Moral Markets and Predatory Lending

Citizen Wealth Financial Justice Ideas and Issues
 'What was lost when Newcastle United’s historic St James’ Park stadium was renamed after its sponsor?' Photograph: Stu Forster/Getty Images
‘What was lost when Newcastle United’s historic St James’ Park stadium was renamed after its sponsor?’ Photograph: Stu Forster/Getty Images

New Orleans   Nothing like ten or more hours on an airplane to get some reading done. Reading Evan Osnos award winning book on modern China, Age of Ambition: Chasing Fortune, Truth, and Faith in New China, was interesting, especially having read earlier versions of some of the chapters in The New Yorker. He told one story of popular pushback on the country¹s new value structure, that included unhealthy doses of greed, bribes, and sometimes outright corruption, involving a Minnesota-born, Harvard philosophy professor named Michael J. Sandel, who has become something of a rock star for many in China speaking to small stadium crowds of 10 to 15,000 people driven by huge fan base for his online courses. Importantly, he has taken exception to the notion that everything in business ­ and life ­ can be and perhaps should be allowed to have a price or financial value. In his book, What Money Can¹t Buy: The Moral Limits of Markets, which I also tracked down and read with great interest, he argues that markets also have to reflect morality. Now, this is radical stuff!

Sandel goes after many economists from Nobel Prize winner Kenneth Arrow to more modern sages who argue, almost ideologically, that markets are inherently efficient, and essentially that a price can be set in the exchange of almost anything. Sandel calls them out in some cases for simply fudging on the question when moral issues arise. He takes it one step farther though flatly arguing that markets should not exist for some things because there is no way to eliminate coercion that comes from less than voluntary choices that economists postulate. Agreeing for example with the Beatles that ³money can¹t buy Šlove,² Sandel makes a convincing case that there is almost no way that the market for sex, as understood in prostitution, can eliminate abuse, coercion, and other moral elements. Similarly, he critiques proposals that would create a market for migrants and refugees where these victims of war, globalization, and economic misfortune could be shuffled off to other countries in exchange for hard currency, much as people were paid to fight in the Civil War in the United States in order to avoid the draft, though he does not use that example. He is clear that when it comes to climate change that there are moral issues that are not resolved on market-based programs like cap-and-trade, where countries continue polluting and exchange their irreparable damage to the environment in exchange for helping protect a rain forest in a country involved in releasing less greenhouse gas.

Joining the Chinese, I was silently cheering and standing in quiet applause as I flew across the Atlantic for home. Disappointingly though in the scores of examples Sandel offers of markets where morality should resist monetization, I kept waiting for him to frontally tackle all too common financial practices by money transfer organizations, banks, payday lenders, and the like that are inherently predatory, and therefore by his reasoning, blatantly immoral. It seemed obvious. People were desperate for money and forced by the market to pay whatever the rate, no matter how high or absurd, based on that desperation. There is no choice involved. Nothing is voluntary about taking a Wonga loan for 1509% interest or getting a refund anticipation loan from a tax preparer on your income tax refund for 400% or more. Money lending with interest is even seen as immoral in the Muslim religion, so this is not an unexamined market.

Sandel¹s book was excellent, and his voice needs to be heard as clearly in our home of the brave, free, and unequal as it is now being heard in China, despite the fact that I can¹t keep from scratching my head at why he is giving predatory lending in all forms and fashions a free ride thus far, when the demand for a moral market there is heard far and wide.