June 15, 2018 § 33 Comments
It is worth emphasizing that personal guarantees on invested capital (usury) are indeed very bad business in entrepreneurship, where capital and labor/expertise come together to produce objectively valuable goods and services. Personal guarantees are a huge red flag that the contracts and capital structure are dysfunctional and should be re-worked before a deal is inked, or that perhaps the deal is no good at all on any terms. It is a naive and foolish business practice to give capital to a business partner under a regime of personal guarantees.
Usury is great business though when the objective is to sell things to consumers (e.g. college degrees in grievance studies fueled by five dollar lattes); things that they cannot afford without selling themselves into slavery, at prices massively inflated by the ready availability of usurious loans.
March 20, 2017 § 43 Comments
A good sovereign will decline to enforce usurious contracts, and will reserve the authority to – if prudentially necessary – punish those who attempt to craft usurious contracts.
I conclude that what makes debtor’s prison bad is acceptance of usury. In the absence of usury, debtor’s prison is just prison for criminals.
March 16, 2017 § 23 Comments
Reader TomD is preparing to make a print version of the Usury FAQ available. He is doing all of the work (he has a nice shiny shovel made of mithril), but in preparation for this ‘third edition’ I’ve added Question 56, “Isn’t criticism of usury just veiled anti-semitism”.
Regular readers may notice that the answer is a modified version of this blog post.
February 20, 2017 § 45 Comments
Human beings used to be reasonably capable of distinguishing reality from imagination, at least in the boots-on-the-ground world of day to day life. Property at one time referred to something real, something which exists in its own right. Thus property could be possessed, repossessed, bought, sold, stolen, consumed, or destroyed independent of the property’s owner or of any other particular persons.
Then along came widespread acceptance of usury. Liberal modernity counts, as one of its crowning achievements, the destruction of chattel slavery. As with all of liberalism’s putative emancipatory achievements, this is illusory. Rather than freeing humanity from the objectification inherent in chattel slavery, liberalism has merely driven this objectification into the subcutaneous socioeconomic metalayer, implanted it under the skin, making it that much more difficult to see and resist. As always liberalism does not actually “free” us from authority as it pretends to do: it simply makes authority sociopathic.
The old tyrannies could at least be seen out in the open. A man knew where he stood. Now the tyranny comes cloaked as the seductress “freedom”. Liberal tyranny boils up from under layers of flesh, lurks inside clinging to the bones as it gnaws away at internal organs and releases its offal into the body. If paganism, Mohammedism, and Rabbinic Judaism are packs of hyenas harrowing Christendom, liberalism is a cancer that eats away at it from within, an alien embryo feeding on its host as it releases a thousand horrors.
But I digress.
Property is objective, that is, it consists of objects independent of any particular human subject or subjects. Owners are human subjects, human beings independent of any particular property. Take away a man’s property and you still have a man.
You can tell who truly owns what by asking what happens when the music stops: by asking what, at the end of the day, secures each person’s claims. In a recourse mortgage the borrower “owns” the house and the lender owns the borrower, because the lender is contractually entitled to collect deficiencies from the borrower if selling the house does not fully discharge the borrower’s contractual obligations. The situation is even worse than that though, because in the case of taxable real estate the sovereign really owns the property and leases it back to the tenant (whom we deceptively label the “owner”). Real estate “owners”, then, don’t really own the actual property. The sovereign owns the property and what the “owners” really own is exclusive leasing rights: a kind of financial security. That isn’t nothing, but there is much less there than meets the eye. Real estate “ownership” where there are property taxes is a form of lie: what is owned is not land and buildings, but a perpetual and exclusive lease on land and buildings.
Products dependent upon cloud software represent a new, technologically enabled phase in non-ownership “ownership”. Cloud software or “Internet of things” products require a “mother ship” somewhere on the Internet in order to work. Without the mother ship they become literally useless; “bricked” in the vernacular. For example you can spend years of your life producing work with a cloud based – or even just cloud licensed – CAD program, under the illusion that you own at least your own actual work product. You don’t own the software, it is merely ‘licensed’ to you, sure. But in fact you don’t even really own your own work product which you produced with the software using your own hands and mind, because you cannot even continue to access your own work without regularly checking in with the mother ship to ensure that license terms are met . If the terms and conditions change, or the company goes out of business or the mother ship crashes for some other reason, you can’t even access the features of your own “property”; not even your own accumulated work.
Cloud products represent a kind of legalized ransomware. As with usury there is a superficial resemblance to legitimate transactions; in this case a resemblance to having sold or leased you some tools with which you can produce your own work; work which you then own. The work you produce with cloud-based ransomware looks like it belongs to you.
