How to determine the price you are sold for in the slave market
September 26, 2016 § 28 Comments
Your personal price as a chattel slave, in dollar terms, is reflected in your credit rating. In this post I will outline a proposed methodology for calculating the price that you are currently selling for in the chattel slave market. I haven’t worked out the details: this post is really just a starting point.
Like many modern terms, ‘loan’ is used equivocally.
Suppose that you are a borrower of money. We can calculate your value as a chattel slave by looking at the differences between the non-recourse (and therefore non-usurious) loans you can acquire and the personally guaranteed (usurious) loans you can acquire.
Scenario 1: non-usurious borrowing
In one sort of loan — a non-usurious loan — you sell your lender a stake in some property that you are purchasing or that you already own. You retain the use of the property, so you pay rent to your ownership partner (lender). This rent is often called ‘interest’. You may also buy back your partner’s share over time. This is often called ‘principal’.
If your partner doesn’t know you very well, he is going to want to get some idea how well you will take care of the property that he owns in partnership with you. This kind of knowledge is provided institutionally by the modern process of establishing credit ratings. Based on your trustworthiness – whether established by credit rating or some other means – your lending partner may require a larger down payment (thus lower loan-to-value ratio) and / or may charge a higher rent (because he is taking a greater risk).
If you stop making payments for any reason, he can recover what he is owed by repossessing the property. Financially and morally this is the same scenario as a landlord evicting a tenant who stops paying the rent. Depending on circumstances, this may or may not affect your credit rating specifically or your reputation generally. But your partner’s financial claims are limited to the property that you own in partnership.
In this non-usurious scenario, your trustworthiness as a partner with custody and use of the lender’s share of the property is reflected in the interest rate and in the loan to value ratio (and thus the size of the required down payment). These in turn are generally determined by your credit rating.
Scenario 2: usurious borrowing
In a usurious loan, the lender’s claim is not against property or only property: it is against your personal guarantee that you will repay the loan. The thing you are selling to the lender in this case is not an ownership stake in property: it is a contractually binding ownership stake in you, yourself. This will generally be reflected in a larger required down payment and a higher interest rate.
Calculating your price:
Your current market price as a chattel slave is related to the similarities and differences between these two kinds of scenarios. Specifically it is related to the premium you have to pay in terms of larger down payment and higher interest rate for the unsecured personal loan. I’ll propose the following calculation for the sake of discussion:
Take the largest personal unsecured loan you could get approved by a reputable lender with your current credit rating. Then determine what size non recourse loan you could get approved – say to purchase some real estate – with the same down payment and interest rate.
Your current price as a chattel slave – the price for which your owners are currently buying and selling you in the marketplace – is the same as the price of the property that you could purchase with the non recourse loan.
Zippy Catholic 
One tweak that immediately comes to mind is that we probably need to subtract personal net worth (kind of like subtracting cash and equivalents in order to calculate enterprise value when looking to acquire a company). Acquiring a chattel slave via usury de facto means acquiring all of his property in addition to his person, so the slave’s value is the acquisition price minus the value of the additional property acquired.
Also, I am arguing with myself about whether the down payment should or should not be subtracted. At this point I am thinking not. A ‘no money down’ loan would represent a willingness to purchase the ‘whole you’ and rent the whole you back to yourself.
[…] Source: Zippy Catholic […]
Bankruptcy law limit how much we can sell ourselves into slavery. (alimony and US student debt are not part of such limitations though). Do you think it should be substracted or it is not an interesting case?
AdHominem:
Offhand yes, that should be a factor in the calculation since consideration of the law factors into interest rates and down payments, and of course bankruptcy protection does not apply to non recourse loans. It is similar to taking into consideration the chance that a given slave might escape: I imagine that proximity to hostile non-slave states, the existence of ‘underground railroads,’ and the like probably depressed the prices of slaves somewhat.
I was going to say that in general any legal or other impairment of the plenary rights of slave owners will depress the price of slaves. But that isn’t strictly true. To the extent that social and legal structures create incentives or disincentives for people to sell themselves into slavery that will affect the pricing of slaves in nontrivial ways also. For example student loans are one of the most pervasive examples of the modernized slave trade.
So maybe the best we can say is that we can calculate your current market price as a chattel slave, where all the various particulars are taken into consideration by the phrase ‘current market price’. Different circumstances in general pretty much always result in different prices for specific pieces or kinds of property.
(N.B.: Bankruptcy protection cannot make a usurious contract non-usurious, as I explain in the Usury FAQ).
