Lion of the Blogosphere

Neither a borrower nor a lender be

In Hamlet, Polonius counsels his son:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

“Husbandry” means the management and conservation of resources in general, not the more common modern usage specifically meaning the care, cultivation and breeding of crops. So Polonius means that borrowing harms your ability to take care of your money and property in a prudent manner such that you never fall into the trap of needing to borrow in the first place.

Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent.

But society has always known that the libertarian belief is false. 400 years ago, Polonius knew that his son needed to be trained to have higher future-time orientation, otherwise he’d spend all of his money on hookers and booze and useless trinkets and have nothing left for his future married life. So don’t borrow money you don’t have, and don’t lend money to your friend because that just enables your friend to behave in an imprudent spendthrift manner and furthermore you might not get paid back and may lose a friend trying to get paid back.

Polonius’ advice is badly needed by American proles. According to Google, 40% of Americans have credit card debt, and the average amount of debt is scarily high.

This is where the government should step in. When people act against their own interests, and they lack a wise father like Polonius to set them straight (and the percent of people who even have a father who was married to their mother and helped raise them is shrinking every year), for the good of society the government should step in and prevent people from making bad decisions.

But aided and abetted by Republicans, the government has been doing the opposite by enabling student loans for bogus for-profit colleges. Also, there used to be usury laws to prevent people from being ripped off too badly by unscrupulous lenders, but libertarian types are against those laws because they “interfere with the free market.”

Written by Lion of the Blogosphere

November 30, 2017 at EDT pm

Posted in Economics

59 Responses

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  1. 40% of Americans have credit card debt because our financial system countenances usury. Credit cards are a line of credit. To get a line of credit should be required to have sufficient assets which you can pledge as collateral should you fail to make good. Needless to say, this does not happen so credit card debt explodes way out of proper proportion.

    Andrew E.

    November 30, 2017 at EDT pm

  2. Free market is a voting booth where money is the ballot.

    A wise person will see that much of college is overpriced and useless. And he or she will be outvoted by fools who will vote with borrowed money.

    WRB

    November 30, 2017 at EDT pm

  3. Not to be annoying but polonius is meant to be something of a joke character and his ‘advice’ truistic and nails on chalkboard, not ‘wise.’ (kind of like maester pycelle in GOT).

    My sister noticed something interesting in hamlet. He describes death as the place from which ‘no traveller returns’ but the play opens with him conversing with his father’s ghost. So he knows souls can return. Her conclusion is that he was feigning his instability as part of a ruse to uproot the kingdom.

    toomanyspiders

    November 30, 2017 at EDT pm

    • These are good points. I actually agree with the advice on not borrowing or lending, but the character is meant to be a pompous a__ who is always preaching truisms and the audience is supposed to cheer his death.

      I actually think there is some material that was in the original staged “Hamlet” that didn’t make it into the folio, that would have explained the political situation better. I definitely think Hamlet was faking insanity and instability to avoid being seen as a threat, otherwise as the leading alternative contender to the throne he would have been eliminated early on by the Claudius faction.

      Ed

      November 30, 2017 at EDT pm

    • The Polonius speech is a catalogue of conventional wisdom that in Shakespeare’s time everybody knew, so he’s a drag for stating the true and obvious while his son is trying to make his ship in time. It’s an indictment of our own society that people don’t know this stuff anymore.

      The ghost’s soul doesn’t return, not in the sense that Hamlet was speaking of. The ghost specifically says that he’s in a “prison-house” of torment. The dilemma Hamlet is raising is that of uncertainty. Life is full of tragedy and humiliation, but who’s to say that any other form of existence would be better? His father sure preferred earthly life.

      Richard

      November 30, 2017 at EDT pm

    • Or Shakespeare wanted to meditate on death but also wanted a ghost in his play and either didn’t think of the inconsistency or figured the audience wouldn’t care.

      The ghost also contradicts the most famous bit of the play, the “To be or not to be” soliloquy. What dreams may come? Well, ask your dead father.

      It seems that a lot of modern versions cut the ghost out, which seems smart, as it detracts from what’s otherwise a story grounded in reality.

      Wency

      November 30, 2017 at EDT pm

      • It’s not clear if the Ghost is really the spirit of Hamlet’s father, or a mad hallucination, or a demon. Hamlet himself ponders the nature of the Ghost in the play.

        Sid

        December 1, 2017 at EDT am

    • Not to be annoying but polonius is meant to be something of a joke character and his ‘advice’ truistic and nails on chalkboard, not ‘wise.’ (kind of like maester pycelle in GOT).

