Am I irrational? — BitconnectCarlos

Depends on your hierarchy of values; your priorities. If poker is a top value of yours, then giving it the according amount of care, time, energy, and attention is perfectly rational. I think ultimately we all want to be "happy" (a pop-culture type word, but good enough for now), so hopefully poker plays some kind of role in your life towards that ultimate end, or maybe you consider it an end in itself. Either way, nothing irrational about that. (Incidentally, I played poker professionally for 1 year, 6 months at home and 6 months actually living in the casino [given where I lived, there was no way to make a living or progress in bankroll without putting in more hours, and that required moving there]. I think there's actually many parallels between poker and life.)

I had a friend who grew up poor his entire life and had finally attained some degree of financial stability blow his savings on an expensive car. Am I - who grew up in a very different environment - going to label his action "irrational?" Yes, financially, I think we would both agree that the action was irrational but from his perspective owning a nice car finally means one "made it" or had attained a certain status - something that I wouldn't be conscious of owing to my class upbringing. — BitconnectCarlos

You answered your own question: yes, it is. Unless, of course, he believes it's the right choice to own a car for status but have no money for anything else. You've also identified why he's acting irrationally: he's acting out of an emotional need for status because of deprivation of youth. This happens often in psychology -- a person growing up "food insecure" will often, as adults, gorge themselves when food is available, long after the insecurity is there. There's all kinds of things like that, and it's studied in psychology. But whether or not it's rational is fairly easy to see, given my (and others') definition of rationality.

If you have a more full proof, all-encompassing method of determining which goals are rational then let me know. — BitconnectCarlos

Ratonality, in terms of the state of a human being I like calling the "theoretical," and when discussing action it's based on goals. Goals are based on values and beliefs, which is a matter of ethics and morals. Here we get into the related issue of "will," "desire," "care," and general motivation. It's also leads to the question of "What is good?" or "What is the good life"?

All very interesting. So it's a good question, and we could pursue that if you like. I still feel, though, that it's a diversion, but if you feel it'd be illuminating in some way I'm happy to talk about it. Full disclosure: I'm influenced heavily by the thinking of Nietzsche in this case.

If, however, for the sake of political discussion, we simply assume the standard thing that most people in this country would say, something like "I want to be happy" when pressed about what their greatest good and ultimate end is, then we can talk about whether an act is rational or moral in this context (political action).

In the past seven years since I last went flat broke, I have saved up about two years worth of my current living expenses. At that rate, if nothing catastrophic ruins my life again, and I keep living how I live now in this tiny trailer, by myself, never getting married, then I could retire at 65 with about ten years expenses saved up. But I hope to live past 75, so... — Pfhorrest

I just caught this. Let me add my $0.02.

All that planning is fine and good, provided that your saving for old age isn't at the expense of your present happiness. I suspect that that may be the case, but correct me if I'm misreading you.

If you're sacrificing or postponing some high value of yours simply because you're scared to be broke or homeless, I think a better balance is needed.

However, if you manage to do everything else you want to do, while also saving a bit of money, then I'm envious indeed! I have no savings for the future, no 401K, nothing. I don't have health insurance, and for years I had no car insurance (my car was fully paid, now I finance so I am required to have it). Maybe this is all very "risky," I don't know. I guess I figure there's social security and medicare, or else family and friends, and I'm confident in my resourcefulness. I don't require much materialistically in order to live well. That may change when I'm an older or elderly man, I don't know. Plenty of government help you can get, and if you live within your means that's generally good enough. If not, and I end up going bankrupt or accumulating a lot of debt that I'll never pay off, so be it. What do you make of this? Does this seem crazy to you?

I have little sympathy for people who can see a problem coming, oh, 40-50 years in the future and not do anything about it. If you don't take care of your life that's not my problem. Get a side hustle. Get a better job. Train as a welder or an electrician. Move to a cheaper area. It's not someone's fault for being into poverty, but it is their fault if they die poor. Plenty of people don't care to try to advance. Not my problem. — BitconnectCarlos

This is terrible philosophy, and very damaging. Think through what you're saying. You know there are plenty of examples of people who simply don't get the opportunities or resources that other people do. There's a reason rich people serve less time in jail than poor people (white or black), get into the "best" schools, get higher paying jobs, etc. To argue this is all merit-based, simply a matter of proper work ethic or motivation, is simply not true.

