God himself approves of debt cancellation. Under Moses, every 50 years, there was a national debt reset, called the Year of Jubilee. No, it should not be taken as an opportunity to avoid responsibility. But the point is that sometimes debt becomes a weapon of enslavement. God in his law is telling us to value freedom at least as much as we value honoring contracts.
Furthermore, if we had such a periodic reset, think how it would curb undue reliance on credit markets. Lenders would have to be planning for the reset by coming up with realistic assessments of creditworthiness and repayment plans that could actually work. It’s all good.
The problem is when you have debt forgiveness while at the same time forcing lenders to lend to undesirables, lest they be charged with discrimination.
“God himself approves of debt cancellation”
One thing you have to bear in mind about the Bible is that it takes place long ago. That’s why, for instance, we don’t get so uptight about its endorsement of slavery or how it suggests people who don’t keep the Sabbath should be put to death. Rich people in the olden days were less likely Warren Buffets or Mitt Romneys. They were not hedge fund managers nor corporate raiders. They were more likely guys who hired people out to bash your brains in and take your stuff.
Think of olden time money lenders as loan sharks. Unlike banks and such, loan sharks operate outside the law and therefore feel free to employ what in civil society, excepting cases of self-defense, only the government can employ only for just purposes: violence. Unalienable rights, of course, never can be sacrificed, but we do give up various privileges to belong to civilization. One of these is the privilege to bash people in the head whenever we feel like it. In return, we receive various civil rights, among them the right to receive police protection from people bashing our brains in.
Now, debt can be onerous. It can lead to something like slavery. Especially if you’re dealing with an organization outside the law, like for instance the mafia. They will make an indentured servant out of you. Banks, belonging to civil society, cannot. They can employ the courts to hound you, and the courts can imprison you, but only with due process.
Do you think the biblical rich cared about due process? Unlikely. They were part of a civil society of sorts, but not like ours. Not one that respected natural law in the same manner. Comapring the two is tricky. Pretending the same sort of debt you got into in year zero and last year is a cheat. It’s like how Marxists call employment wage slavery, even though you get paid over mere subsistence and are free to go when you please. That’s not slavery, nor is debt servitude. Even if you can wind up in prison over debt (indirectly), contemporary debt does not lead to servitude.
There is the issue of unalienable rights, of which I touched on earlier. Some natural rights you sacrifice in exchange for civil rights; some you never can give up. You cannot, for instance, enter into a contract for perpetual slavery. Can you enter into a contract that dooms you to the sort of servitude that results from being imprisoned indirectly over $280 dollars? Libs and apparently Bible fans want to think no, because debt is bad; ancient people used and mafiosos use it to enslave people. I say surely, why not? It’s so easy to avoid jail over $280 that it’s a non-issue.
If you want to Jubilee out debt after 50 years, whatever. This woman has several decades to sweat it out, then.
“Pretending the same sort of debt you got into in year zero and last year”
Pretending they are the same, I mean.
“Furthermore, if we had such a periodic reset, think how it would curb undue reliance on credit markets. Lenders would have to be planning for the reset by coming up with realistic assessments of creditworthiness and repayment plans that could actually work.”
Firstly, Keynes said that in the long run we are all dead, and 50 years is too close to life expectancy to make enough of the difference you want it to make. More frequent debt relief would certainly tighten credit, but how much? You say reliance on the credit market is undue, and it is, but some level of reliance is due. Modern civilization runs on credit; it is the economy’s oil. How much is too much? No one knows.
That’s why, instead of further centralizing the economic decisions of a ridiculously overregulated industry, perhaps the credit market should instead become a free market. You know, like everything else is supposed to be (to an extent). That way credit could represent actual savings, and demand would be tempered by how much people are actually willing to pay for it.