      That’s pretty interesting, because I always felt it was mighty odd advice. Seriously, dude, you mean to tell me you won’t lend ten bucks to a friend? Weirdo.

      SJ, Esquire

      November 30, 2017 at EDT pm

  4. A Mexican dough boy who works in a pizzeria told me how he was shocked with Wall St braggarts buying pizza slices and pies on credit after a night of revelry.

    JS

    November 30, 2017 at EDT pm

    • A lot of people always use credit cards for convenience of not using cash, not because they can’t afford it.

      Lion of the Blogosphere

      November 30, 2017 at EDT pm

      • The bottom line is that many Americans are addicted to credit cards. This euphoric feeling of having fun now and suffer the consequences later, essentially, this is the kind of behavior that people engage in with lower future time orientation.

        JS

        November 30, 2017 at EDT pm

      • High future time orientation = Researching credit cards, figuring out which one will give you the best rewards for the money you spend, even if it involves an annual fee, and using that card for all your purchases, paying it off each month.

        Middling future time orientation = Settling for some credit card without studying the rewards too closely. Pay it off each month.

        Low future time orientation = Accruing credit card debt for any length of time.

        Rock-bottom future time orientation = Having such bad credit that you can’t even get a credit card.

        Wency

        November 30, 2017 at EDT pm

      • “Researching credit cards, figuring out which one will give you the best rewards for the money you spend, even if it involves an annual fee, and using that card for all your purchases, paying it off each month.”

        I feel justified in not wasting the time trying to figure that stuff out.

        The American Express green card has no special rewards and a high annual fee (compared to most bank cards), but they don’t try to rip you off. (They make their money by ripping off vendors, who are willing to be ripped off in order to cater to the kind of customer who is a little higher in class.)

        Lion of the Blogosphere

        November 30, 2017 at EDT pm

      • I just paid for my new $6000 AC on my MasterCard granting 2% cash back – so that’s $120. Six months ago, I paid of my $13,000 new roof on the MasterCard, so another $260. MasterCard just told me that I received $2000 back since 2007.

        A lot of people always use credit cards for convenience of not using cash, not because they can’t afford it.

        Yes, I don’t like getting back a handful of change to carry around if I pay in cash.

        Rock-bottom future time orientation = Having such bad credit that you can’t even get a credit card.

        Even lower than that are the people that pay their electric bill in cash at Amscott, or worse, have to put the electric bill in their baby’s name.

        E. Rekshum

        November 30, 2017 at EDT pm

      • Seriously, I was always confounded when I go to pay, pull out a card, and they ask, “Debit or Credit?” Like, why on earth would I pay with debit, when I get credit card reward points? I puzzled over this for a long time, until I realized that there are probably significant numbers of people who intentionally avoid using a credit card because they know they’ll let the spending get away from them.

        SJ, Esquire

        November 30, 2017 at EDT pm

      • They are trying to encourage you to use a debit card because they pay less of a fee.

        Lion of the Blogosphere

        November 30, 2017 at EDT pm

      • In a similar vein, for another reason, the bank recently checked my credit score, and the guy on the phone was like, wow, you pay off your credit card in full every time. I was like, what, that’s not usual?

        SJ, Esquire

        November 30, 2017 at EDT pm

      • ‘ I puzzled over this for a long time, until I realized that there are probably significant numbers of people who intentionally avoid using a credit card because they know they’ll let the spending get away from them.’

        When they swipe your card the gotta press a button depending on whether it’s credit or debit.

        Yakov

        November 30, 2017 at EDT pm

      • Credit vs. debit:

        There’s a category of person that has a bank account but can’t qualify for a credit card, or at least not a card that gives any kind of rewards. If they don’t intend to accrue debt, then they might as well use debit, since the credit card bill just becomes one more bill to deal with.

        You can get cash back on a debit card at some places. Depending on how you value your time, the value of avoiding a trip to the ATM may exceed the foregone rewards from not using your credit card.

        Wency

        December 1, 2017 at EDT am

    • The Mexican dough boy sounds like he doesn’t understand credit cards or why they’re used, which I guess you’d expect.

      Lowe

      November 30, 2017 at EDT pm

    • A Mexican pizza maker is almost as bad as a black sushi chef.

      E. Rekshum

      November 30, 2017 at EDT pm

      • Mexicans are great cooks, they can definitely make good pizza.

        Lion of the Blogosphere

        November 30, 2017 at EDT pm

      • They can make pizza, but not sushi. You need higher IQ and be detail oriented for that.

