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Hi, sorry I took so long to reply.
Sometimes I shy away from controversy, and I'm often best-suited to a slow pace of correspondence anyhow, especially when someone prompts me to think hard about something… :-)
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I absolutely and totally agree that gifts are better than loans, most of the time, in most ways. Gifting feels MUCH better to me as a giver, anyway, other things being equal. And an outright gift can be more uplifting and inspiring and expansiveness-promoting for a receiver, too, I know from personal experience.
Yes, same here.
However there is the old adage that people tend to place more value on–and treat more respectifully– what they exchange value for, rather than what they get for free, and “interest” is simply an exchange of value for the value of the money borrowed. That “value” is defined as the fact that the use of that money is “lost” to the giver for the period of the loan. So in some cases it might actually help the recipient use the money more wisely, knowing it has to be paid back, and paid FOR (through interest.)
I suppose that can be true in some cases - reminds me a little of how much more motivated to focus I was when I was in a class I paid for, rather than trying to study the topic on my own for free.
A loan is just as much a “purchase” as anything else that one would pay for. Trouble is, impossible to really identify these folks (who would value the loan more if needing to repay) ahead of time. So perhaps paying back loan, and perhaps adding interest to principal payback, could be OPTIONS for the recipient.
Sounds good to me. :-)
Also, no one is FORCING people to take these gifts or loans, so I don't regard them as victims of anything they voluntarily agree to, such as payback or interest.
Yes, no specific person is forcing them. (Well, most likely, no specific person - although I've heard of cases in the USA where some people financially take advantage of relatives who they threaten to kick out of the house if their relatives don't comply with taking out loans or credit, and/or surrendering money they've earned; I wouldn't be too surprised if that sort of thing is a possibility in poor countries as well).
However, even if no specific person is forcing someone to agree to a loan - people's circumstances can be so bad that it pressures them into accepting a high interest loan without really wanting it, since as lousy an option as it frequently is, it might actually be better than the alternatives.
Circumstantial pressure at least isn't duress imposed by the lenders, but, it still might be fair to call it a form of duress, and also fair to say that the obligation the recipient took on was therefore taken on under duress/not completely willingly - since they likely would not have taken on that obligation if they weren't pressured into it by their bad circumstances.
I don't think anyone should take advantage of people's bad circumstances and lack of good options - especially not an organization like Kiva which is supposed to be a charity, and which could surely obtain the financial support necessary to provide better options.
I think no one is ”forced to spend time, energy, and money paying back a loan.” (Your words, my emphasis.) In my view, force is the threat of (or use of) violence or imprisonment or fine, and doesn't pertain to obligations voluntarily assumed, by choice. It's crucially important to make that distinction, and not toss that word around lightly. Obligations are not force.
Well, I suppose that's true for as long as the person really wants to go along with the obligation. But as soon as the person no longer wants the obligation, but can't get out of it, I think it's forced.
For instance, if someone agrees to have sex with someone, but then suddenly decides it was a bad idea and changes their mind, but their partner forces them because they previously agreed to it, is that not rape?
And, even in first world countries, many people do end up coerced into complying with their unwanted obligations by threats (and impositions) of various fines or fees, lowered credit scores, “universal default” (where when you're late on a payment to one creditor, other creditors who you weren't even late paying jack up your interest rates), and so forth.
(Though fortunately we at least don't have anything like debtor's prison in America - except when it comes to child support, which is possibly the worst of all types of debt we have in this country, given how legally sometimes up to 65% of someone's wages can be garnished for child support, and when taxes are added to that, it's hard to see how some people who have to pay child support can even survive. Oh, and that reminds me, people can also be jailed for “tax evasion”, and taxes are definitely not an optional obligation).
However, on the other hand, I suppose some people maybe don't really mind being threatened with such coercion, and many are so eager to discharge their obligations regardless of the threats (and would probably discharge them even in the absence of such threats), that coercion isn't their sole motivation for paying. (Originally, I was happy to pay my credit cards before they mistreated me by robbing me of hundreds of dollars in late and over-the-limit fees and jacking up my interest rates).
I guess if a person says to someone, “you're going to jail if you can't pay your child support”, but the person threatened really wants to support their child, there's an argument to be made that it's not precisely a forced obligation, despite the presence of threatened coercion.
“Slave for months to pay back…..” implies slavery, and is not literally true; slavery is a nonvoluntary relationship.
Actually, I think maybe there is an element of willing compliance in any form of slavery. I doubt any form of slavery could exist if all slaves preferred to choose death, jail, or whatever other negative consequences would arise from refusing to be a slave, instead of thinking to themselves, “Well, I guess I don't have it so bad, so I will just go along with being a slave and avoid the horrible consequences of not going along with it that I'm threatened with.”
Sure, a person can choose to default on a loan, but the consequences of that might be so adverse that one is pressured into choosing to continue to work to pay it. With a more extreme and blatant form of slavery, a person could choose to run away, but they might be so afraid of being recaptured and flogged, they might choose to stay and work.
The main differences between the above two hypothetical examples seem to me to be in how severe the consequences of noncompliance are, and how burdensome the obligations supposedly consented to are. And, the duress which caused the person to accept the obligation in each case comes from different sources - probably impoverished circumstances in the first case, and probably a more direct form of duress, like being captured and physically threatened, in the latter case.
