Pay-day loans - the scandal of silence

“Lord, who may live on your holy hill?” asks David in Psalm 15. Answer, the one whose walk is blameless, who does what is righteous and, tucked away at the bottom, “He who lends his money without usury” (v 5, NIV).

That little word ‘neshek’ is one that ought to be written large over our Western culture. Indeed it may turn out to be its economic epitaph.

Simply, it means ‘charging interest’, which is of course at the basis of modern capitalism. In Mere Christianity, C S Lewis pointed out that our economies were therefore based on something which, until the end of the medieval period, all Christian traditions had taken to be a sin. Whilst admitting that he was no economist, he said it would nevertheless be remiss of him not to make this observation.

Personally, I think we now know how right he was. An economy driven by interest charges is fatally flawed. Furthermore, it seems to me Jesus also had this ‘traditional’ take on economics.

In the parable of the talents, the master says to the man who accuses him of reaping where he has not sown, “then you should have put my money on deposit with the trapezites” — according to the Greek English Lexicon of the New Testament a broker or banker who ‘exchanges money for a fee, and pays interest on deposits’. In other words, he should have lent to someone as grasping as he makes his master out to be.

Some still want to argue that the Bible is not opposing ‘sensible’ or ‘business’ loans. Personally I doubt that, but whatever one’s view there is surely something utterly scandalous about the increasing proliferation of so-called ‘pay day loans’. Our television screens are full of their adverts, and that alone surely indicates a booming business. With a typical repayment rate of over 4000% (that’s right, four thousand per cent) they surely qualify by anyone’s standards as ‘excessive’.

Furthermore, it is not just the desperately poor or the economically ignorant who are falling victim to what is basically a scam. In today’s Daily Telegraph, a reporter writes of her experiences with just such a loan, pointing out that with the so-called ‘credit crunch’, banks and other lenders are being urged to be cautious in the loans they offer.

Her conclusions are hard to dispute:

“Legal loan sharks have simply stepped in to the breach, devoid of proper regulation that might provide a cap on lending, and now, worst of all, this Government is actually cosying up to them. As was revealed in The Daily Telegraph a fortnight ago, Wonga executives attended the recent Conservative Party conference and paid £1,250 a head for face-to-face meetings with ministers from the Treasury and the Department for Business.

Instead of financial lessons about loans being learnt, it feels as if the normalisation of debt is close to being complete. You never hear anybody talk about “saving up” any more, unless it’s for a house, and even then that process is only in place so that you can take out a whopping great loan. Entire lives and lifestyles are still built on credit, and it is seen as uncontroversial that one of the Prime Minister’s closest employees goes to work for a company that has been investigated by the OFT.”

This makes me angry. I hope it makes you angry too. Every time I see a ‘Wonga’ advert, I want to throw up. And every day there seem to be more such companies. Yet the Church, along with society as a whole, seems to be strangely muted in response.

This is not a case of wanting the Church to leap on a crusading bandwagon. Nor is it the traditional call for the Church to attack the profit motive. It is about the exploitation of the poor and indeed the spread of poverty. If the directors of these payday loan companies are getting rich, we know exactly at whose expense they are doing so — the poor sap who thought they could pay for that car repair or that little treat for the kids by taking out just a little extra.

In my book, payday loan companies and heroin dealers are not that different. They both relying on getting the needy client hooked and then milking them for all they can.

In God’s book it is already clear where they stand — and it is not on his holy hill.

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Children died, the days grew cold ...

Afficionados of Larry Norman will know that the line from I wish we’d all been ready continues, “A piece of bread would buy a bag of gold.” The reference is to the days after the supposed ‘Rapture’: “The Son has come, and you’ve been left behind,” is the ‘punch-line’ to the song. The idea is that in the days before the Tribulation (with a capital ‘T’) the condition of the world would become worse and worse, until the Christians were finally removed, leaving the planet to its own, or rather Satan’s, devices.

This is a concept with which I have very little theological sympathy. I think that the notion of the Rapture is based on a misreading of a Scriptural image (specifically, 1 Thess 3:17). In that sense, I am a classic amillennialist. But, perhaps controversially, I am not one of those who believes that Christ could return ‘at any moment’. It seems to me that the argument of 2 Thess 2:1-11 (“that day will not come until the rebellion occurs and the man of lawlessness is revealed”, v3) depends on their being certain discernible events taking place before the Second Coming of our Lord.

Less controversially (maybe), it also seems clear to me in the Scripture that Christians will not be preserved from the world’s sufferings before the End. The bad news, from that point of view, is that we will have to stick around.

Back in the realms of controversy, however, I am entirely unconvinced by the Post-millennial scenario expressed in one of my favourite Christmas songs, “It can upon a midnight clear,” with its reference to the “age of gold” which will come round “with the ever circling years.” It is a wonderful idea with a long pedigree, that the Church will prove triumphant and, through the gospel, bring an age of peace and prosperity, but again I do not believe it fits the Scriptural evidence. Rather, the evidence points (I am persuaded) to increasing difficulties and a final outbreak of rebellious evil.

At the same time, I am aware that previous generations which thought they were living in the end ‘end times’ have all been wrong, whether they were the pessimists of medieval millenarianism or the optimists of the nineteenth century Student Volunteer Movement with its slogan of “the evangelization of the world in this generation.” History teaches us caution. Yet I cannot help feeling a certain resonance between Norman’s angst and what appears to be coming towards us just over the horizon.