        Yakov

        November 30, 2017 at EDT pm

      • I’m not sure if I’d count Mestizos out for making sushi. Food is one of their strong points as a people. I don’t know the ethnic composition of sushi chefs in Mexico City, which reportedly has a pretty good sushi scene. It wouldn’t surprise me if some good ones were Mestizo.

        Everyone compares poorly to the Japanese in food service though. Tokyo is the food capital of Earth. More Michelin Stars than Paris and NYC combined.

        Wency

        December 1, 2017 at EDT am

  5. “Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent….But society has always known that the libertarian belief is false.”

    I can’t think of any libertarian or libertarian-interested economist who wrote this. Austrian-school economists start with the action that people prioritize and learn as they go along.

    Bob

    November 30, 2017 at EDT pm

    • Thank you. Libertarians, whatever your opinion of them, operate from the premise that humans have a wide spectrum of time preferences, and that individuals should make decisions as to whom they will lend. Let the market decide who will remain creditworthy.

      Note I didn’t say “free market.” That will never exist in reality any more than the “dictatorship of the proletariat” will ever be.

      What government could do:
      – blunt the impact of Griggs v. Duke Power, let businesses use tests for hiring, thus lessening the need for people to take out loans for degrees which may or may not get them jobs.
      – relax the laws for establishing colleges, which would increase the supply and thus drive down prices
      – relax the laws which force banks to lend to people they wouldn’t lend to, if left alone

      Yes, those are “negative” laws, in that they reduce the amount of regulation.

      As for “positive” law, I commend Congress for passing the Credit CARD Act of 2009. That blunted the 1978 Supreme Court decision which stated that only state laws apply when setting credit card rates. That’s why the banks’ billing offices were usually located in South Dakota and Delaware. Those states have looser anti-usury laws, so people in the other 48 states were subject to them.

      njguy73

      November 30, 2017 at EDT pm

  6. The federal government is suing an entity that owns three for-profit law schools for fraud:

    The winds have shifted fast in the law school business. Five law schools have announced plans to wind up just in the last two years. This was completely unthinkable not too long ago.

    I expect a few law schools to shut down every year for the next 10 years or so. The same trend of declining enrollments and shrinking budgets is taking a toll throughout higher education.

    The article I pasted here ties together many themes of this blog. Some of this trend is obviously due to demographic changes in the college-age population.

    “The school, Ms. Bernier alleged in her suit, pumped up its enrollment numbers by actively targeting military veterans for their paid educational benefits and admitting African-American students “who failed at an extremely high rate, and most did not make it through a second semester.”

    McFly

    November 30, 2017 at EDT pm

    • *There is an ongoing federal investigation into an entity that owns three for-profit law schools, which are also being sued for fraud.

      McFly

      November 30, 2017 at EDT pm

  7. It’s not simply a prole thing. There are plenty of high income individuals who spend as quickly as they earn. The correlation between income and wealth is lower than what most people probably expect, especially below the first million or two.

    https://dqydj.com/income-is-not-net-worth-the-raw-data/

    The graph featured in the article does not contain negative net worth and is based on survey data. I doubt that most people can even roughly estimate their own net worth.

    Contrarian

    November 30, 2017 at EDT pm

    • Low millionaires with their wives who don’t work, raising a few children, and more than one pricey residential with mortgages attached – I’m not sure how credit cards are good for these people.

      JS

      November 30, 2017 at EDT pm

      • “Low millionaires with their wives who don’t work, raising a few children, and more than one pricey residential with mortgages attached – I’m not sure how credit cards are good for these people.”

        Lots of things are easier with a credit card. Renting a car, using EZPass, buying stuff over the internet …

        James B. Shearer

        November 30, 2017 at EDT pm

      • I believe some vendors have started to prefer credit cards because they guarantee more consistent payment. I always used to pay for car service with a check, and was surprised when I started encountering auto shops that actually refuse to take checks–unless you’re going to stop at your bank and withdraw hundreds or thousands of dollars in cash to pay them, you have to use a credit card.

        Hermes

        December 1, 2017 at EDT am

    • True. The book “The Millionaire Next Door” confirmed that the vast majority of millionaires don’t make that much. The play really good defense, ie being frugal, and invest for the long term.

      B.T.D.T.

      November 30, 2017 at EDT pm

  8. Carrying a balance each month is stupid. However I’ve been able to take advantage of 18 month 0% balance transfers (usually with a 3% fee on the amount). Not a bad deal I think

    Rattle

    November 30, 2017 at EDT pm

    • You should’t be in the position where you have a balance you need to worry about reducing the interest rate on.