Class matters. More so than race, even. Throughout history, those who are in a more powerful class --whether in the aristocratic or noble or monarchic or cleric or warrior or Brahmin class -- simply live in a different world than those of a less powerful class. The idea that you can "move upwards" is an illusion. It's like arguing the exception proves the rule.

Lenders or renters may give more than they receive in order to help others, make a fair trade, or take advantage of those in a weaker position.

You seem to be claiming that lending is inherently predatory in nature. — praxis

I said exactly that, yes. And note the words "at interest", which are very important. Lending interest-free is certainly helpful behavior. Lending at interest is a transaction where someone who started out with more than they needed (enough to let someone borrow some) ends up with more than they started with, and someone who started out with less than they needed (requiring them to borrow something from someone else) ends up with even less than they started with. That is inherently exploitative of the poor by the rich.

All that planning is fine and good, provided that your saving for old age isn't at the expense of your present happiness. I suspect that that may be the case, but correct me if I'm misreading you.

If you're sacrificing or postponing some high value of yours simply because you're scared to be broke or homeless, I think a better balance is needed. — Xtrix

I am sacrificing and postponing major things to safeguard my future, yes. Mostly, I'm living in a much smaller space than many people would accept, and consequently can't live with the woman who would be my wife if only we could live together.

I have been, for half a decade or so now, trying to live a bit more balanced than I used to, when I was much poorer (though even then, I was apparently still making a median income). Not only do I not cut every single corner like I used to do anymore. (Aforementioned girlfriend used to complain how I had no trash can in my bathroom, because I had one in the room right next door, so it seemed a waste of money to buy a whole other little trash can just to spare walking six feet to throw something away). I also let myself enjoy little luxuries that make life more enjoyable now and only make a tiny dent in my long-term savings plan, like... getting my car washed.

But things that would consume my entire future, like renting an apartment big enough for two, I can't bring myself to do, because ...

However, if you manage to do everything else you want to do, while also saving a bit of money, then I'm envious indeed! I have no savings for the future, no 401K, nothing. I don't have health insurance, and for years I had no car insurance (my car was fully paid, now I finance so I am required to have it). Maybe this is all very "risky," I don't know. I guess I figure there's social security and medicare, or else family and friends, and I'm confident in my resourcefulness. I don't require much materialistically in order to live well. That may change when I'm an older or elderly man, I don't know. Plenty of government help you can get, and if you live within your means that's generally good enough. If not, and I end up going bankrupt or accumulating a lot of debt that I'll never pay off, so be it. What do you make of this? Does this seem crazy to you? — Xtrix

...I don't want to call you crazy, because I feel more sympathy than anything else toward you, but yeah that seems crazy to me. I know plenty of elderly people who never saved for retirement (not that I'm faulting them for it like Carlos would, many many people simply can't) and they're suffering immensely because of it. My own mother foremost among them. She survives at all only because there are government programs that can help her out, and even then barely so, and is always on the brink of homelessness. I'm not so sure I can even count on those to still exist when I'm here age, since the rich are constantly trying to destroy them.

I used to be of the mindset that I was fine not worrying about money, going broke was no big deal, etc, back when all going broke meant was not eating for a while, because I had a free roof over my head (the roof my the tool shed next to my dad's trailer, but still). Ever since that got taken away, my top priority became to get back to a place where I could stop worrying about money like that again, where going broke wouldn't mean I would lose absolutely everything, because if I didn't constantly pay someone else for a right to exist somewhere, I would lose any right to exist anywhere. That seems like it should be the most basic of things a human being is entitled to, but apparently we're expected to fight our entire lives just to try to attain it and even then it may all be for nothing.

To argue this is all merit-based, simply a matter of proper work ethic or motivation, is simply not true.

It's not all merit based and it's not all based on hard work. But you know what? Hard work couldn't hurt.

Class matters.

Absolutely.

The idea that you can "move upwards" is an illusion.

Then why do I - someone who is enlisted military - work around plenty of people who were born into poverty and are now middle class and able to afford homes? Some service members own several homes. This is just not true.

You know there are plenty of examples of people who simply don't get the opportunities or resources that other people do.

People are just a helpless bunch, aren't they?

