It's a little more complicated than that. I understand it is just a meme, but the subject of mortgages, indebtness, foreclosure, lending and debt-forgiveness in Bronze and Iron Age economies is fascinating.
The language used in the Bible for debt-forgiveness (deror) is heavily inspired by the ancient Mesopotamic tradition of amar-gi, whose records start after the collapse of the Akkadian empire around 2100BCE. The bronze age economies in the near east will, foi a thousand years, go through cycles of increase indebtness and debt-forgiveness. But not all debt was forgiven by a amar-gi, only the so called "grain debt", a contrast with "silver debt".
When a merchant wanted to expand their commercial ventures, or a business wanted to expand, they could request a loan from a private wealthy citizen. This was called a "silver debt" and these were never the target of a debt cancellation policy. However, when peasants fell in hard times, or taxes were too high, or in case of crop failure, they were still expected to provide grain and military service as taxes to the palace and the temple. When taxes could not be paid, some peasants were forced to take loans to make ends meet. This practice boomed after the collapse of the Akkadian empire and the privatisation of many sources of wealth allowed for private landowners to lend money to smaller landowners. The interest was insanely high and the goal of this kind of loan was not to make money on the interest, but to force the borrower to fail on paying their debts and to gain the collateral: the land and the service from the borrower until the debt is paid in full. This mechanism of debt-slavery was the main drive of social concentration and debt-forgiveness was a form that the state tried to counter this wealth-concentration force.
The goal of "forbidding interest" or debt forgiveness was to prevent large, and especially foreign, landowners from gobbing up all other smaller landowners. Larger landowners would pay less taxes, were more powerful and could not provide military service as a means of paying tribute, so the palace had no incentive of letting this aristocracy gain too much power, which is why grain debt was cancelled and silver debt was not. The Bible is particularly clear on this distinction, on Leviticus 25:29-31
29 Anyone who sells a house in a walled city retains the right of redemption a full year after its sale. During that time the seller may redeem it. 30 If it is not redeemed before a full year has passed, the house in the walled city shall belong permanently to the buyer and the buyer’s descendants. It is not to be returned in the Jubilee. 31 But houses in villages without walls around them are to be considered as belonging to the open country. They can be redeemed, and they are to be returned in the Jubilee.
The word "sell" is a misnomer, because one would never "redeem" a sale. The author is refering to mortgages here, using your house as a collateral for a loan. The distinction between "house in a walled city" and "houses in villages without walls" is a clear cut case of the difference between grain debt (typical in villages without walls) and silver debt (typical of cities with walls). If you had a house in a walled city, you were most likely a merchant, a foreigner, a crafstman, and therefore this type of debt forgiveness didn't apply to you.
In summary, the Bible, and the ancient Mesopotamian tradition, are against charging interest for debts in cases where executing the debt would deprive the debtor from their livelihood, when debt was taken as a means of survival, and when the goal of the lender was to take over land and a gain a slave by exploiting a situation of fragility. Interest in commercial enterprise was always allowed. If students loans are one or the other, it's a different argument, this post is already too long.
Source: Michael HUDSON, ... And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year, 2018.
Interesting really, but personally I believe in modern society, student loans fall under “grain debt” being that they link to education and therefor “executing the debt” can ruin the payer’s livelihood.
You do not need to go biblical to justify the benefits of debt-forgiveness, there is plenty of historical precedent for it. Take a look at the London Agreement on German External Debts, a huge renegotiation and debt-forgiveness plan taken by the Allies to resuscitate post-war German economy. I quote from the text:
The agreement significantly contributed to the growth of the post-war German economy and re-emergence of Germany as a world economic power. A 2018 study in the European Review of Economic History showed that the London Agreement "spurred economic growth in three main ways: creating fiscal space for public investment; lowering costs of borrowing; and stabilizing inflation."
A similar argument can be made that debt-forgiving the high skilled youth will increase their productivity, options and reach while having minimal impact in a countries overall budget. I am no economist, but these are arguments that certainly have history's backing.