      Lion of the Blogosphere

      November 30, 2017 at EDT pm

      • It’s deposited straight into my checking account. I don’t use it to pay off debt. It’s only for when I need a lot of cash up front and then pay it back diligently before I ever pay a dime of interest

        Rattle

        November 30, 2017 at EDT pm

    • To clarify, I never carry a balance each month. I literally can take out a small 0% loan for 18 months before a usurious interest rate kicks in

      Rattle

      November 30, 2017 at EDT pm

      • The level of the interest rate is not what defines usury. Usury is when the contract purports to give the lender a claim on the person of the borrower (rather than a claim limited to pre-defined collateral held in trust), via future wages or unspecified assets for example, in the event of default.

        A loan shark is usurious not because he charges 10% per week but because he’ll break your legs if you can’t pay him back.

        Andrew E.

        November 30, 2017 at EDT pm

  9. What happened to ‘a freind in need is a freind indeed’? If you don’t lend money to your freinds, you have no freinds. Sure you help your freinds, and sometimes you never see the money. So what? What’s better to live in a dog eats dog world? This is how you can test people. Ask your freinds for loans and see their reaction. You gonna know who is real. I lend money to freinds and family and I don’t drop them if they don’t pay in a timely manner or even at all. There is more to life then money.

    Lousy advice, Lion. You didn’t mean it this way, did you?

    Yakov

    November 30, 2017 at EDT pm

    • Machiavelli has it somewhere that you get to know a person during bad times to see their real persona.

      William Shakespeare said this in one of his plays: When the sea was calm, all ships alike showed mastership in floating.

      Good times are rolling and many people are generous with their money.

      JS

      November 30, 2017 at EDT pm

      • Neanderthals had this figured out too. Are you dissing people helping each other? What exactly are you doing?

        Yakov

        November 30, 2017 at EDT pm

      • Don’t listen to Machiavelli. He was a guido.

        maryk

        December 1, 2017 at EDT am

      • He was NOT a guido. That’s a phenomenon of low-class ethnic whites in the NYC metropolitan area.

        Lion of the Blogosphere

        December 1, 2017 at EDT am

      • It’s true. Have you seen self-righteous, privileged SWPLs low on mileage, because they pissed away their money? You get to see their selfish/entitlement nature more so than people who are less privileged.

        Machiavelli should tell you one thing. Humans are not rational, they are rationalizing.

        JS

        December 1, 2017 at EDT am

      • “He was NOT a guido. That’s a phenomenon of low-class ethnic whites in the NYC metropolitan area.”

        Lion, I thought it was obvious that I was just having some fun with JS – given all the times he’s called every IA under the sun a guido.

        maryk

        December 1, 2017 at EDT pm

      • Low-class Italians,mostly from Sicily, in the NYC area don’t reflect at all the amazing Renaissance contributions of northern Italians in the 15th and 16th centuries.

        Lion of the Blogosphere

        December 1, 2017 at EDT pm

      • maryk – OK, what was his name? Rocco? Vinnie? Tony?

        Who was it that gave you wedgies and stuffed you into lockers? ‘Cause there’s no other explanation for your guido fixation.

        njguy73

        December 2, 2017 at EDT am

      • “Who was it that gave you wedgies and stuffed you into lockers? ‘Cause there’s no other explanation for your guido fixation.”

        I have no fixation. It is Lion and JS who both have a guido fixation. I put up with a lot of insults to IAs to stay on this blog. Isn’t it better to respond with humor than hostility?. I thought my humor was obvious, but Lion took me literally. It is Lion who calls practically every IA under the sun a guido – including those with a Harvard law degree, success on Wall Street, and 3 published books (I refer here to Anthony Scaramucci.) But I have long suspected that some guido stuffed Lion into a locker and that explains his fixation. I once claimed Lion could spot a guido in Tanzania! I still stand by this statement.

        If I have to keep hearing anti-Italian remarks can’t I at least joke a little bit?

        maryk

        December 2, 2017 at EDT am

      • Any regular reading and commenting on this blog who grew up with proles will understand that impulse control and lower IQ are the code words!

        JS

        December 2, 2017 at EDT am

      • Yah njguy73 has it backwards, Mary was the one giving the wedgies

        Gm

        December 2, 2017 at EDT pm

  10. I don’t research cred card offers either.

    A lot of time wasted trying to figure out their fee/rewards shell-game. *Maybe* there could be an advantage one way or the other, but that advantage is not worth the time wasted looking through those stupid and unclear catalogues.

    fakeemail

    November 30, 2017 at EDT pm

  11. “Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent.”