Not at all. It would be like if drunk driving rates were to skyrocket in this country and you saw me getting into my car drunk; could I just tell you: "well MOST people drive drunk, it's fine!" — BitconnectCarlos

That doesn't make it "fine". However, if 70% of the population was drinking and driving I would think it ridiculous to think I am going to solve (even partially) that problem by saying, "hey, why don't all you people stop drunk driving and act right!"

You can literally educate yourself for free on this topic. There's a billion resources and it's vastly relevant to your life if you're not already rich and you're concerned about your financial well-being. — BitconnectCarlos

:rofl: well f*ck you too :razz:

Thanks for the financial tips. If becoming a wealthy mo fo in the top 1% ever become a life goal of mine, I will remember to check out this thread :up:

I've mentioned this before: There is no minimum cost to enter stocks or cryptocurrency. You could throw $5 into an extremely high risk one. — BitconnectCarlos

That's beside the point. The point is that someone who only has $5 safely saved up ("safely" as in money that they don't need to keep out of risky investments because they're going to need it soon) isn't going to be able to put as much money into risky, rewarding investments as someone who has $1000 safely saved up, never mind someone with $10,000 or $100,000 safely saved up. This whole side-track into risk has gotten us away from the main point, which is that having money gives you a means to make money, so the more you have the more you can make the faster. (And conversely, and more problematically, lacking money costs money, in the same way).

Yes, there is risk involved there, in the sense that high-reward investment will involve a lot of short-term ups and downs along the way toward gradual long-term gains. But that nominal risk only becomes actual, genuine risk if you're going to have to cash out on those investments at a time when they might be down; if you can just wait for them to come back up, then there's no actual risk there. I "lost thousands of dollars" this week, temporarily, on paper, but I have next to zero doubt that that will be undone in time, probably not even very much time on the scales I care about, so I'm not actually in danger, at risk, of any kind of suffering on account of this week's market fluctuations. People who have lots of money are the ones who can afford to weather those ups and downs, because they have so much in excess of what they're going to need any time soon that they can let it safely sit there. Those who don't have much in the way of that excess either can't invest as much (if they're being smart), or else expose themselves to genuine risk by putting money on the line that they're going to need back soon when it might not be there.

I've mentioned this before: There is no minimum cost to enter stocks or cryptocurrency. You could throw $5 into an extremely high risk one. — BitconnectCarlos

You are mistakenly assuming that the destitute have the money, the knowledge, the method, the ability to implement, and the time it takes in order to do all these things...

You are mistakenly assuming that the destitute have the money, the knowledge, the method, the ability to implement, and the time it takes in order to do all these things...

Here in the UK the privelidged classes are of the opinion that the poor choose to be poor, it's a lifestyle choice. If they don't like it well they can get one of their rich daddy's friends to give them a job, or set up a business making face masks for example. It must be their choice, or they would do something about it.
Now we have a rip roaring right wing Tory government, they say it out loud. It's time to punish the poor, for holding us back.

People are just a helpless bunch, aren't they?

And what if they are born with flat feet, so the army doesn't want them?

I was watching a documentary last night about a specialist children's hospital. There was a child born helpless with numerous serious health conditions. The specialist team had worked tirelessly for a number of years to keep her alive, with a good quality of life. This must have cost millions, her parents where poor. They didn't have to pay anything towards her care. Everyone there was working and living in a nurturing loving lifestyle, in which money didn't figure.

Will she find a proper job when she grows up, to pay the healthcare bill? And what if she is too lazy to do the work?

Lending at interest is a transaction where someone who started out with more than they needed (enough to let someone borrow some) ends up with more than they started with, and someone who started out with less than they needed (requiring them to borrow something from someone else) ends up with even less than they started with. That is inherently exploitative of the poor by the rich. — Pfhorrest

Nonsense. It’s basically an exchange of value (including future value), which as I’ve explained can be generous from the lender side, fair, or exploitive. Whatever capitalistic incentives may lead to exploitation aren’t inherent in lending itself.

There is a wealth of research how personal choices have very little to do with socio-economic (upward) mobility. The fact that we're still arguing this is either because of people not informing themselves or the ideological barriers that come with being born and raised in the US. Fuck, if it was all about personal choices, don't you think the majority of Sierra Leonians would've pulled themselves up by their own boot straps?