But when the music stops your hammer no longer works, there are no other hammers which will work, and all that you have built with the hammer is hostage to the true owner’s terms and conditions. You were never the owner of your own work product in the first place: you rent your own work at the pleasure of the private party who really owns it.
When philosophical anti-realism invades the domain of property, the distinction between persons and property disappears. This erodes the distinction between persons and objects in spheres beyond property and ownership.
If you would like to see the great dehumanization reversed, I can’t really offer much hope. But I’d be happy to hand you a shovel.
 Nota bene: not physical or merely physical, since physicalism is false.
 At least for as long as the tenant continues to make payments, which can be increased at any time without his agreement.
October 20, 2016 § 29 Comments
In retrospect I suppose it is odd that this hasn’t come up before; but it isn’t the sort of angle I’d thought to raise myself. That’s just not how my mind works.
In the comments below MarcusD writes:
A priest in my diocese, when the subject of usury comes up (well, all two times), states that opposition to usury is “inextricably linked with antisemitism.” Do you have any thoughts on that position? Will you add a rebuttal to that to the “Usury FAQ”?
My first thought was that the assertions of this priest are just obviously ridiculous, the sort of modern guilt-by-association lunacy unworthy of the validation involved in treating it as a serious objection. (To be clear: it is certainly not a serious objection).
Several things may be noteworthy though, at least in terms of characterizing the association and the guilt — to the best of my knowledge, and with all the usual caveats, this being well outside the domain of what I consider substantively pertinent to the basic moral question.
First, the fact that diaspora Jews in Christian lands gravitated toward usury as a profession is as much Christians’ fault as Jews’ fault. The attitude was that Jews were heathens and were going to Hell anyway, so the Christian sovereign’s law actually treated Jews more leniently than it treated Christians. Christians were prohibited from engaging in usury for the sake of their own souls; but Jews were damned anyway so why not let them do what they want? A libertine approach to the laws that applied to Jews was really a form of cruelty toward them, as is true of libertine legalism in general. It was also a good way to cultivate anti-Christian forces within Christian society over the long term.
Just imagine if there were a tribe in modern America who were treated as if the law against violent crime didn’t apply to them. Wouldn’t that in objective fact be cruelty toward that tribe? Wouldn’t we expect the violent behavior of that tribe to increase, to their own detriment and ours?
Second, the situation illustrates the lie built into ‘libertine’ law in the first place. Without the Christian sovereign’s enforcement, usurious contracts would have no teeth. To the extent that the Christian sovereign enforced usurious contracts he formally cooperated with them: you can’t enforce contract terms without intending them. So professional usury on the part of Jews was really a partnership between Jews and their Christian enforcers.
Third, there were in fact significant non-Jewish tribes or dynasties associated with professional usury, notably the Lombards. As is the case in many high IQ professions Jews were doubtless overrepresented in part simply because they have greater intelligence than most of the rest of the bell curve. But it isn’t as if they had a monopoly on the particular sin in question.
Of course it is risible in the first place to claim that the Church’s doctrinal condemnation of usury depends on whether or not one tribe or other has become, fairly or unfairly, disproportionately associated with that sin. Alcohol abuse doesn’t become immune to criticism in virtue of its (fair or unfair) association with the Irish.
But in any case with usury, as with any basic execrable disgusting filthy sin against nature and nature’s God, there is plenty of guilt to go around.
June 27, 2016 § 287 Comments
Warning: in this post I am kind of talking out of my hat, just sharing something I recently discovered. I haven’t done the sort of due diligence that would warrant a strong view on my part. This is just one of those things that make me go “hmmm.”
A personal admission: I tend to get bored out of my mind when I start to read sedevacantist material (articles expressing and attempting to justify the view that there is presently no Pope of Rome, and that the man who presently appears to be Pope is not in fact the Pope). In my experience, the folks advancing those arguments tend to be completely unaware of their own metaphysical baggage. At the very least their metaphysical baggage remains hidden and unacknowledged — perhaps because acknowledging it would weaken their arguments, or perhaps because they simply suffer from a limited imagination and are unaware of all of the questions they are begging.
Life is short, and when writers issue too many promissory notes of which they seem utterly unaware themselves I tend to lose interest in what they have to say.
It was interesting to discover though that sedevacantist arguments seem to draw heavily on the Jesuit School of Salamanca: the same “Georgetown of the Middle Ages” that (arguably) brought us Jesuit economic anti-realism and waffliness on usury.
