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Comment by ihaveajob | Hacker News Reader

I know someone who worked for McKinsey for a few years, and some of the projects he described were straight up slimy. The one I recall right now was helping a big payday lender (read: large scale loan shark) figure out how to get their money back from people who were behind on their payments. The problem was that they can only attempt to withdraw so many times from someone's bank before they're banned, so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses.

This person is no longer working there, and I'm not surprised.

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As a very early P2P lending participant in the early days of Prosper Lending, I've seen the other side of this. Many borrowers adopt a mindset that they have earned the money they borrowed and don't feel that they need to pay it back. I came in to Prosper with a distaste for the apparent predatory lender tactics and came out with an appreciation that not everything that seems predatory really is. While there are plenty of legitimately shady lending practices, reasonably high APRs and the collection tactic you described are not some of them.

Asserting your debt as more important than someone's housing does seem like a pretty shitbag thing to me.

You say that but every debt company will say that very thing. Miss enough credit card bills, and they come for you; and, in states that don't protect the house, that's fair game.

People say that like the "debt" doesn't ultimately matter - as if adopting a policy of "you only get property ownership rights if you can prove you're sorrier than the person who claimed your stuff" won't lead to calamity over the medium-long term.

The reality is that this is a very difficult situation all around.

1) Lenders probably shouldn't be lending money to people they know cannot repay the debts. This is also why APRs are so high - most people simply don't.

2) People who know they can't repay the debts shouldn't be borrowing in the first place. This is also why lenders have to go to such extremes to collect their debts.

This is a function of being poor in a country like America with zero social safety net. If you're desperate and on the ropes and have nothing to fall back on you'll do whatever it takes to get by including take out loans that you can't afford, from lenders who know you can't repay them.

The problem isn't predatory lending, or deadbeat borrowers, it's a deeply unequal society which doesn't look after its own, with rampant wealth and income inequality and a total lack of social safety net.

In an ideal world, folks would be able to rely on unemployment or UBI to get by tough stretches, and this system would disappear instantly. Half the country is busy breathlessly screaming socialism over what the rest of the world considers a "functioning government" and the other half has other things on their mind like walking back stupid bathroom laws, and in the end, nothing fundamentally changes.

How do you design an unemployment/UBI system that provides an incentive not to use it unless necessary and not to stay on it any longer than is necessary?

You don't have to.

How many people have you met who were happy doing nothing, living with nothing, AND who made good employees doing anything at all?

I've met exactly zero.

The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible. Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.

This is in line with the results of Canada's early UBI experiments; substantially nobody left the workforce except to pursue liberal arts or stay-at-home parenting, both of which have intrinsic value. People are motivated by a combination of intrinsic and extrinsic factors, including their social group at work, finding meaning in their lives through their work, and so on.

UBI and unemployment isn't provide enough for a lavish lifestyle, you can achieve that through work.

> The ambitious won't want to stay there; the unambitious may "unfairly" get their basic needs met, but they're hardly living the high life, and the lost -useful- labor to society is negligible.

Certainly true, and of course, automation will replace the missing labor in the pool, and the continued march of development will lead to even lower birth rates (already well below replacement rate of 2.1 is almost every developed nation), and there will be fewer and fewer of these folks in time.

Canada's most recent UBI experiment, cancelled recently (2020) by Ford & co, was showing excellent results [1], and so did the earlier one in 1974 [2].

[1] https://newatlas.com/good-thinking/canada-basic-income-exper...

[2] https://www.bbc.com/worklife/article/20200624-canadas-forgot...

I think the major fault with these studies is there participants know the benefits will end. I think this biases them towards continued working because they view it as a short term windfall that won’t sustain them rather than a long term solution. It would be incredibly hard to design an experiment to control for this.

Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it

Indeed, I think the challenge is around committing to a 50 year study that they won't cancel later in a discretionary way.

> Conversely, I think the hard part about implementing UBI is that it would be incredibly hard to roll back once people become accustomed to it

So we are left with something people like and don't want to give up, and that's bad because... :)

>So we are left with something people like and don't want to give up, and that's bad because... :)

Sorry, I should have taken the time to elaborate.

There’s certainly a conceivable scenario when the situation is either unsustainable or not providing a net benefit.