One of the reasons I come here infrequently are the rants against usury. Yes it’s wrong but you aren’t posting how modern finance is supposed to work. What specifically would be the alternatives for:
1.A credit card (not a debit card)
2.Mortgages
3.Student loans
Credit cards are what make online purchasing work. Bitcoin is too clonky to use for day to day purchases still. Also it’s used for hotel rooms, car rentals, things a normal debit/prepaid card couldn’t really cover.
It’s one thing to complain but what are the specific alternatives and how would they realistically work.
Well, to me the obvious alternative to the Credit Card *is* the debit card; also, bank routing information can be used electronically as well. Also, there is no reason that Credit Card companies (particularly American Express) could not simply retool as pure payment processing firms; that is already what they do for banks and consumers with debit cards that need to be used like a credit card. Also, PayPal.
Mortgages are non-usurious; they are securitized with the house itself. Kind of like a Rent-to-Own store.
As for student loans, they just need to go away. Emphasis on scholarships, attendance reduction, tuition reduction, and restructuring of education needs to happen. Grad school in this country is already funded without debt; look at the Foreign Language and Area Studies Fellowships (some of which are available for undergraduates too!), the Boren Fellowship, and the various STEM funding programs too. Or, perhaps there could be a way of simply mortgaging ones house to get the money, assuming that is an ethical and prudent decision.
Anymouse:
Great answer overall, but a word of caution about mortgages in the US of A. Last I checked there were four non recourse states, which limit mortgage liability to repossession of the house. In the 46 other states the courts will enforce deficiency judgments against borrowers when the contract is written that way.
Also, see Question 23 of the Usury FAQ and this recent post.
That it’s literally hard to conceive of a world without usury is, in any case, a big part – or at least symptom – of the problem.
The question is akin to someone saying “Yes, I know you all want abortion illegal, and that’s all very good in theory, but how do you intend to TAKE CARE of all those unwanted babies?” To ask the question is to answer it, if you have ears to hear.
As a current student, the universities would save students a ton of money (and, of course, make a ton LESS money) simply by not requiring pre-requisites. There is absolutely no reason somebody who wants to learn how to code in C++ and Java needs to learn anything but C++ and Java – and if he thinks it will help his job prospects to take more classes, he can.
And if he can’t hack the math in the classes, well, then he’ll fail.
Of course, the issue there is the accreditation committees that want to ensure at least the semblance of a liberal arts core. In some cases the State governments wish to keep a strong core as well, as in Texas. There really should be a more explicitly technical path, but that is largely confined to community colleges today.
Right – the issue is definitely with the accreditation committees. Other people defining what the common man needs to know, content in the knowledge that they’re too stupid to decide for themselves whether or not General English is useful for them, or if the type of programming they are doing has anything at all to do with Calculus.
(Whatever the many good and great merits of the liberal arts education it is a simple truth that the very, very vast majority of mankind has managed to get by with absolutely no semblance of such a thing, but the majority of men have learned some sort of trade.)
For the debit and credit card talk I will quote Eamonn Fingleton :
“the German banking system has hindered the rise of credit cards and has instead promoted debit cards. Credit cards reduce the savings rate whereas debit cards boost it, providing German banks an abundant source of funding to support their corporate clients. ”
source :
http://prospect.org/article/germanys-economic-engine-0
I have not checked myself the veracity of the claim. And the article is 6 years old so it could have changed. But if you need a real case example of a WEIRD (western, educated, industrialized, rich, developed) country with little credit card and working well, check it. So one can make the argument that debit card help to have a sound financial system.
Universal and “free” high school infantilizes young people and gives them a prison-like experience which wastes four years of their lives in the name of egalitarianism.
College used to be elite liberal arts education for the aristocracy, but has become a combination of exorbitantly expensive trade school and SJW brainwashing propped up by usury. A few hard core religious schools act like monasteries, attempting to preserve core parts of Christendom and western culture amongst a small devout population.
The whole thing needs a reboot in my view, independent of the issue of usury.
Increased use of debit cards makes ‘money’ stronger and more stable, on at least one side of the equation.
Most of the ‘money’ that everyman uses is bank deposits: claims against the balance sheets of banks denominated in units of sovereign currency (tax vouchers). Credit cards are unsecured personal debt, increasing the amount of the ‘money supply’ which rests on just a wink and a promise.
True or false: credit cards are morally legitimate if the balance is paid off at the end of every month, because it boils down to a 0 interest loan.