Some obvious differences between rich and poor people increasing inequality:

1. When borrowing money a rich person, all else being equal, has a higher credit rating and therefore pays less interest because the risk component of the spread is lower. They therefore save at a higher rate or if they invest the loan it will provide a better return. In other words, each loan can be better leveraged by a rich person than a poor person;
2. Rich people can afford better housing, which means they pay less in upkeep and heating;
3. Their houses are in better neighborhoods so there's less crime, resulting in less damage to our theft of property;
4. Houses in better neighbourhoods have better roads and public transport connections and are closer to work. Poor people pay more for commuting;
5. Poor people (in the USA) can't afford the same education or healthcare, which is obviously detrimental for the ability to (continue) to generate income.


Less obvious but very interesting: people have a maximum "bandwidth" of stuff they can think about. Once you're in poverty, it's incredibly hard to plan long term because you're too busy surviving. Choices that may seem irrational from the outside are in fact very rational as a poor person. One anecdote I remember is how in a poor family, someone made extra money and ended up spending everything on a new TV. That sounds stupid, until you realise everyone in the family is strapped for cash and likely to spend the money on other things. Buying the TV, "saves" the money for the person who bought the TV. That is all to say, when in poverty your thinking changes. Expecting the types of decisions that will get you out of poverty becomes totally unrealistic.

So if you know someone in poverty, the best way to help them is to relieve their need to think about their finances. Doing their shopping for them after working out a budget, means they get time to think about other things and can manage planning ahead again.

Nonsense. It’s basically an exchange of value (including future value), which as I’ve explained can be generous from the lender side, fair, or exploitive. Whatever capitalistic incentives may lead to exploitation aren’t inherent in lending itself. — praxis

"Nuh uh" isn't an argument. You're just stated your disagreement, not said anything to refute my explanation of how interest (not just lending) is necessarily exploitative.

If I lent you a sum of money for low enough interest you could make a profit by simply investing it. Is that a simple enough example of non-exploitive lending with interest? With a little imagination I’m sure you could think of many other non-exploitive lending scenarios that charge interest.

The basic principle you don’t seem to appreciate is that a borrower can produce something of greater value with the borrowed capital.

There is a wealth of research how personal choices have very little to do with socio-economic (upward) mobility. The fact that we're still arguing this is either because of people not informing themselves or the ideological barriers that come with being born and raised in the US. Fuck, if it was all about personal choices, don't you think the majority of Sierra Leonians would've pulled themselves up by their own boot straps?

I’m not so sure about that (though I might be misinterpreting what you’re saying here), because according to this study by the world bank, over 87% of people who were asked how they escaped poverty said they did so through “individual initiative”, whether by finding jobs, starting businesses or migrating. Compare this with those who said it was government (3.4%), or NGOs (0.3%) Of course, that isn’t to say they are not affected by economic downturns, health problems and so on.

Sure, they may be lying due to pride or boastfulness, but I think it is deeply infantilizing and patronizing to argue that the choices of these people had little to do with their escape from poverty.

over 87% of people who were asked how they escaped poverty said they did so through “individual initiative” — NOS4A2

That's a textbook case of survivorship bias. You're looking at how many people who did escape poverty did so through individual initiative. What we're wondering is how many people who try to escape poverty via individual initiative succeed.

How many lottery winners played the lottery? How many lottery players won the lottery? Very different questions.

Also, people don't generally escape poverty due to government action, but rather are prevented from falling into poverty by the structure of their society, including its government. The kind of people who governments help keep afloat aren't people who would be described as having "escaped poverty".

Sorry, I was responding to the claim that “personal choices have very little to do with socio-economic (upward) mobility”, not “how many people who try to escape poverty via individual initiative succeed”.

Many lenders aim at borrowers who are not adding value to the capital. They know how many people find it easier to spend money than make it. Those who borrow for other reasons than to add value to the capital, are often short of funds for one or more of a myriad of reasons and become exploited by the lender to varying degrees. Often the people who are the least able to repay are leant at the highest interest rates. There is a lot of money to be made from " chuggers ", people who only make the minimum payment on their credit card each month, for example.

There must be jobs (economic circumstances). You have to know they exist (access to information). You have to be able to physically reach them (quality of infrastructure & costs). You have to qualify for them (access to education). You shouldn't be discriminated against (female, poor, weird accent or foreign). They have to pay enough (economic circumstances, political minimum wage, negotiation power). etc. etc.

The classical capitalist view that poverty is not a social problem but an individual one has been dead in the water for about three decades now but political ideology takes long to die. Obviously a lot of people benefit in the short term from not emancipating poor people. In the long run it doesn't make economic sense though.

