Moral Markets and Predatory Lending

 '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.


China May Drop the Stock Market, but India is in Turmoil

Screen Shot 2015-09-04 at 9.51.50 AMKiln, Mississippi     So while all the big whoops worry about their 10ks, plummeting stocks on Wall Street, and whether or not the Fed raises interest rates in Wyoming, what are the rest of us supposed to do? We have grown men and women believing in unicorns and giving them billions. What’s up that that? I thought only very small children and Rainbow Brite believed in unicorns?

No one seems to have a grip on China and one report contradicts another. The economy is collapsing, they are laying off 300,000 soldiers even while they are motor boating into international water space when President Obama is hiking in Alaska, and still more people are buying Apple’s gadgets over there. Somehow China owns a big hunk of America, but it’s a daily mystery to most of us. So, let’s take a break and take a look at India. There’s a democracy of sorts and a country maybe we can understand.

Here’s what we know: India is somewhere between topsy-turvy and turmoil!

Prime Minister Modi took office in a rightwing rout as the BJP, a conservative communalist party swept the long serving Congress Party out of office. Modi had been the governor of Gujarat and, pretending it was Texas, he had campaigned on the supposed economic miracles in the state. Others were less sure. There was still the persistent question about his role in not stopping the slaughter of Muslims in the state some years ago which had been serious enough to deny him a visa for entry into the United States up until like yesterday almost. Much of his platform seemed to be economic development or else, and it is hard to ramrod such a program through a country with even a semblance of democracy.

Attempts to gut the nation’s labor laws to pave the way for business were met this week by a general protest strike called by ten unions that organizers estimated involved 125 million workers. Al Jazeera quoted ACORN India and our hawkers’ union organizer, Dharmendra Kumar, saying

The Modi government has turned a blind eye towards the problems being faced by the labor class. The government must rethink its labor policies. Modi has made a mockery of us by telling the world to come and manufacture in India because it has the cheapest labor.

Kumar also repeated the call for an increase in the monthly minimum wage “from $72 to $226 be extended to the informal sector.”

Ok, you say, but maybe this is just us. Well, I don’t think so.

This week the Modi government also withdrew its proposals for seizing agricultural land for either government infrastructure projects or corporate economic development, which had been a centerpiece of his program to jump-start the economy and make the country more business friendly. Land issues have been wildly contentious in states throughout the country. Modi got a reminder that rapidly urbanizing India is still almost half rural and agrarian.

And, then there’s the mess in Gujarat. Friends volunteering in Gujarat’s largest city had offered to help out while in the state, and I’d demurred saying we continued to not be comfortable working in Gujarat, but thanks all the same. We got an email saying that demonstrations of 300000 to half-million people in the city had led to them being housebound for days as the military was mustered and the state feared a return of communal violence. The issue was triggered when one of the major castes totally almost 15% of the total state population known as popularly as the Patels hit the streets demanding either an end to the reservation or quota system of affirmative action in employment and education for long discriminated against groups or that they should be made a registered caste themselves and allowed to compete for the reserved slots. Reading the story in the Times, Journal, or other western sources and you are clueless, but this is the “fire next time” in India, and it is hard to believe that managing such a crisis is Modi’s strong suit given his history in Gujarat.

Good luck with figuring out China and believing in unicorns, but keep an eye on India. There’s a reason that Obama has established a “hotline” to Modi in India now. Something big is boiling there!