On Twitter Hurlock took a swipe at distributism. I’m not going talk too much on distributism. I heavily sympathize with it but do not think it is something that would work out. I also find that many distributists simply use distributism to try to disguise their socialism. I must admit that the romantic side of me really likes the idea of repersonalizing production and property, however impractical that might be.
I came not to talk about distrbutism though, but rather usury. At some point in that discussion Hurlock and SB got onto the topic of interest and usury. Essentially, Hurlock thinks that interest should be a free-for-all and SB wants limits on interest. About two years ago, I would have been heavily in Hurlock’s camp; I remember defending payday loan outfits a number of times. Yet now, not so much. Now I fully support a ban on usury.
The problem with discussions of usury is that, as it seems to be in this particular exchange, the focus is almost always on the interest rates being charged. SB focuses on a 400% rate, while someone else implied usury is interest over 10% and should be banned. It’s not the particular rates that are the problem and rates should not be the focus. (Not to mention a focus on the rates is rather arbitrary: ex: why 10%, not 9.5%?)
Zippy has written a lot on usury over the last half-year or so and usury has nothing to do with particular interest rates. A loan is usurious if it is for profitable interest and is full-recourse. To break it down to a more practical level, any loan is usurious if it is for expenditure on consumptive activities (no matter the interest rate), while it is non-usurious if it being spent on capital and real property and that capital is the only recourse for the loaner should the debtor default.
It is a fact that some people are less intelligent and neoreactionaries very much accept this fact. Compound interest is not something that a significant portion of the population will be able to comprehend and even among those who do comprehend it, a significant portion of them will have too low a future-time orientation to make rational decisions. Compound interest makes sense to people like Hurlock, but I’ve lived among the working classes most of my life, and I’ve seen the hardships usury can bring to the lower classes. Now it is possible to take the position of screw them, debtor slaves are natural slaves, but I don’t think the mass debt slavery is healthy for society.
To illustrate, let’s look to the biggest example of modern usury, one that tend to get the attention of the reactosphere: student loans. Unlike most forms of usury, this one is primarily impacting the right half of the bell curve, so its not just the stupids that are being taken for the ride. Thanks to the ease of obtaining this particular form of usury we have a situation of massive amounts of young people going into debt slavery for near worthless pieces of paper, then squandering their potential in underemployment to get of it.
Do these people deserve their debt slavery? Yes, they did take out a loan, then waste it on worthless degrees, and they did promise to pay it back. They fully deserve their debt slavery.
But this is not the right question to ask. The better question is: is it healthy for society to have a large portion of the most intelligent people of an entire generation permanently in hock for a worthless degree? The obvious answer is no, this is a disaster for society. The entire corrupt edifice of the modern college system is built on and enabled by usury. Remove the usury and the entire corrupt structure falls.
We can now look at the national level. The federal government has taken out massive amounts of usurious loans*, enough that 7% of the US budget is devoted to interest payments. Usurious loans (along with inflation) are what keeps the decaying government going. Usurious loans are what allow the uninterrupted growth of the bureaucracy and they are what allow the corruption of the people by said bureaucracy. The corruption of the USG we so hate depends on usury.
If we look back to what constitutes usury, debt for consumption is usurious, while debt for productive purposes is (usually) non-usurious (as long as it is not full-recourse). If we banned usury, if would not hurt the economy. Productive activities would still be able to get themselves funded, while consumptive ones would not. This would be in the best interests of long-term, natural economic growth. Allowing usury draws potentially useful capital away from production towards consumption.
Keynesian nonsense is based on usury. The endless cycle of consumption to keep those GDP numbers high is funded by usury. Without usury, keyensianism would die. There would be no stimulus because there would be no way to fund stimulus.
Usury drives the degenerative ratchet. Cut away to the heart of any degeneracy and inflation and usury will almost always be funding it.
Every reactionary should oppose usury (in its proper sense).
* Technically, bonds are sold to ‘investors’ by the government as debt instruments and blablabla. But throw away all the extra garbage, and essentially a bond is a usurious loan to the United States government given by ‘investors’.