For the first case, consider a petrostate whose population is heavily subsidized by its oil sales. If oil price drops, whether by lack of demand or over supply, they may not have the funds to continue these benefits without debt, regardless if the populace “likes” them.

In the second scenario, it’s possible that it creates unintended consequences (like spikes in drug use, drop in life expectancy, reduced productivity) that become a larger social ill than what it was trying to prevent. Despite society being worse off, it becomes hard to scale it back because of the psychological endowment effect.

I’m not saying its likely, just as a counter point that just because people like a benefit it means it should continue. I think it’s important to do a “pre-mortem“ on these kinds of policies to make sure we have the guardrails in place before implementing them.

> So we are left with something people like and don't want to give up, and that's bad because... :)

... other people are burdened with providing it against their will.

A Southern plantation owner in the pre Civil War southeast US had something they liked and didn't want to give up and it was most certainly very very bad.

UBI is universal, everyone gets it. I’d wager if you asked slaves if they were enjoying it they’d say no. One of the many problems is they weren’t being asked.

I think the counterpoint is that, while everybody receives the same amount, people contribute differing levels so the net benefit is very different for individuals.

I think this is an affront to some people's ideas of fairness even though it aligns with progressive tax schemes.

The question I always wonder, when people bring this up, is if they've applied it to themselves.

If they had a basic UBI of, say, $20k, would they quit their job, and not look for work, not work on personal projects, not look to go back to school, nothing, just do what they are assuming others will do, sit around, watch TV, that sort of thing? Rather than keep striving, keep working, and have both an extra $20k being paid to them currently, and that safety net in place in case they lose their job?

Because I can't imagine doing that. I -like- having a higher quality of life. I desire to do things, to affect things. In fact, the most frustrating jobs I've had were the ones that felt like they handcuffed me from leaving due to the salary (not to mention things like equity cliffs and paying back signon bonus), but deprived me of any real empowerment or responsibility to affect change. If this logic applied to me, I should be thrilled; I barely have to do anything, am barely expected to do anything, and am paid through the nose. But I end up hating it and wanting out.

Even something like working McDonald's; would the additional pay of working there on top of UBI be worth it? If not, what would have to change? Better working conditions? More pay? I'd be interested to find out; why -don't- people find service industry jobs desirable? Why would someone choose to be unemployed, if their disposable income is higher working there? Are they just lazy, as America likes to paint it, or are there institutional problems that could be addressed, but remain unaddressed due to the inability for people to just quit and walk away?

We actually have some anecdotal data to this; people who inherit money sufficient they could live the rest of their lives doing nothing.

If it's multiple millions, yeah, people do decide not to work, "trust fund babies" and the like.

But plenty of people get a few hundred thousand and a house. That's enough that, if invested, they could pay property taxes and live a basic life without working. They could sell the house and move out of the country, and live even cheaper. How many do it in lieu of working? Very few. Why? Because they desire something more.

Anecdotally I’ve seen both sides. I’ve seen people get social security or disability benefits and coast for the rest of their lives without working even though they have the ability to do so without affecting their benefits. I assume they value sleeping in and not having to answer to anyone. Their idea of a good time is spending hours hiking or watching tv or various other things that have negligible cost.

I’ve also known those who get said benefits and either use it as a leg-up to get ahead or just donate it while they keep working. Honestly, I’ve seen more in the former category than the latter.

I suspect it cuts down along the industriousness subset of the Big Five personality traits. Those who get intrinsic satisfaction doing/building are probably likely to be in the latter group. I bet HN skews towards this which is why so many find it difficult to comprehend why somebody would want to just loaf around with their life. To your very thoughtful questions about why someone wouldn’t want to continue working, my guess is the roles they qualify for aren’t intrinsically satisfying to them because it’s a poor mating of their personality and the jobs society has deemed necessary or they don’t pay enough to make the juice worth the squeeze

Yeah; I wasn't saying one side doesn't exist. It was more in tandem with my parent post - the people who are happy to watch TV, hike, just kinda bum around, doing nothing else, desiring nothing else...how often are they great workers?

