Mark Horne » Blog Archive » Welfare or Debt? Which is ethically preferable.

Just for the record:

In the Bible, financial emergencies are a moral reason for going into debt.

If the emergency is partially due to foolishness, then the pain of the debt will be compounded with feelings of remorse. If there is no remorse then the person in debt will keep being stupid and stop getting credit.

In the people, people in financial emergencies are supposed to get low- or no-interest loans. These are a form of charity and not business. The idea that the poor should not only go into debt but pay higher interest rates is an American perversity. It is a subset of the perversity of accepting unsecured consumer debt as a normal part of the economy.

After all, how do you know that the high interest rate doesn’t encourage a default? Duh.

The advantage of debt is that it teaches a person to do everything possible to avoid such emergencies. He has to work hard to pay back the loan.

But gifts are also an acceptable way to help the poor.

The problem with welfare is that it isn’t charity, but a way that a ruler or regime bribes supporters. (No, I don’t mean welfare recipients, I mean the legions of middle class workers who provide the services).

Nevertheless, if you have to choose between debt and free money, you should choose the free money (though watch out for strings). The fact that doing so “encourages” the welfare state is not a rational consideration. You have no indiidual influence of that kind. It only leads to a world in which only people without scruples got welfare and those with scruples get debt. Since most or all unsecured debt is a government product anyway, I hardly see it as being much of a choice. Again, the state is just outsourcing mastery to a private contractor.