Kidd Cudi:
A usurious contract is intrinsically immoral on the part of the lender, not the borrower. It may be immoral on the part of the borrower because of the borrower’s intentions or because of circumstances; but insisting on interest on a mutuum loan is the lender’s sin not the borrower’s.
Intentions and circumstances are necessarily particular to particular cases, so your question cannot be answered with a categorical and simple rule.
(NB reducing the amount owed to usurers is definitely good in itself, for the same reason that minimizing a thief’s opportunity to steal is good: it means that the thief or usurer will have that much less objective thievery or usury to answer for in Hell or in Purgatory).
How about credit card rewards?
If someone who doesn’t need to use a credit card does so anyway in order to profit off of the points/cashback/airline miles, is this morally licit?
donnie:
About all I am prepared to say with the conviction of certitude is that using credit cards — and mutuum borrowing under usurious contracts more generally — is not intrinsically immoral, and may therefore be justifiable when there are sufficient reasons. Beyond that we have to consider all sorts of factors.
My inclination (and it is just an inclination) is that if accumulating reward points is literally the only reason that is pretty weak tea. But debit cards are also not as secure as credit cards: an identity thief may be able to empty your accounts with a compromised debit card, and getting stolen property back is always a lot more difficult than not having it stolen in the first place.
So anyway there are many factors and I am not really ready to conclude that my own judgments are superior to the judgments others might make on the prudential question, assuming that formal cooperation is avoided and there are good reasons in place.
I suppose my question ought to have been worded differently. What I’m trying to understand is not whether profiting off of credit card rewards is sufficient reason to justify entering into a usurious contract. What I want to know is if profiting off of credit card rewards is morally licit, since the money being pocketed is “blood money” in a certain sense.
I’m inclined to think that it is morally dubious to profit from usurers in any sense. But I’m not 100% sure.
I suppose a good rule of thumb would be to donate $1 to a worthy charity for every $1 or equivalent earned in credit card rewards. This assuming one has a sufficient reason to enter into a usurious credit card contract in the first place.
donnie:
I don’t think that works. It is one of those things that, if true as a general principle, proves too much.
Contracting for usurious profit is intrinsically immoral, but once you get ‘downsteam’ from that the usual formal and material cooperation with evil criteria apply: intending usury is wrong, and material cooperation with it must be justified by proportionate reason under double effect, etc.
But isn’t there a difference between materially cooperating with evil in order to meet a proportionate need, and doing the same but also benefiting in some way above and beyond that need?
As I’m sure you know, it’s not at all difficult to pocket an extra $3k – $5k per year by churning rewards cards and keeping an eye out for attractive sign-up packages. Seems wrong to take that kind of money from the Devil without being complicit in his deeds in some way.
donnie:
I don’t really disagree: precisely what is at issue is proportionate reason for material cooperation with evil.
I am not willing to discount travel points or whatever as a proportionate reason for some folks though. Maybe they have sick relatives in another state, and as a practical matter won’t be able to visit as often without points. Maybe they just work hard and need the relief of a vacation. Or maybe it is just narcissistic pleasure seeking.
In short, the particulars matter.
Standard (correct) economist answer: “It depends”
Zippy, you are making this too complicated. There is no down payment in a usurious loan. Your key insight can be proven at the simplest, highest level. Compare the interest rate for a non-usurious mortgage to the interest rate of any personal loan, credit card, etc. There is a big difference.
So your point is proven right. Not only is usury bad at any interest rate, but the high interest rates charged and paid proves that slaves are considered a lot less valuable than houses.
GariFrance:
There certainly can be, when personal guarantees are combined with property as security. Even loans (charging interest) secured by property are usurious if they contractually provide for a deficiency judgment against the borrower.
But your point that a pure unsecured loan — a straight-up mutuum for interest — won’t require a down payment is well taken. That means that a down payment would not apply in the calculation we are making here which, as you say, does simplify things.
It also complicates things though because a non recourse loan is not generally going to be granted without a down payment. The lender may as well just own the house and rent it to the ‘borrower’. (Even then a refundable deposit is usually required).
I suppose that suggests an alternative calculation though, based on comparing Bob’s capacity to rent property to Bob’s capacity to rent himself back from the slaver to whom he sells himself.
Take the interest rate on the largest personal loan Bob could acquire starting from no debt. Determine the value of the property Bob could rent with the same payment as the interest portion of the payment over the same period. Subtract the value of Bob’s current savings and other property.
That is the imputed value at which Bob himself is currently trading on the modern slave market.