I meant the question in response to the observation that "we don't know what happens long term if people are promised this kind of money" - right, but the presumption there is that it will cause people to quit en masse, that they won't look to work, or use it as an excuse to better themselves in a way that society values as well. But will you? I mean, you're on HN; you likely care about bettering yourself, likely have some ambitions. If people with those things aren't dissuaded from working...what's the concern? That we won't have enough checked out people in useless administrative tasks, or poorly performing manual labor or service jobs that we then collectively complain about, while also refusing to pay well for?

>what's the concern?

I think the concern is there may not be enough “ambitious” people to maintain productivity to sustain the non-ambitious folks.

Thinking back to a previous job that most people would probably assume employees incredibly driven people, I can honestly say many were not. Hours wasted on long lunches/breakfasts/breaks, surfing the Internet for auctions, bouncing from office to office for hours to gossip, really anything to distract them from the work that needs done, all the while complaining there wasn’t enough time in the day to get it completed. If a “world class” organization is like this I don’t want to know what a “lesser” one is like.

The best employees are always those who value the work itself. I think very few people find their work intrinsically motivating and are only doing it because of an extrinsic reward (status, money, whatever). Unfortunately, after talking to many in that former organization I don’t think they have a very good grasp on what is intrinsically motivating to themselves.

Your example kind of makes my point? Those people you mention...how much were they really adding to the org?

If a company is happily paying white collar worker wages to people who are that big a waste of space, why not pay them $20k in UBI and let them go, $20k to someone who needs it, and not waste everyone's time? Let those people have the safety net necessary to find themselves, so to speak. Worst case is they stay on and we're in the same situation we're in now; best case they leave and figure out what motivates them.

If they were fired, their net utility can go to zero. I may not think they are worth their wage, but they are still providing some marginal value. Not having a slow morphine drip of money is all that seems to keep them providing any value whatsoever.

>Worst case is they stay on and we're in the same situation we're in now

I think I disagree with this. Similar to point above, they can go from providing a marginal amount of value to justify being a net negative on the balance sheet by staying home and collecting UBI. Ideally, they will find a way to contribute to society but I’m not convinced many or most would, given anecdotal observations. I’m not taking some Randian stance here, but I can at least imagine a scenario where there are more takers than providers because it’s the easier path and we seem wired to prefer to minimize personal costs. I don’t think it’s a situation where there’s next to no downside as you suggest.

Most game theory seems to devolve when freeloading is not kept in check. With all the talk about the benefits of UBI, I hear very little about checks and balances if it doesn’t work. I’m currently in favor of it but would like to see a bit more due diligence in terms of guardrails

> how often are they great workers?

It's not about them being great workers or not. It's about them carrying their own weight at minimum instead of offloading that burden to the productive members of society.

There's no lack of jobs society needs filled that provides utility to society even when done by bad employees.

I don't think it is unreasonable for the productive to be fully decoupled and unburdened from the willfully unproductive.

> If they had a basic UBI of, say, $20k, would they quit their job, and not look for work, not work on personal projects, not look to go back to school, nothing, just do what they are assuming others will do, sit around, watch TV, that sort of thing? Rather than keep striving, keep working, and have both an extra $20k being paid to them currently, and that safety net in place in case they lose their job?

Depends on person and their situation.

Would I quit my job and go on UBI if I could?

Me before marriage and a kid: in my line of work and with my hobbies, sure! I'll fulfill my need of doing crazy hobby projects and after few years of doing just that (and social life) I'd probably get bored and get back to work somewhere. Or spin one of my projects into a business. Or start contracting half-time to have some more spending money.

Me now: I'd probably cut down work a bit, but I can use the extra cash to ensure good conditions and financial safety for my kid.

Me if I worked in just about any other field: fuck no, not if I knew the benefits would end. Software industry is special (and still will be for at least a couple of years) - a programmer with decent skills can just find a job or start a company. For every other field, the many years long gap in your CV will scream "not good worker material". Keeping the working history continuous is something on the minds of majority of westerners; failing to do that is likely to result in being hireable only for jobs not much better than the UBI.

There's also nothing stopping people from accumulating all the things they need for a pleasant life of leisure and hobbies and then once they achieve that deciding to freeload off UBI and enjoy those hobbies. I'm less than a decade out from having most of the physical belongings I need for the myriad hobbies I enjoy. Once I get there free time plus 20k a year will be more valuable than being a contributing member of society. This is basically the basis of the entire "dirtbag" lifestyle that many partake in. I've known many dirtbaggers in my life.

