From: Mike Lorrey (mlorrey@datamann.com)
Date: Fri Aug 24 2001 - 16:23:07 MDT
Charlie Stross wrote:
>
> On Fri, Aug 24, 2001 at 11:06:54AM -0400, Mike Lorrey wrote:
> >
> > And as I said, the 19% rate is a disincentive to begin with. Giving a
> > loan to a person who has just lost their job is, as I said earlier, a
> > 'really really dumb idea'. If Jamaica decides to take out such loans, it
> > is merely demonstrating its own stupidity.
>
> Firstly, you're personalizing a nation of millions. Don't do that. For
> all you know, the average guy on the streets of Kingston is just as
> opposed to the taking out of such loans as you are. (Do I need to read
> you the standard libertarian "the state is not the same as the sum of
> its citizens" speech at this point?)
Depends on what context you want to give it.
I think you are taking my point wrong, though. If you know that someone
is going to lose their job (i.e. lose their case in the WTO on
protectionism of banana exports), its a really really dumb idea to lend
them money, especially money to be spent on expanding banana
cultivation.
The 19% rate is simply a disinscentive against borrowing for such a dumb
purpose. It's saying "We don't want to be seen as discriminating against
you by refusing to lend to you, but if you are going to be dumb enough
to borrow money for this purpose, you are going to pay for it"
>
> Secondly, there may well be circumstances which force current politicians
> there to take out such loans, even against their better judgement. Such
> as, say, the need to service interest payments on previous loans taken
> out by previous governments. (In other words, it's elephants all the
> way down -- at least, to the point where nobody now alive deserves to
> be saddled with the blame for a bad decision.) Yes, taking these loans
> is a dumb idea, in the absence of other conditions. For all we know,
> there may well be conditions that make _not_ taking the loans an even
> worse option in the short term.
Whether it's turtles all the way down or not is irrelevant. Keep in mind
I'm not too sympathetic toward the IMF either, but at least they are
starting to get their act together. There are plenty of measures that a
country like Jamaica can take to pull itself out of the hole by the
bootstraps. For example, they can drastically revise their banking and
taxation laws to encourage an influx of deposits from overseas
investors, and structure their social welfare programs to encourage
people to obtain long term birth controls like Norplant.
I understand completely that being in a situation where you have a large
percent of the population who are unskilled, unemployable, and unwilling
to fix that, you have a major mess on your hands, one that requires
either war, famine, epidemic, or other natural disaster to fix.
The purpose of the 19% loan is to send a price signal to the rulers that
they can no longer fix today's problems by borrowing from the future.
>
> Thirdly -- and this is the most important point -- conditions attached to
> the loans are being used as instruments of state power. That is the
> real bad problem here; the recipient of the loan isn't free to use it
> productively.
No, they are not free to spend it on social welfare programs. There is
nothing wrong with a person to attach stipulations on how THEIR money is
going to be used by those they lend it to. A bank would get mighty
pissed if I took out an auto loan and used the money on a vacation to
Fiji.
>
> If I hold a metaphorical gun to your head and say "here's ten thousand
> dollars -- you must repay me at 19% interest within ten years or come
> back for another loan to service the interest payments, and you're not
> only allowed but required to spend this loan on heroin," you wouldn't
> thank me, would you? Seems to me that this, in human terms, is pretty
> much exactly what the IMF is doing.
I don't. I see it as "You're not allowed to use this money on heroin, or
food stamps, but only on buying a car so you can get your ass to work
each day."
This archive was generated by hypermail 2.1.5 : Sat Nov 02 2002 - 08:10:03 MST