Your Live-in Vampire Squid

There are people who want what you have, and they want what you do not yet have. They want what your college-age children have, and what they do not yet have. They want a large piece of the action, no matter how small that action is, and they want it for the rest of your life. They will do anything to get it: prey upon your naiveté, your desperation, your addictions, your greed, or your simple need to obtain the things living requires. I'm not talking about ordinary thieves who will create a temporary crisis by stealing your wallet, your bike, or your jewelry. These are saints by comparison. They will only hurt your for a few days or weeks. The people I'm talking about move in, often when we are very young, and mean to stay. And good luck getting rid of them once they have. Too many of us must then devote a good part of our working lives as slaves, earning money for them.

You already know who I am talking about: credit card companies, banks, payday style lenders both online and nearly every urban block, businesses of all kinds offering what you want and can't afford for easy credit, and the collection companies that buy those debts for pennies on the dollar when they've "gone bad." They are everyman's version of Matt Taibbi's "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." We should be smart enough to avoid these invertebrates, but too many of us are not.

Caveat emptor, some reply, buyer beware. If you are stupid enough to get involved in this kind of debt you deserve whatever happens. Okay, but rarely do you hear that argument turned around on the lenders: if you make predatory, high interest loans, lend to people who are desperate or addicted and will struggle to pay you back, or push high-interest credit cards on students and young people who do not understand credit, then you deserve whatever happens. Seller beware. You were foolish enough to take the risk involved with fundamentally immoral lending practices. Your money perish with you, I say. And I say it also to those who invest in public companies that practice this kind of lending.

But people should pay their debts, of course. Of course. And it is wrong to borrow money you know that you cannot afford to pay back. Too many people are far too ignorant concerning basic financial principles. In a better world, everyone would understand how money works, capital would be available at fair rates to those who can manage some debt. Advocates for payday style loans claim that credit would not be available to high-risk borrowers if they weren't there to fill the void; and even with their interest rates, sometimes as high, effectively, as 1000%, they are providing a much-needed service to those who couldn't otherwise find a source of money in time of need. Every loan shark since Sumerian Sam has made the same claim, and it's true: if you are a desperate borrower and you are willing to extend the current frying pan for the eventual fire, if you are desperate enough to be sucked into a spiral of debt that will only end when you do, then these are the lenders for you. And don't wait for your legislators to move in and cap these rates. They have little inclination to do so, and even when they take some half-measure (a 36% cap? Thanks a lot), the lenders are quick to find loopholes that allow them to continue in some slightly modified fashion.

But what about single mothers who are short grocery money until payday, the guy who just got a job but needs transportation and so gets hooked into an obscene rate of interest for some piece of crap car? Don't these people need available credit no matter what the cost? I would argue that no, that is exactly what they don't need. What they need, and should have, is charity. Nothing wrong with that, and that's where communities come in, where you and I come in. If you have never been in a position where you need help from others, good for you, but many of us, at one time or another in our lives, require some kind of assistance to move forward. Because of the Internet, the world is a closer community than ever before. There are new ideas sprouting up all the time, and I believe that there will be new ideas that put financial predators out of business for good. Once such model, though it is currently active only in Kenya, is GiveDirectly, (click and check out their story) an astonishingly simple yet revolutionary way to help others without having to feed the organizations that help others, too, and to give with no expectation of return. If you knew that you could go online and give, say, $100.00, directly to a woman who needed to feed her family for the week, would you not do it? What if she were then required, as a condition, to pass on a small gift to another? It could quickly grow and spread the culture of giving, enabling people to improve their lives without the burden of lifelong debt strapped to their backs.

Finally, more than anything else, education is critical to solving the problem of debt and abolishing the practice of predatory lending. Every young person should be required to take a class where they learn about capital, debt, lending practices, how to handle money, investing, saving, and what it takes to get by financially in our culture, and how to say no to those who are so anxious to put them under a burden of debt. Such a curriculum should be required in the schools, but it should also be required of every student who determines to drop out of school, as a condition for dropping out. Our financial culture piles on. When things get tough, they get tougher, whether it's the Denver boot they put on your wheel because you didn't pay a ticket, and so now you can't get to work to earn money to pay that ticket and have the boot removed, or the money you borrow to pay the interest on the money you borrowed to pay other interest. It's a lot easier to prevent the vampire squid from moving in in the first place than to evict it once its blood funnel is sucking you dry.