The entire idea behind FIRE is achieving a passive income that you earn by being a productive member of society versus UBI giving you for free with no obligation to contribute to society.

Many hobbies produce things that are immensely valuable to society.

I’ve noticed people sometimes confuse what is valuable to the economy with what is valuable to society. We should defer towards the latter when they are in conflict

>There's also nothing stopping people from accumulating all the things they need for a pleasant life of leisure

I think it’s a stretch to say this is available to most. To say it’s available to anyone doesn’t acknowledge the poor circumstances many are born into simply by chance. While still technically true, the possibility is vanishingly small for many. Policy should be based on what’s best for the general welfare and not a smallish subset

What do you do about unambitious people who live beyond their UBI means and end up being unable to pay the rent?

What do you do -now- about the ambitious people who live beyond their salaried means and end up being unable to pay the rent?

So what problem does UBI solve, then?

It guarantees a certain level of means. Obviously. It's not intending to address people who live outside their means; there are other controls for that. It's to ensure that a person's means is sufficient to cover their basic needs.

A person who is responsible with $10 a month may not be a credit risk, but clearly can't cover their needs; a person spending $10k a month when their job pays them only $8k is clearly a credit risk, living outside their means, despite earning enough to cover far more than their basic needs. You're strawmanning.

It's funny how these sort of questions are always being used to counter a safety net for the poor, but at the same time nobody does anything about rampant tax evasion and avoidance, which is much much more money.

It's an implementation question. It's one of the reasons we give people services instead of cash.

> How many people have you met who were happy doing nothing, living with nothing, AND who made good employees doing anything at all?

Several members of my partner's family meet this description. They fit the welfare queen stereotype to a T. That's just immediate family. I've met plenty. Maybe you just don't have contact with people who would?

> Almost certainly more than offset by the ambitious who can now take risks they otherwise couldn't, knowing that if they fail they at least aren't going to end up hungry and homeless.

This is a completely unsubstantiated claim. How are you measuring this and where's the evidence? Yeah, it sounds great and is something people want to believe is true, but where's the hard evidence?

The whole point of UBI is that everyone gets it, unconditionally. There is no not using it or not staying on it. You just get the UBI, and it should be enough to pay for basic living costs, and most people also want to be able to afford luxuries so the incentive to work is not gone.

The "U" in UBI stands for "universal". Everyone gets it all the time.

I would say that while this is a real concern, our current system places way too high a priority on addressing it.

My concern is that lenders will start loaning against it at ridiculously high rates on UBI income streams - "Get 100K today for signing away your UBI payments!" or "just pay us the monthly amount of your UBI payment!".

After thinking about it a while, I realized the law would need to protect the UBI payments from being accessible in bankruptcy. That would significantly limit lenders willing to lend on that money. Those who did would be charging very high-interest rates on it and probably limit the total amount backed by it, so someone can't borrow 200k and then declare bankruptcy but have it be protected.

Even writing this out now, I'm not sure that this would work because I'm not sure how you prioritize lenders for someone's assets who declares bankruptcy.

I also see upward pressure on housing prices - right now, few landlords know what the market can take for pricing. It would be easy to bump everyone's rent by a few hundred dollars when UBI kicks in because you know everyone can afford it.

Technology and the market structure are so efficient at extracting value from things that it's hard to design any policy that will effectively achieve the desired outcome of providing food, clothing, and shelter for all citizens without some wonky unintended consequences.

Congress changes the terms of credit and bankruptcy all the time. See the limitations that lenders bribed Biden into including in his "Bankruptcy Abuse Prevention and Consumer Protection Act". As a part of a UBI law, they could just say that creditors have no right to recover UBI payments. Take everything he owns, but you can't come back next week to take more.

It could be that housing rents in certain situations could increase in response to UBI, but in most cases having more money gives one more choice, not less. A family who are now stuck in a rattrap located conveniently with respect to public transport might move to a better cheaper place in a more remote location and buy an old car. They wouldn't have to stay at the mercy of their current landlord. Other people in other situations might respond in other ways.

