Usury for dummies
December 18, 2012 § 10 Comments
Like many subjects, usury makes for some rather complex discussion. At bottom though I think it is a simple enough concept. In fact in the comments below I drafted a proposed Constitutional amendment that would wipe out legally sanctioned usury. It took me eleven words:
No government or arbiter shall enforce deficiency judgements in any contract.
If you don’t like that one, here is an alternative:
All debt contracts in the United States shall be nonrecourse.
Note: This post used to contain a YouTube video which has since been removed. Seeing the video was only peripherally related to understanding the point made here – in fact I’m not sure I even remember what video was here – but it did make the experience much more amusing, IIRC. I think it was a Mitchell and Webb thing.
Zippy Catholic 
The latter is better. IANAL, but if you couldn’t even enforce recovery of pledged collateral it would effectively nullify any such contract.
Non-recourse has a problem in that it is possible that the collateral is impaired (e.g. you pledge a house that burns down), yet have plenty of assets to repay but simply refuse.
Liberty is hard and subtle. Attempts at creating simple rules are futile.
The essence is that you cannot in perpetuity encumber a person, nor deprive him the basics required to earn a daily wage or to live. Life and liberty supersede property.
But that requires steering between the Charybdis of allowing people to walk away when they can pay back from their abundance and the Scylla of turning people into debt slaves. No one or hundred rules suffice.
tz2026:
The latter is better.
I like the former because it makes explicit that usurious contracts are (like all contracts) made possible by active government enforcement.
if you couldn’t even enforce recovery of pledged collateral it would effectively nullify any such contract.
That should make lenders a bit more careful then, no? If not, and they choose to make riskier contracts – contracts where recovery of pledged collateral is in doubt – under the more hands-off rule, well, tough cookies. Life in the fast lane and all that.
The essence is that you cannot in perpetuity encumber a person, nor deprive him the basics required to earn a daily wage or to live. Life and liberty supersede property.
I don’t think the essence is nearly so high-falutin. Usurious loans are pretty easy to define, and the government shouldn’t actively enforce them.
I was tech-support, but it took a promotion to dumb me down.
The fellow in the routine makes the point I was getting at: The legality of owning a PC is irrelevant. If you’re not trained enough to operate it, you shouldn’t get one.
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