November 13, 2015 § 31 Comments
Pope Francis says:
“Before the problems of the church it is not useful to search for solutions in conservatism or fundamentalism, in the restoration of obsolete conduct and forms that no longer have the capacity of being significant culturally,” the pontiff said at one point during his remarks.
“Christian doctrine is not a closed system incapable of generating questions, doubts, interrogatives — but is alive, knows being unsettled, enlivened,” said the pope. “It has a face that is not rigid, it has a body that moves and grows, it has a soft flesh: it is called Jesus Christ.”
“The reform of the church then, and the church is semper reformanda … does not end in the umpteenth plan to change structures,” he continued. “It means instead grafting yourself to and rooting yourself in Christ, leaving yourself to be guided by the Spirit — so that all will be possible with genius and creativity.”
This of course can be interpreted in a way which is perfectly orthodox, depending upon the listener; but the overall thrust of Francis’ preaching is unmistakable. If I am interpreting him correctly, and I am pretty sure that I am, Pope Francis is telling us that intellectualism and hidebound rule-following is disconnected from real life and unmerciful; and that being a stickler for doctrine in the face of real pastoral situations in the peripheries is not walking with Jesus Christ.
Well, I have to say, he’s got my number. This blog is basically all about hidebound doctrinal rule-following, and justifying it intellectually. Probably the most prominent intellectualist doctrinal rule-following I am guilty of on this blog involves my condemnations of usury and torture. Close behind that is the way I am such a stickler for the just war doctrine, and how I don’t give people a break for voting for Republican candidates who stump for torture and unjust wars. I’ve been mean and judgmental toward poor beta men on the peripheries of culturally significant sexual life, by calling into question the practice of lying to get women to have sex with them. And I’ve even been known to criticize priests, on an intellectual technicality, for failing to follow the rules.
So maybe we should give unrepentant torture apologists, usury apologists, and unjust warmongerers tickets for Holy Communion, so they can get past the turnstiles and bouncers. If the Pope says that doctrine has to take a back seat to pastoral mercy, well, who am I to judge?
November 7, 2015 § 27 Comments
Dante did not put usurers and sodomites into the same circle of Hell by accident.
Reality always asserts itself, so nobody can get away with comprehensively ignoring reality all the time. When I say that all modern economic theories (including the ones you like, not just the ones you dislike) are anti-realist, I do not mean that they are postmodern. Postmodern theories look at the hopelessness of the positivist project – which is an anti-realist project, since it attempts to fully capture reality in formal representation, to reduce some demarcated part of reality to nothing but symbolic representation or a metaphysically neutral verification procedure – and pretend to give up on objective reality altogether. This becomes immediately rather ridiculous to sane and well adjusted onlookers, because directly and explicitly rejecting reality is something that it takes a peculiarly pointy-headed intellectual form of sociopathic stupidity to do.
Anti-realist economic theories (which is to say, all existing economic theories of which I am aware) therefore are not entirely disconnected from reality. There are true things which can be learned even from wrong theories: stopped clocks and all that. The sodomite’s understanding of reality is not comprehensively wrong in every respect: his understanding is a distorted and disordered view of reality, not a beaker of distilled and purified falsity. Every lie has to have some grounding in the truth in order to get any traction at all; although the more lies take hold, the less that is the case.
The thing that distinguishes anti-realist economic theories from a realist theory of economics, which as far as I know does not exist, is that anti-realist theories attempt in various critical places to reduce value and/or property to nothing but the projection of subjective human intentions, understandings, preferences, will, or desire. What you may notice is that this often involves abstracting together unlike things as if they were the same kind of thing: securitizing unreality, if you will, at least metaphorically speaking but sometimes literally. A realist perspective, in contrast, does not deny the importance of the subjective and psychological but recognizes that there is an irreducibly objective aspect at work too. (This is true in moral theology as well, where the morality of human action cannot be reduced to nothing but subjective intentions). As with all lies anti-realist economic systems would fall apart immediately if they were pure nothingness: if there were not some anchor in reality. So the thing to look for, if you really want to take the economic version of the ‘red pill’, are the places where metaphysically anti-realist finance marbles together the irreducibly real with the purely subjective into a thing it calls ‘cake’, and which it says we must all eat.
In sex, analogously, look at the manifest conflation of sodomy with intercourse. Look at the manifest conflation of the masculine with the feminine. Look at the more subtle conflation of ‘dating’ and serial fornication (as opposed to parallel fornication, which is Really Bad, at least for now) with marriage. Look at the conflation of self sacrifice (what a husband and father owes his family) with authority (the obedience the family owes to the father), and the labeling of these entirely unlike things ‘mutual submission’. Look at the conflation of committed self-sacrifice with fickle and fleeting emotions, both under the label ‘love’.