I hear you, but I still question how long those on UBI could get ahead of the rat traps before the non-rat trap options become their old cost + the cost of UBI, effectively transferring most of the UBI benefit to the landlords and ending us up in a similar place.

In my mind, it's about answering the question of how we lower barriers to moving to ownership and getting people out of the poverty cycles. There are two major hurdles I see:

- The current structure right now, and incentives that exist, are so good at extracting money that they might quickly eat up the additional money handed out - whether it's through financial instruments or increased prices for basic necessities.

- The people that consistently don't have money are bad at earning money, bad at keeping money, or some combination of the two. UBI only helps the people who can't earn money, but doesn't solve the financial literacy problem or the root cause that a group of people is bad at keeping money.

Naval ravikant put it succinctly , the real issue is that once the 51% know they can vote to redistribute the wealth of the remaining 49%, then that opens the door to...well, the JRE clip goes deeper

https://m.youtube.com/watch?v=eHim7CMOZ6U

And this is supposed to be worse than 1% accumulating most of the wealth how?

Are you ready to argue that the poor are better off when everyone is poor, and inequality is nonexistent ?

Because thats called north korea/ussr... and people routinely risked their lives to escape that equality...

Here is how i think your point of view becomes stronger:

Say inequality exists - but show how did it get there? Is it corrupt wealth? Does inequality persists because movement between wealth levels is becominy stale?

For example, did bezos sell slaves or sell missiles? Or did he get rich getting to sell you stuff which you really like?

Or, is there a chance your avg 1%er could be wiped out tomorrow? Or is being in the 1% sticky...like it is in the UK, Italy and france, where the same 5 families had the same wealth since the middle ages ?

If you have a fair shot at the 1% , and if the road to get there is morally sound, then you wont hear of anyone to complain of inequality.

Show which of the 1% is morally corrupt, and where progress in wealth dynamism is stalling, and im there to argue with you that we need to fix it.

A big part of the reason that nothing ever changes is because it isn't profitable for things to change, at least not when some moneyed interests can make a profit doing things like predatory lending and others get to have cheap employees.

In other words, the lack of a social safety net isn't just some accident that citizens blundered into. It was engineered and continues to be advanced by the people who make money from it.

This is a dumb take.

Canada has a very cushy social safety net and still has payday lending with interest rates of 49%.

And the alternative of having payday lending is no lending - that is, these folks would have no way of getting a short term loan. Is that better?

> Is that better?

Usually.

Indeed if payday lenders are profitable then they are extracting welfare from the worst off.

Huh? If the poor by Apple phone is able extracting welfare from them?

I think there's a middle ground between "unrestricted predatory lending" and short term lending. The payday loan industry spends a lot of money on lobbying to push things to the former end (see attached article about 1000% interest rates), and have been very successful [1]. (But the overall lack of a social safety net in the US is due to moneyed interests that go well beyond the payday loan industry.)

Yours is a typical HN binary take that holds a thing must be an utterly unalloyed good or it must be banned, there's no middle ground for a thing to be useful when moderated and regulated, and predatory in other circumstances. This is a very common intellectual failure mode.

[1] https://www.nytimes.com/2018/02/02/us/politics/payday-lender...

Not paying back debts as agreed is tantamount to stealing, which is even shittier IMO

For the most part, America abolished debtors prisons in 1833, and they were found unconstitutional in 1983 (Bearden v. Georgia). I say for the most part because that offer doesn't apply to things like fines and court fees [1].

Assuming you're truthful in your application for the loan, it's not theft. It may be a poor decision on the part of the lender, but of course, that's why interest rates exist and scale with your likelihood of nonrepayment.

[1] https://www.forbes.com/sites/nicksibilla/2019/08/30/federal-...

In the first scenario the borrower can't pay their rent, is evicted and possibly becomes homeless.

In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.

How is that worse.

While I agree with the comments about predatory lending, I kind of feel that it has more to do with being more financially aware before agreeing to such loans. Payday lending is closer to the predatory lending practices, but I see the same kind of attitude among borrowers at lower interest rate products as well.

Borrowing when you know that you will not be able to repay the loan (or with the intention of not repaying) is also wrong.

> In the second scenario the worst case is that the payday lender becomes insolvent, the company collapses, and the workers go and find other jobs because they're not the ones suffering financial stress.

