The Morality of Moneylending
Here is a scenario. This could have happened to anyone as it could have already happened to you too. One is in desperate need of money. There could be a multitude of reasons. So who does he go to, to borrow the money? The "need" is there, the "need" must be filled.
Those with great credit references and collateral can go to the banks or any financial institutions. The ones with bad credit or someone who just wants the money quickly and has very little collateral goes to a family member, the pawnshop or money lending companies who asks very few questions. But these types of loans come at a price. A price that some can't pay back.
After the money is loaned and the borrower can't make the agreed or contracted payments, the collection process starts. At first there will just be a few excuses for the delays, then later when the borrower can no longer rob from Peter to pay Paul, the trouble starts. The money lender now starts to pressure the borrower and rightfully so, since they had an agreement. However, the borrower does not see it as the lender's right, he sees it as coercion. The borrower now thinks of the lender as the enemy.
This thought process is nothing new. History repeats itself. For thousands of years they (lenders) have been the primary scapegoats for practically every economic problem. They have been condemned by religious leaders. Philosophers talk about them with contempt. In some instances they have been humiliated, framed, jailed, and butchered.
The laws of the nation has always been there to protect the consumer. The lender is not considered a consumer.
Throughout history great thinkers such as; Adam Smith, Aristotle, Thomas Aquinas, Karl Marx, and Plato, to name just a few, considered moneylending, to be a major vice. Popular novelist depict money lenders as villains. Check out Shakespeare or Dickens.
Moneylending is condemned by practically everyone. But what exactly is being condemned here? Are they condemning moneylending or are they condemning usury? Are they condemning the excessive charging of interests?
Let us look at this from another point of view. Let us look at this from the over all point of view. The world's economy is not possible without the existence of lenders. On the micro level, Manang's sari-sari store will not be possible without the lenders. There is credit from the biscuit supplier, credit from the beverage company and when the going gets rough there's credit from Mr. 5/6. If all goes well, everybody makes money and everybody is happy.
However, inadvertently something always goes wrong. Tuition needs to be paid, the baby got sick, somethings needs to be fixed and Mr. 5/6 can't be paid. Now the downhill slide starts.....
Is there a solution to the Money Lending Problem?
Money lending will not "go away". It is like gambling. It won't "go away". It is here to stay. The act of lending or gambling is a two-way street. Can't have lending without the borrower asking something from the lender.
Borrowing is spawned by "NEED". What is the definition of "Need"?
The dictionary defines need as such:
- a requirement, necessary duty, or obligation: There is no need for you to go there.
- a lack of something wanted or deemed necessary: to fulfill the needs of the assignment.
- urgent want, as of something requisite: He has no need of your charity.
- necessity arising from the circumstances of a situation or case: There is no need to worry.
- a situation or time of difficulty; exigency: to help a friend in need; to be a friend in need.
Wikipedia defines "need" as such: "A need is something that is necessary for organisms to live a healthy life. Needs are distinguished from wants because a deficiency would cause a clear negative outcome, such as dysfunction or death. Needs can be objective and physical, such as food, or they can be subjective and psychological, such as the need for self-esteem. On a social level, needs are sometimes controversial. Understanding needs and wants is an issue in the fields of politics, social science, and philosophy."
The need to survive and prosper usually fuels the "need" to become an entrepreneur. What is an entrepreneur?
Wikipedia defines entrepreneur as such: "An entrepreneur (i/ˌɒntrəprəˈnɜr/) is an owner or manager of a business enterprise who makes money through risk and/or initiative. The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to help launch a new venture or enterprise and accept full responsibility for the outcome. Jean-Baptiste Say, a French economist, is believed to have coined the word "entrepreneur" in the 19th century - he defined an entrepreneur as "one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour".
Because of "NEEDS", money lending is here to stay. But how do we make money lending a little easier and more pro-active. The government and several NGOs have tried.
Here is a claim from one of the NGOs that I know of who is willing to help. The company is OBI or Our Barangay, Inc.