And continue looking from there, because the most important thing that waking up to the obvious examples shows is that we can be fooled by the obvious. Nominalist pseudo-categories conflating things rooted in reality with what human subjects want, intend, or expect are absolutely necessary for the lie to continue. This only works as long as most people carefully avoid noticing the introduction of anti-realist poison into their thoughts: as long as repentance is avoided at all costs.
It may help to think of accounting as the mathematics of property; of finance as the physics and engineering of property; of economics as the meteorology of property. In modern accounting, an “IOU” or “note receivable” can mean a claim against some actual pool of property, or it can mean the securitization through usury of nothing but a promise made by a borrower to personally repay. Said sightly differently an entry on the asset inventory of a balance sheet can mean a claim against some actual pool of property, or it can just be the counter-entry to a personal IOU. A note payable can mean the impairment of some actual property, or it can mean that a person is on the hook to come up with some amount of money — an IOU. The ‘fractional reserve’ is either cash and equivalent liquid property kept on hand that a property aggregator/securitizer (bank) can use to satisfy demand deposits under normal operating conditions, or it is a magical delegation of power by the sovereign which permits banks to create currency out of nothing but personal IOU’s through an accounting trick. You aren’t supposed to notice the difference; because as soon as you notice the difference, the jig is up.
The conflation of reality with unreality doesn’t just make folks think that unreal things are real though. It also makes folks think that real things are unreal. A husband and father’s authority is just tyranny, because people don’t feel like they should be morally obliged to obey flawed human beings (unless they agree with the command; that is, unless it isn’t a command). The wife’s commitment to satisfy the marriage debt is rape. Taxation is theft, because the sovereign’s role in the functioning of industries, markets, and property in general doesn’t exist. And sovereign currency is mere fiat not a security against actual valuable property, even though it actually does entitle the bearer to the settlement of tax liabilities which he incurs in carrying out public commerce in the sovereign’s marketplaces. (More on the backward troglodyte financially ignorant medieval perspective on sovereign marketplaces can be explored here).
Once the ‘red pill’ hits you, though, you’ve got a choice.
You can plant your triumphant flag right there at the starting line, next to the naked emperor and the madmen wandering about in the desolation, and enjoy the delightful company of fellow sociopaths.
Or you can start looking for the more subtle ways in which unreality has been mixed into your reality. You can become a digger.
 and : The ‘fiat currency isn’t real’ crowd, it seems to me, is rather too credulous about the willingness of private bankers to accept payment in literally meaningless bits of paper or numbers in computers which represent nothing but themselves, on nothing but the sovereign’s say so. I’ve never known a banker, of all people, to hand out actually valuable property in exchange for something literally worthless. That is the domain of timeshare purchasers and other victims of hucksters. Bankers may often be evil, but they are not stupid.
September 22, 2015 § 10 Comments
The way to figure out whether a contract for gain is usurious or not is to look for contract terms which treat a personal guarantee as if it were property. It is morally licit for an owner to profit from the use of his property, or of property against which he has claims. But a borrower’s promise to repay principal which has been consumed is not property. A mere promise of apples is not itself actually apples. And the historical fact that there used to exist some apples which were consumed or money which was spent is not — the historical fact is not — actual apples or money.
If a mere promise to repay in kind actually were property it could be alienated from the borrower and repossessed by the lender, in case the borrower stopped making payments. Charging rent or levying profits from a mere promise to repay – charging “rent” for “property” which does not exist independent of any particular person – is usury. The fact that what is owed under a mutuum cannot be recovered from reality, but must by definition be recovered from a person, demonstrates that it does not exist in the pertinent sense required to justify rents or profits.
I’ve said in a number of places (because it is true) that moral doctrine condemning usury does not depend on any broader economic theory or theory of just pricing, and is in fact compatible with many such theories. On the other hand it is true that usurers would often take advantage of price ambiguities in order to charge what the medievals called “hidden usury”. It is from this that the myth of interdependence between usury doctrine and medieval just price theory arises. As seems to occur in many areas of moral theology, if people weren’t trying to get a pass on doing moral wrong on a technicality the issue would never arise in the first place.
Suppose I lend you 100 apples and agree to be repaid in two months time. But instead of asking for repayment in apples, I ask for you to personally guarantee (ahem) repayment of 100 oranges. Because oranges are worth more than apples when we ink our contract – and this is where just pricing may come into play – this contract involves “hidden usury”.
