I find usury to be one of the most pernicious, corrosive, and abhorrent tolerated behaviors in modern society. Usury was a sin until the power of debt overrode the moral authority of those who originally condemned it (https://aeon.co/essays/how-did-usury-stop-being-a-sin-and-be...).
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Usury, if we define it as lending at an exorbitant interest, is not in fact tolerated. We have usury laws which criminalize interest above a certain rate. That's why these crooks are targeting Kenya. The article cites annualized rates as high as 180%, which would be criminal lending in my neck of the woods, that being Canada.
We do tolerate fairly high interest rates. A 25% rate on a credit card might be usury to you, but not doesn't meet the legal definition, if the usury law where you live happens to be set at 60%.
It's a sin for good reason, and the secular case against usury is just as strong. It's among the worst manifestations of rent-seeking, economically worthless behavior for anyone but the usurer.
This kind of lending is economic slavery. Why should a credit card company get a 15-30% return on their investment each year? How about 400%? You can use whatever clinical microeconomic language you want about risk and investment principles and rational actors and etc etc, but people now depend on credit for their basic needs. Then lenders can petition the government to garnish borrower's wages and gain eternal, guaranteed payment often on just interest. The borrower works and pays forever without even reducing the principal, and butts sit in offices redistributing wealth to themselves without adding any value to society.
It should be illegal to charge that kind of interest "investing" in the basic needs of people. The absurd prices of basic necessities in America now demand mortgages, car loans, student loans, medical debt, and credit card debt just to squeak by as a normal middle class person. Debt wasn't the solution to the price problem, but rather the cause.
> Why should a credit card company get a 15-30% return on their investment each year?
That is simply not correct. Credit card companies get much, much more return on their investment. They get free money from collecting merchant fees from every transaction, and from credit card annual fees.
If we regard the "investment" as the marginal cost of setting up yet another new merchant or credit card user, the return rate is just ridiculous.
You issue a cheap, little plastic card to someone, and get $100 per year from them, plus several percent on everything they buy. And that's if they always pay their bills on time.
(They give you that $100 willingly because out of that several percent take, you kick something back to them, which ends up adding up to more than $100 over a year.)
- Microfinance programs that grant small, low-interest loans aren't sustainable. Administering those programs (especially in developing countries) carries massive overhead that isn't offset by revenue from interest.
- Furthermore, there isn't strong evidence that low-interest loans actually improve their recipients' well-being on net (considering the harm that indebtedness can cause).
- Evidence (from randomly-controlled trials) shows that direct cash transfers are effective in improving recipients' well-being on a number of metrics, and that recipients do not spend them on "sin goods" like alcohol or tobacco[0].
It's sustainable because the amount of money that's life changing to people in the poorer parts of the world are a moderate purchase to people in the richer parts. Additionally the benefits last way longer than just the initial purchases made with the money, by giving it directly to people instead of giving them things it's injecting cash into the local economy where it circulates multiple times going through multiple people's hands. There's studies showing this kind of direct giving and the economic activity it generates is effective at improving people's lives. The goal of GiveDirectly is charitable after all so they're not trying to extract value from the population.
> And who wants free money?
Are you trying to say people won't accept free money?
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https://www.givedirectly.org/