In this case, the employees of the so called lender are rendered jobless and they don't meet their financial obligations and might become homeless themselves.

Your comparing someone who is in immediate financial stress to a layed off employee who may run into trouble in the future.

I understand the compassion behind your point, but to play devils advocate: doesn’t every bank that holds mortgages and every landlord assume this very thing?

Fall behind far enough and your debt takes priority over staying in your home. Hell, even the government will kick you out if you fall behind far enough on property taxes

It ultimately comes down to what type of housing people have a "right" to. If I can't afford the house I bought, I'll need to sell it and downsize or rent a smaller/cheaper place. That's not because the bank is being a shitbag about my debt.

You’ve drawn yourself a caricature of a hard scrabble borrower who’s just trying to make ends meet and has the best of intentions with regards to their debts.

In my Prosper experience that was the rare exception. The typical defaulting borrower bought themselves a shiny new toy and literally felt entitled to the money. As if their success in securing the loan was sufficient justification to have earned the money outright.

The drama on the Prosper lending forums, where lenders and borrowers could directly communicate with each other, was epic and educational.

Why does Prosper encourage loans for the purchase of shiny toys? Does this service benefit their customers?

Then don't borrow what you can't afford to pay back? When you borrow money from someone, you explicitly enter a contract with a legal understanding that you will pay it off back in a stipulated time. When you go back on your word, it's not only unprofessional, it is also a breach of that contract. So, the other party should be free to get back their money in whatever means legally possible within the boundaries of the law. Getting back their money from your account when it's most likely to exist isn't a bad idea after all.

Not everyone who borrows money is a "victim" and not everyone who asks for their money back is a "predator". It's not so black and white. I've lost money to worthless people who lied while borrowing only to find out they blew it all on prostitutes instead of that family emergency they claimed they had.

>reasonably high APRs

I think the disagreement may be on the definition of “reasonable”.

Similar to utilities, I don’t think most people begrudge a company for making a “reasonable” profit. The problem sometimes comes when it starts to become unreasonable level of profit, predicated on lack of transparency and shady tactics

How do people have such a strong opinion on what level of profit is reasonable if they don't know the default rate?

The average person thinks companies make over 5x the profit they actually make, and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive). What profit people begrudge is likely not particularly relevant, given how uneducated those opinions generally are.

I’m pretty agnostic in my opinion on this personally because I don’t know their profit margin, default rate etc. I also think these lenders fulfill a worthwhile service in some cases. Note that I didn’t actually define what reasonable should be.

People do get a say in the policies of their society in a democracy, whether educated or not. People also think NASAs budget is 50x what it is, but it doesn’t mean we should strip away their right to vote, it means they need to be educated (or their representatives, by proxy). Otherwise it’s just advocating for a technocracy

Otherwise it’s just advocating for a technocracy

A technocratic republic, maybe where we got to pick who ends up on legislative subcommittees ourselves[0], might actually be a good thing.

[0] Obviously we can imagine many other forms for a technocratic republic to take; this is just the most similar to the current system, and thus maybe least unreasonable in a path-dependency sense.

> if they don't know the default rate?

It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value.

> and they think the amount of profit correlates negatively with how responsible and good for the world the company is (when in fact there's very little discernable correlation, and it may be positive).

Sure, you just have to be willing to ignore "fairness, consumer protection, environmental protection satisfaction, and employee satisfaction" when considering "corporate social responsibility."

> given how uneducated those opinions generally are

So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?

> It's rarely ever been above 5%. Plus, a default doesn't necessarily mean the creditor lost money equal to the full value of the loan plus all interest payments. Some defaults are haircuts, some a break-even, and others simply fail to realize their full value.

Citation on ~5%? I've seen occasional claims that it's that low, but I've often seen it quoted in the ~20-25% range as well. And that ignores the money spent on trying to get borrowers to make good, as well.

> you just have to be willing to ignore fairness, consumer protection, environmental protection satisfaction, and employee satisfaction

Nah, some of the most profitable corporations score really well there. High profit is not well-correlated with bad behavior, even though some bad behaviors can bring high profits. It often just means the company is really good at bringing people things they find useful.

> So, do they merely have these opinions because they are uneducated or because they're misplacing blame in the system?