That this is “hidden usury” is clear once we observe that the terms call for contractual profit to the lender in conjunction with a personal guarantee by the borrower. Personally guaranteed loans (mutuum loans) are only ever morally licit as acts of charity or friendship. They are not morally licit as profit-producing investments, even when the lender might have hypothetically made a profit in some other way had he, counterfactually, chosen to do something different.
This does not in any way impair legitimate investment for gain. (It also doesn’t give a free moral pass to every contract which is not, strictly speaking, usurious). The way to avoid entering into usurious contracts (including those involving ‘hidden usury’) is to avoid commercial contract terms calling for personal guarantees of repayment. The only reason ‘just pricing’ comes into play at all is because the parties are attempting to craft a de-facto usurious contract while avoiding usury on a technicality — on the ambiguity of the relative prices of apples and oranges. This would not be an issue at all if the contracts were nonrecourse, that is, if the contract were not a form of mutuum. But mutuum agreements are never morally licit for gain in the first place. The notion that they are or should be is rooted, as with many errors of the modern age, in metaphysical anti-realism.
I’ll leave you with this quote from St. Francis Xavier, giving counsel to confessors (emphasis mine):
‘When in the sacred tribunal of penance you have heard all that your penitents have prepared themselves to confess of their sins, do not at once think that all is done, and that you have no further duty to discharge. You must go on further to inquire, and by means of questions to rake out the faults which ought to be known and to be remedied, but which escape the penitents themselves on account of their ignorance.
Ask them what profits they make, how, and whence? what is the system that they follow in barter, in loans, and in the whole matter of security for contracts?
You will generally find that everything is defiled with usurious contracts, …’
June 11, 2015 § 52 Comments
Lots of folks have suggested that fiat currencies and fractional reserve banking create fake economic value out of nothing and are therefore, if not usury strictly speaking, somewhere in the moral vicinity of usury. So far when this has come up in discussion it has turned out that critics of both don’t really understand either. The former are options issued by the government which allow the bearer to settle tax liabilities; the ‘created money’ in the latter are options against the balance sheets of banks, denominated in the former. There is nothing usurious going on and no creation of fake wealth except to the extent that the balance sheets of banks carry usurious (as opposed to nonrecourse) loans. This should be at least mildly familiar territory to anyone who has read and understood the Usury FAQ.
But there is one kind of government activity that does bear close resemblance to usury: the levying of property taxes.
Here is a (slightly modified) comment I left on Kristor’s Orthosphere post (which itself is less about property tax than it is a preamble to another subject, the beginning of what I hope will be a series of posts well worth following):
Another prudential reason to oppose property taxes is that they encourage treating all property as liquid and fungible, discouraging ownership of anything illiquid and making ownership of illiquid things into something less than real ownership.
Property taxes are like the sovereign’s version of usury: the sovereign demands a fixed percentage repeatedly every tax period until the owner is destitute, independent of the owner’s actual fortunes during the period. The sovereign qua publican doesn’t care about the owner’s fortunes a bit: he just demands his pound of flesh every year.
Transaction taxes (sales, income, VAT, etc) on the other hand are one-time levies directly tied to the activities and fortunes of the person taxed — including property owners, because property owners who work, invest, and buy goods and services in the inevitable struggle against entropy pay transaction taxes when they do those things.
Property tax in contrast is not merely a form of economic double-jeopardy: it is a form of economic infinite-jeopardy. If property were a bucket of water, transaction taxes represent taking a scoop of water every time the bucket changes hands in public commerce. Property taxes represent a hole in the bottom of the bucket, a limitless demand against property owners, in effect making the sovereign into the property owner and the notional “owners” into rent-paying tenants. (Some folks might like it that way — but they ought to be forthright about the fact that their preferred social arrangement involves de-facto abolishment of private property).
None of this excuses the property owner from his duty to steward his property well for the sake of the common good and those more directly in his care, of course — just as the sovereign’s authority does not excuse him from his duty to rule over his subjects well for the sake of the common good and those directly subject to him.
But it seems to me that deposing kings and stripping owners of all of their property (even when you rent it back to them) are serious matters requiring serious reasons, not to be undertaken in the ordinary course of things. The sovereign’s title to already-owned private property (as distinct from taking a share in public transactions) is like the poor man’s title to bread. I don’t think it is surprising that folks who are fond of democracy often tend to be fond of property taxes: they both reflect inherently brittle and cavalier modern attitudes about authority, where kingship and ownership are both forms of authority.