I can understand not wanting to go as far as calling a seemingly willingly-accepted obligation (the only duress being circumstantial; and which has comparatively not nearly as bad consequences for noncompliance) slavery, since the worst forms of slavery are truly brutal. And, indeed, many people do accept obligations of debt truly willingly (such as parents who pay child support and would probably do so even if they weren't threatened with jail, etc.).
However, in essence, I think both unwanted indebtedness and slavery boil down to this:
A person consents to an obligation of servitude which they otherwise would not have consented to if not for being under some form of duress, and they can't get out of it unless they're willing to suffer negative consequences enforced by those to whom they consented to be obligated to, and possibly enforced by others as well, others who have nothing to do with the original obligation.
(Examples of negative consequences enforced by others who have nothing to do wtih the original obligation: “universal default”, already described above, where when you're late on a payment to one creditor, you're also punished by other creditors who you weren't even late paying, who jack up your interest rates. Or, being discriminated against and unable to rent an apartment or being denied a job by people totally unconnected to the original debt because one's credit report is ruined.
None of which, fortunately, is quite as bad as “fugitive slave laws”. However, it's still bad, and very unfair, because there are many perfectly innocent reasons why a person might be late paying a bill, and have a ruined credit report, and they shouldn't be punished for having the misfortune of becoming injured, sick, or being fired from their job because their boss hates them for no good reason, or trying to financially rescue a relative who would otherwise be hauled off to jail for being too poor to be able to afford their child support, etc.)
So, to sum it all up, I do see unwanted indebtedness as a milder, gentler form of slavery. Perhaps indentured servitude is a better term?
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That said, it would be nice if recipients had options of not paying back principal, or not paying interest.
Agreed. :-)
What level of interest is “too high?” That's a highly complex economic/political question, getting into free-choice matters, so I just offer the thought that this question/issue might invite more than a subjective emotional perception.
Yes, agreed. Fortunately, I don't think there's anything subjective about the fact that recipients who don't have to pay the money back or pay interest will be left with more of their own hard-earned profits to use to keep growing their business.
Of course, we are all entitled to those subjective emotional perceptions, and I don't like 21% either!!!!!
:-) Well, I'm at least glad that many Kiva recipients probably have a better interest rate than I do with Providian and Capital One. :-)
It's very true that the amount many people would donate is so small they don't NEED the payback of principal, nor the interest. As I have been saying, it would be GREAT if some folks opted for direct gifts.
Yes.
OTOH some donors might want to promote accountability in the recipients by asking for payback and perhaps also interest.
The trouble is, paying back a loan doesn't prove that the recipient used the money for honest purposes (such as growing their business) - it just proves they were able to obtain the money to pay back the loan _some_how. However, the person could have done _any_thing to get the money to pay back the loan, like mugged an old lady. :-)
I have gotten over my head in credit card debt, too,
Sorry to hear that. :-(
and I do believe our culture/society has a pathological attitude toward spending/debt, but I don't blame the companies involved.
I do. I think sociopathic usurers who think it's OK to mercilessly take advantage of people have a much more pathological attitude than anyone who was naive, innocent, and/or desperate enough to be misled into getting credit in the first place, or who is simply ignorant regarding finances, etc.
They are just doing what the society is into.
I certainly hope members of our society are in general in fact not that loathsomely opportunistic, willing to take advantage of and hurt anyone just to make a buck.
And again, I don't give my power away by blaming them for the choices I made.
Yep, same here. I don't blame them for my bad choices; I'm blaming them for the legalized criminal choices _they_ made, the legalized usury they've inflicted on me after my bad choice of becoming involved with them in the first place.
That said, I wish our young folks were better educated about debt, not just into casual Plastic-Money “with no thought for the morrow.”
Yes, if someone had warned me, I might be much better off now.
I just love it when someone evokes me into setting forth my ideas, so I am delighted you experienced my questions that way!!!!!!!!!!!!!!!!
:-) Thanks again - you inspired _this_ whole message too. :-)
ALSO, I am SURE I have heard of micro-donation organizations that don't necessarily require repayments or interest, especially there is a woman-to-woman one somewhere out there, but I can't remember any specifics now.
Interesting, and nice to hear. I'll have to research this further sometime.
I will be on the alert, as I really do believe all such organizations should know about one another and should synergize.
Yes, an excellent idea. :-)
Thanks for evoking THESE thoughts from the peanut gallery.
You're welcome, my pleasure. :-)
I so admire you for stepping up and putting your energy where your mouth is, and actually creating something.
Thanks. :-)
My kibbitzing is not meant in any way to diminish your achievement.
Understood. :-)
Anyone can come along later and criticize; not everyone has the courage and dedication to create.
Well, I think criticism, even harshly-presented criticism, can be some of the most valuable feedback a person can receive, much better than meaningless flattery, or silence, etc., so, I definitely appreciate criticism. :-)
I acknowledge and appreciate the difference. And I hope my thoughts prove useful for your endeavor.
Yes, I think they will. :-) Thank you very much. :-)
Best wishes,
Apollia
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