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Comment by rossdavidh | Hacker News Reader

I believe (although I can't find it now) that it was Nassim Taleb who said something like, "Every truly long-lived civilization has banned interest."

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Interest compounds geometrically and wages grow linearly. It’s not advanced math to realize the end state of usury is a rent-seeking class that owns basically everything, at least until the political unrest gets to the hot stage.

Historically, intelligent elites have permitted safety valves like bankruptcy and even jubilees. While this does reduce the nominal wealth of the owner class, it has no actual effect on their real wealth since they still own plenty of real assets that can be used to start the next round of interest based rent-seeking. Unfortunately our present day elites present us with evidence that they plan to run the system into the ground and then escape to five star bunkers in a New Zealand. I guess we’ll see how that works out.

> Interest compounds geometrically and wages grow linearly.

That doesn't seem right -- wages should grow with inflation.

Maybe there's a difference between the growth rates of the two, but I don't see how wAge grows linearly.

Inflation is not a net change in pay. If real wages grew at say 1% compounded annually, over the last 2,000 years salaries would have increased by over 400,000,000x.

In the end, wage increases are far from geometric growth.

> I believe (although I can't find it now) that it was Nassim Taleb who said something like, "Every truly long-lived civilization has banned interest."

Sumer? Babylon? (Pre-Islamic) Persia? (Pre-establishment of Christianity) Rome?

Did Taleb say it? Maybe. Is it true? No.

What exactly is the bar for truly long-lived here? What are the examples they're referring to?

Examples? Islam is not as old as Christianity. Nor Judaism. This seems wrong on the face of it.

Oh sure, there might be some lost tribe in the Amazon but I don't accept it, even if it is technically long-lived.

Interest is how we pay people to save and share their savings with others. Growth and reinvestment is much easier with it. This is why the Muslim world has come up with financial gymnastics to reward savers without technically paying some interest.

> Islam is not as old as Christianity. Nor Judaism. This seems wrong on the face of it.

Sorry, what? What does that have to do with anything?

If you're looking for examples of "long-lived civilizations" on Earth, you might be interested in the longest-living cultural institutions. Islam, Christianity and Judaism are such millennia-old institutions. And, a bit contrary to GP's point, all of them have, or had, limited bans on interest.

I think this is because of the context at the time. Your borrower should be aware of what they're signing up for. Debtor's prisons also existed. There is a lot different then than now and I think lending is a much safer activity today if is regulated properly.

I like to think of religion as early law. Pork was also probably not a very healthy meat to eat at the time. Now it is probably an outdated thing.

Perhaps. I'm not saying there was any divine knowledge involved, whether about interest or pork. It's just that if you're looking for evidence in favor of the quote at the beginning of this thread, these three organized religions - one of the longest-living cultural institutions on the planet - are good examples.

You do realize that the Islamic prohibition on interest comes directly from the Christian New Testament, right? That early Christians forbade interest for centuries? That some Christian groups still forbid collecting interest?

It is no coincidence that many jews used to be in the money lending business in those times. They could not charge interest on loans made to other jews, but christians (and other non-jews) were fair game. Sadly this did not improve their popularity...

Lots of other reasons too, like fears of being driven out of town and having to abandon any physical goods and stores, not being allowed to own land (so no farmers), not being allowed to join many craft guilds....

Also, Christians were banned from lending, but didn't ban lending, so they needed non-Christians to fill the need.

Jews also forbid interest among themselves.

So maybe the quote should be: "Every truly long-lived civilization gives up on banning interest"

As other posters have mentioned, but to put a little more emphasis on how this worked: the Christian world of early to middle Europe banned Christians collecting interest on loans (which, effectively, banned Christians from operating loan-based financial service businesses). They didn't ban interest on loans in general, and in fact depended on loans with interest. They outsourced their financial services to their minority Jewish populations, and then every hundred years or so when the interest payments piled up too high, they evicted and/or massacred all their Jews, and seized their property.

Not a great deal for the Jews! Although they were also legally barred from doing almost any other work (they could also be tax-collectors, which was hardly a better job)[1]. But it's definitely not the case that the civilizations of Christian Europe didn't have loans with interest.

This was also largely true in Islamic societies: they did rely on loans with interest, by once again relying on their minority Jewish population to provide financial services. [2] Unlike the Christians, though, the Muslims generally paid back their loans instead of murdering their creditors.

[1] https://en.wikipedia.org/wiki/Medieval_antisemitism#Restrict... [2] https://en.wikipedia.org/wiki/Riba#History

True, but "ok we will have interest but periodically massacre the people interest is owed to", is much like not having interest, except nastier. You are, in a sense, avoiding the problem of an interest load spiraling up out of control.

But, it's true, it was not a perfect ban, but it certainly did have the practical impact of not allowing those to whom interest is owed, from hijacking control of the state. Again, not in a good way, but I think it shows that long-lived civilizations eventually find that the Mathew Effect is particularly strong with interest, and must be reined in somehow.

Hopefully in a better way than the medieval Christian one.

Or, alternatively, you could notice how the Islamic states managed to do exactly the same thing but without massacres.

It's actually much, much more devious than that in the Christian world.

In England, Jews aren't consider the subject of the local lords. They're subjects of the king directly so they paid their taxes to him directly. Thus by raising taxes on the Jews, the kings of Englands were able to indirectly tax his nobles (because the cost would be passed on to their creditors) while throwing the Jews under the bus. This is why you see at various times in English history that the nobles call for the eviction of the Jews.

It's actually more nuanced than that. Interest isn't banned outright. Interests on things that carried risk was fine so interest on foreign exchange was fine. This was how the banking families of Italy like the Medici made so much money. The ban on usury is only on non-secured loans or loans secured by the person. For example, mortgage is actually OK because the debtor can default and walk away. However, loans that are secured by the person who must pay cannot collect interest. This, IIRC, comes from St. Thomas Aquinas.

Minor point: the prohibition actually goes back to the Old Testament (Leviticus 25:36), whereas the New Testament seems strangely OK with it (in the parable of the talents [1]). Also Leviticus explicitly permits you to charge interest to an outsider, which is why Christians outsourced it to Jews.

[1] http://www.yourfaithyourfinance.org/money-and-faith/usury-an...

Right, I forgot it was Leviticus with the most clear passage on the subject. Though, I suppose I've heard more of the anti-usury interpretation of the Parable of Talents than the straight reading. I also know that the Parable of the Moneylender is brought up sometimes as anti-usury by the way it conflates usury with sin directly in its analogy. Also, the tale of kicking the moneylenders out of the temple is often mentioned alongside these examples.

You might find that the tale is about money changers who changed various things into shekels so that the client could then pay the temple tax [1]. I don't think that line of business is connected with usury, unless you look at making a market in an item using a bid-ask spread as selling a cake and charging separately for its consumption [2].

[1] https://www.bibleodyssey.org/en/passages/main-articles/jesus... [2] http://www.yourfaithyourfinance.org/money-and-faith/usury-an...

Both Christianity and Judaism have, at various points in the past, had bans on interest (amongst themselves, anyway), even if in more recent (and secular) times those have been ignored.

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