And what if they are born with flat feet, so the army doesn't want them?

Lucky for you, flat feet are no longer disqualifying. Even if a condition is disqualifying you can get a waiver (as I did.) The military is only one option. Will trade school disqualify you for having flat feet?

Will she find a proper job when she grows up, to pay the healthcare bill? And what if she is too lazy to do the work?

People with disabilities are in a different category. They can get government assistance and we can't expect them do the same things that abled people would do. One of the people I went to school with has Williams Syndrome which means he has an IQ of maybe around 60ish. He's very friendly and he does work part time at a community center or something along those lines. Obviously we can't hold the same expectations for these people as someone else who is able.

That doesn't make it "fine". However, if 70% of the population was drinking and driving I would think it ridiculous to think I am going to solve (even partially) that problem by saying, "hey, why don't all you people stop drunk driving and act right!"

I wouldn't expect me simply saying "hey, stop drunk driving!" to solve the problem, but it still is one's responsibility not to do that. Personal finance is more of a personal thing, and I don't know your situation, but for me it's been very relevant.

We can talk about vague, abstract notions like responsibility all day, but for me it was simply having an experience where in college I had a brush with poverty. I very clearly remember not having money for a sandwich and the guy behind the counter was nice enough to give it to me for free. My bank account was drained due to automatic charges which I simply didn't really care enough (or know how) to monitor and I kept wondering what happened to everything. I don't ever want to be in that situation again.

3. Their houses are in better neighborhoods so there's less crime, resulting in less damage to our theft of property; — Benkei

That doesn't tell why they would be better neighborhoods. Or that with lower income you would automatically have worse neighborhoods.

This isn't so straight forward. For example, I lived earlier in my life in a very upscale neighborhood with the highest real estate prices in Finland. It also was also one of the places where most crime happened in Helsinki: the city center. Unlike American cities, here the downtown is a sought after place. There is crime (by Finnish standards): typically it's the young people coming there to party or to hang around that keep the police busy. This tells just how much of these issues are just in people's minds: basically statistically the City center was as bad (or good) as the so-called problematic parts of Helsinki, but that didn't matter the people that lived there. Lot of young couples with children were totally happy to live there, especially if they had had their own childhood in the city center. They were cavalier about parked cars being sometimes vandalized on the street. It was just something that occasionally happened, even if the 16 years I lived there my car was OK (perhaps the reason was my home was on the other side of the street from a police station).

I already offered an extreme example of predatory lending, that of payday loans.

Anecdotal evidence isn't evidence though but obviously concentration of people raises the likelihood of crimes as well.

It's far more about what people percieve than actual factual statistics, especially when crime is truly rare. What is a better neighborhood?

Especially, when thinking if some city/neighborhood is "safe".

How safe is Manhattan compared to Amsterdam, compared to Chicago, Malmö or Mexico City?

Obviously a lot of people benefit in the short term from not emancipating poor people. In the long run it doesn't make economic sense though. — Benkei

According to selectorate theory it makes political sense in an autocracy, and that’s why democracy tends to be favorable for the masses.

There must be jobs (economic circumstances). You have to know they exist (access to information). You have to be able to physically reach them (quality of infrastructure & costs). You have to qualify for them (access to education). You shouldn't be discriminated against (female, poor, weird accent or foreign). They have to pay enough (economic circumstances, political minimum wage, negotiation power). etc. etc.

The classical capitalist view that poverty is not a social problem but an individual one has been dead in the water for about three decades now but political ideology takes long to die. Obviously a lot of people benefit in the short term from not emancipating poor people. In the long run it doesn't make economic sense though.

Despite that, over 87% of people reported that “individual initiative” is what helped them escape poverty. So like you said, the fact that we're still arguing this is either because of people not informing themselves or the ideological barriers that come with being born and raised in Europe.

when asking survivors how many of them survived the response rate was 100%. Have fun with yourself.

when asking survivors how many of them survived the response rate was 100%. Have fun with yourself.

That’s a false analogy. 87% of people who were asked how they escaped poverty said they did so through “individual initiative”. Your claim that “there is a wealth of research how personal choices have very little to do with socio-economic (upward) mobility” is contradicted by those statements. Perhaps you can reach into that “wealth of research” to prove otherwise. I’m quite open to hearing it.