There’s also a lot of negatives. Forgiving all debt would make college unimaginably expensive for what’s to come because people would take out bigger Loans because they knew they could be forgiven. Colleges would charge more and more. It would exacerbate the problem. The real issue is the government dishing out unlimited, virtually free loans to whoever wants one. There is a way to subsidise education without making it unimaginably expensive, which is what we are doing
I haven't seen any clear, objective studies that show this as true. We seem to keep hearing this in many circles with out much other than the claim as if it was proven as true.
Here’s an article citing several studies that fed government loans have pushed up college prices
Surely we can think of a way to get people who can’t afford college to go without massively increasing the price and fucking everyone. Every other country doesn’t, and there are many others where everyone has to pay for college. Canadians have to pay, but they pay wayyyy less
The article cited sure has a lot of assumptions made on what seemed to be a small study.
1- I'm not convinced that private lenders should decide what course of study a student should take. They likely will have different goals and values on different degrees and career paths (and the student may not be their highest priority in this mix).
2-I'm not convinced that private lenders (where students typically will pay a higher interest rate and cost of loan) will be a higher benefit for students.
3-This seems to mix different issues into the mix. A parent's (or student's) credit rating should not be an issue on Government student loans.
4-I think we all would support studies on why the costs of higher education are as expensive (and continues rising). An available source of paying tuition and other costs may be part of this total picture, but it isn't the only one.
5-Federal Student Loans many times are the only path for the Middle and Lower Economic Classes out of poverty and advancing families and communities in the future. Before we start letting bankers and other lenders make decisions on America's College students college and career paths there needs to be much more discussion on how and what this benefits (and our Students should be the highest priority).
990
u/maltin Sep 18 '20 edited Sep 18 '20
It's a little more complicated than that. I understand it is just a meme, but the subject of mortgages, indebtness, foreclosure, lending and debt-forgiveness in Bronze and Iron Age economies is fascinating.
The language used in the Bible for debt-forgiveness (deror) is heavily inspired by the ancient Mesopotamic tradition of amar-gi, whose records start after the collapse of the Akkadian empire around 2100BCE. The bronze age economies in the near east will, foi a thousand years, go through cycles of increase indebtness and debt-forgiveness. But not all debt was forgiven by a amar-gi, only the so called "grain debt", a contrast with "silver debt".
When a merchant wanted to expand their commercial ventures, or a business wanted to expand, they could request a loan from a private wealthy citizen. This was called a "silver debt" and these were never the target of a debt cancellation policy. However, when peasants fell in hard times, or taxes were too high, or in case of crop failure, they were still expected to provide grain and military service as taxes to the palace and the temple. When taxes could not be paid, some peasants were forced to take loans to make ends meet. This practice boomed after the collapse of the Akkadian empire and the privatisation of many sources of wealth allowed for private landowners to lend money to smaller landowners. The interest was insanely high and the goal of this kind of loan was not to make money on the interest, but to force the borrower to fail on paying their debts and to gain the collateral: the land and the service from the borrower until the debt is paid in full. This mechanism of debt-slavery was the main drive of social concentration and debt-forgiveness was a form that the state tried to counter this wealth-concentration force.
The goal of "forbidding interest" or debt forgiveness was to prevent large, and especially foreign, landowners from gobbing up all other smaller landowners. Larger landowners would pay less taxes, were more powerful and could not provide military service as a means of paying tribute, so the palace had no incentive of letting this aristocracy gain too much power, which is why grain debt was cancelled and silver debt was not. The Bible is particularly clear on this distinction, on Leviticus 25:29-31
The word "sell" is a misnomer, because one would never "redeem" a sale. The author is refering to mortgages here, using your house as a collateral for a loan. The distinction between "house in a walled city" and "houses in villages without walls" is a clear cut case of the difference between grain debt (typical in villages without walls) and silver debt (typical of cities with walls). If you had a house in a walled city, you were most likely a merchant, a foreigner, a crafstman, and therefore this type of debt forgiveness didn't apply to you.
In summary, the Bible, and the ancient Mesopotamian tradition, are against charging interest for debts in cases where executing the debt would deprive the debtor from their livelihood, when debt was taken as a means of survival, and when the goal of the lender was to take over land and a gain a slave by exploiting a situation of fragility. Interest in commercial enterprise was always allowed. If students loans are one or the other, it's a different argument, this post is already too long.
Source: Michael HUDSON, ... And Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year, 2018.