The immediate cause of these musings is an article I came across by a gold analyst (here as a pdf), warning of the potential danger of hyperinflation. I am not an economist, and am therefore not in a position to judge his prescience, but I know a Christian who is, and he is making exactly the same prediction for similar reasons, namely that far from being almost out of the recession caused by the credit crunch we are about to have our ‘swine ’flu’ moment as a second wave of problems hits us in the form of runaway inflation.

The heart of it is that the First and Second worlds have accumulated debts which make Third world debt a thing of, if not indifference, certainly insignificance in terms of the global economy. The Christian’s view is that the measures taken by Western governments have done the trick and saved the economy from simply going ‘pop’. However, they have done it because governments have an advantage with regard to debt which is not possessed by the ordinary citizen and it is called ‘the printing press’. That is to say, governments can create money. The posh name for this, as most people know, is quantitative easing. The Analyst and the Christian both agree that the way governments have been buying their own bonds has averted the immediate disaster. But they both also agree that this still has to be ‘paid’ for.

Who, then, will pay? The answer (because there is no-one else) is that we will. In the immediate short-term it may be by the traditional method of taxation, for the other thing governments can do which ordinary citizens cannot is to raise revenue from ordinary citizens. In the long term, however, we will pay by massive (perhaps hyper) inflation. If multiple trillions of dollars (that is $N,000,000,000,000) are ‘owed’ —and they are —then somehow the debt has to be reduced. The good news is that you can do this by printing money. The bad news is that printing money is inflationary. The very bad news is that an awful lot of money is going to have to be printed. The good news —maybe, if I’ve understood this correctly —is that when the £20 note in your pocket is actually a £20,000 note, that debt mountain has just had a useful number of zeros knocked off its effective ‘value’.

All this, however, brings me to two questions —or rather one question with two aspects, and it is this: are we, the Christian church, ready? Readers will not be surprised to hear that I think we are not. On the one hand, we seem to be saying nothing, and to have nothing to say, about the current economic situation, beyond an easy criticism of ‘the greed of the bankers’. Yet we could just as easily criticize ‘the greed of the man in the street’, for all that debt, whether amassed by governments or corporations, is allowing us all to live beyond our means, right down to the level of ‘schools and hospitals’ so beloved by our political leaders.

As the Analyst points out, we have already had one scary foretaste of what the future will hold with the spike in basic food prices, especially rice, that occurred in 2008. The difference next time is that whereas previously the impact of such ‘spikes’ was absorbed by people in the Far East doing without, next time they will have the economic clout to compete, and the pinch will be felt here. The indebtedness of our societies puts us in an increasingly poor position (in every sense) as global economic competitors, and the balance of economic power is undoubtedly shifting to China and India.

The Western church, at least, seems to have nothing to say, just when a ‘prophetic’ voice might actually come in handy. We could, for example, be denouncing First and Second world debt, or warning about the credit-card culture, but we are not. Instead, we are paralysed by the headlights.

But the Church also seems unready for the spiritual challenges this implies and entails, for (as history again shows) economic hard times bring with them spiritual risk. This may not be the time before the End Times, but it certainly provides the opportunity for spiritual forces which have been at work throughout history to manifest themselves in ways which will be simultaneously both deeply attractive to the mass of humanity and deeply inimical to God’s people.

I am constantly reminded of the verses from Revelation 13 which express, I believe, not so much a prediction as a recurring theme of history: “He [that is the second beast who is the ‘false prophet’, 19:20] also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.”

Who, in 2009, could imagine the free countries of the West succumbing to a system of economic dictatorship? Yet who in 1950s England could imagine a London bus ticket costing over a pound? And who, in early Weimar Germany, would have imagined Christians would be unsure how to respond to a man who offered them economic security and a glorious future at the price of complete obedience?

Revd John P Richardson
6 October 2009

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Karl Marx, prophecy and the wonderful power of the urban legend

Today in my meagre e-mail I received not one but two 'urban legend' posts - you know, like the one about the Vanishing Hitchhiker who, just before he disappears, says "Jesus is coming soon."

One I won't bother with, but the other was this great quote "ascribed to Karl Marx":

“Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism.” — Karl Marx, 1867, Das Kapital

Bang on - except that it just didn't 'smell' right. So I Googled it, and came up with this comment on Faux Marx (via another website):

It's been fifteen years since I read Das Kapital, and I'm not sure how much I retained even when I was young and hale. But it immediately set off my fake alarms. First, because it doesn't sound remotely like anything I remember Marx saying--his core thesis was that falling wages would immiserate the working class, not that they'd be done in by their overdrafts. Second, because I do remember Marx spending huge chunks of Das Kapital grousing about the inadequacy of the housing supply for the working class, in very tedious detail. (I now appreciate, as I didn't then, how valuable this is as a historic record. But it's quite something to wade through.) And third, because no one in 1870 imagined the working class having access to bank credit.

Read the rest, and you'll see it's highly unlikely Marx said anything like what was "ascribed" to him.

It would be fascinating to know who makes these things up. But at least we know who passes them on. That would be the rest of us!

What Marx apparently did say, quoted chapter and verse in a comment on the other website, is this:

"The credit system, which has its focal point in the allegedly national banks and the big money-lenders and usurers that surround them, is one enormous centralization and gives this class of parasites a fabulous power not only to decimate the industrial capitalists periodically but also to interfere in actual production in the most dangerous manner - and this crew know nothing of production and have nothing at all to do with it." - Marx, Capital, vol. 3, chap. 33

Now that's more like it!

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