    When are you going to stop repeating that tired, old straw man? I don’t think any libertarian believes that humans are hyper-rational. Quite the opposite. But they believe the free market generally allocates resources more efficiently than government. And it usually does. No one spends other people’s money as carefully as they spend their own.

    Of course, I’m sure that dumb people piss away a lot of money on dumb things. I’ll bet I could even go through your finances and find lots of mismanagement. But I doubt some government bureaucrat could help you. And that’s the great thing about the free market — resources are allocated to those better able to manage them. It’s a self-correcting system even if consumers aren’t hyper-rational.

    destructure

    November 30, 2017 at EDT pm

    • I used to be a libertarian, I remember what I used to believe.

      Lion of the Blogosphere

      November 30, 2017 at EDT pm

      • Now THAT is what I call “small sample bias”! I don’t think that represents anything but what YOU used to believe. If you think otherwise, then you should go to a libertarian website and ask them. Libertarians probably think that they, themselves, are hyper-rational. But they don’t think most other people are. You shouldn’t make that claim again until you’ve asked a number of libertarians.

        destructure

        December 1, 2017 at EDT am

    • “No one spends other people’s money as carefully as they spend their own.”

      That’s a mere article of faith, handed down from Saint Milton.

      “Of course, I’m sure that dumb people piss away a lot of money on dumb things.”

      Preventing them from doing so is an obvious improvement.

      “I’ll bet I could even go through your finances and find lots of mismanagement. But I doubt some government bureaucrat could help you.”

      What if the government hired you then? Would you somehow lose your ability to manage Lion’s finances the very moment you assume office?

      “It’s a self-correcting system even if consumers aren’t hyper-rational.”

      Self-correcting as in people who don’t save enough for retirement would have to beg on the streets and would starve to death? Socialist government intervention is an actually correcting system that produces better outcomes.

      Contrarian

      December 1, 2017 at EDT am

      • “That’s a mere article of faith, handed down from Saint Milton.”

        No. The data supports it.

        “Preventing them from doing so is an obvious improvement.”

        I’m not sure why you need my money to prevent other people from wasting their own.

        “What if the government hired you then? Would you somehow lose your ability to manage Lion’s finances the very moment you assume office?”

        No. But I would never take the pay cut. More importantly, there’s a difference between managing my own finances or Leon’s and creating a one size fits all agenda for everyone else.

        “Self-correcting as in people who don’t save enough for retirement would have to beg on the streets and would starve to death? Socialist government intervention is an actually correcting system that produces better outcomes.”

        Once, again, I’m not sure why you need my money in order to prevent other people from wasting their own. Except, of course, that it makes you feel angry for some people have more money than others. And it makes you feel really good to give charity to the needy. But I don’t think it’s smart to base economic policy on your feelings.

        destructure

        December 2, 2017 at EDT pm

      • i would feel sorry for libertarians, given that they suffer from autism and mental retardation.

        but they are also evil.

        truly evil. without exception.

        libertarians are cockroaches.

        ian smith was a lot better than mugabe.

        December 3, 2017 at EDT am

  12. “Those who believe in libertarian economics believe that humans are hyper-rational consumers who only spend money after careful consideration that the spending of it increases their utility by an amount greater than what is spent.”

    What a stupid straw man. No prominent libertarian economist has ever said anything remotely like that. Most of 19th century western Europe was libertarian, a time of unprecedented economic, scientific and cultural advances. For the first 150 years of the USA, federal government spending per GDP averaged 3 to 5%. In 1900 in the USA you could by medicine that contained cocaine, morphine and marijuana! Hell, Great Britain was libertarian. Singapore, Hong Kong — giant, highly interconnected metropolises — and even Taiwan are libertarian.

    Hilariously, you’re making the converse of the “no true communism” argument. Communists deny every real world example of communism for not being pure enough because they LIKE communist theory. You deny every real world example of libertarianism for not being pure enough because you DON’T like libertarian theory.

    The problem is that the label Libertarian is an ideological collection basket for all sorts of nut jobs like the National Socialist Green Libertarian Party (or whatever that was) and apparently the younger Lion of the BS. That’s why despite being almost as libertarian as I was in my younger days, I prefer the equivalent terms American conservative or classical liberal.

    mvetsel

    December 1, 2017 at EDT am


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