The people are often educated -- they're merely uneducated on the relevant info for that particular question. Most people don't know how the major systems they interact with work; we should expect them to misplace blame.

> I think the disagreement may be on the definition of “reasonable”.

Agreed. It very much does depend on the default rate.

FWIW when I now see 10%+ APRs on unsecured loans for presumably highly rated borrowers and much higher rates for riskier borrowers, I’m no longer shocked.

I'm not opposed to collection (it's your right after all) but what would you describe as a reasonably high APR?

yeah a lender trying to get back principal seems pretty ordinary, i thought the bad behavior is making it hard to pay down to drag out the interest payments.

>so the agreed solution was to estimate the best time of the month when the client had received their paycheck, but before they had used it to pay rent and other expenses.

The Purdue OxyContin's 12 hours higher dose and thus higher addictiveness "solution" instead of the 8 hour based lower dose cycle similarly bears all the hallmarks of being produced by MBA consultants.

Along with the whole different release times thing.

People obviously have different metabolisms, so the duration of effect was different for different people. When these people told their doctors that their dose didn't last a full 8 hours, and they were experiencing pain after, say, 6 hours... their doctors were advised by Purdue to simply up their dosage, rather than give them a different dosing schedule. Pretty direct approach to creating addicts.

Time-release to begin with was the strategy to re-patent a prescribable habit-forming API (Active Pharmaceutical Ingredient) whose underlying patent itself had already expired.

Turned out to be even more of a gold mine since the FDA approved formulations where each tablet simply contained way more of the API than it had on the label.

Full detailed data from the clinical trials supported the labeling for each tablet to show the amount from that tablet that would be released into the bloodstream when taken as directed, not the actual full amount of API in each tablet.

For the "taken as directed" dosing to be reliable enough for doctors to correctly gauge how much habit-forming toxic API their patients were absorbing compared to established & generic non-time-release formulations, the target is for the time release pills to have quite a bit of API remaining at the baseline upon excretion.

But this is an API that opiate addicts crave and it didn't take long for them to figure out they could simply crush the pills to ingest the full amount of API a tablet contained.

On the black market this escalated each pill to the top shelf category.

For addicts and chronic pain patients building a progressive tolerance they can't get enough, and this is the regular kind of opiate API that has always fomented eventual overdose when the increases are not curtailed and the toxic effects become much more prominent or fatal.

For any patient on generics who wanted _more drugs_, if they got switched to Oxycontin at the same dose they were a happy camper. Until they wanted even more. But multiple time-release pills were not in the prescribing guidelines so Purdue escalated by stepping up to the plate and developing stronger-dose product in the same time-release formulation.

This was a sign that so many people were building up a tolerance where it took more API to give them the same perceived effect.

The non-addicted occasional consumer of these powerful pain pills could sell their surplus for more each year. The financial incentive to refill prescriptions is greatest for those who don't actually take any of the pills. The Sacklers got richer at the same rate as the drug dealers too, since they raised the pharmaceutical price in step with the increases in street price.

The growing financial economy paralled the spread of the tolerance-building consumption habit, so realistically the demand was stronger than that from all of the ultimate consumers' habits by a large margin.

Opium wars had been fought over this kind of thing.

Doctors, nurses, patients, addicts, narcotics agencies were raking in the bucks like there was no tomorrow, and even those who were not benefitting by one dime were not going to stop.

Sacklers simply declared opium wars and the casualties are still mounting.

Same with the people I know at Mckinsey. I makes sense though, companies contract out the work that would cause them bad publicity. Then when someone writes a news story they can say "hey, that wasn't us, it was the consultants."

Considering the sacrifice and hard work that people make to get into a top management consultancy, no one leaves due to ethical concerns. If they do, the entire world comes to know about it through self-promotion (hire me! buy my book! hear my TED talk). People rationalize morally questionable behavior in all walks of life. Management consultants aren't even the decision makers who have to pull the trigger, and it's far easier to sleep at night as an advisor than it is an operator.

We know that interest is a parasitic, immoral, and destructive practice. The banks are in bed with the government, so they are allowed to lend with interest, however, how are payday lenders allowed to operate? Who are they bribing?

It's slimy to try and collect on payments that a consumer agreed to make? Is that what you're saying?

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