Policy Press
16 The myth of easy money: developing financial services that would really help
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Niall Cooper
Abstract
We live in an era of fantastically cheap money and easy credit. Unless that is, you are poor. One of the cruellest paradoxes about the use of money within the modern market economy is that those who have least pay most. That is nowhere more true than in relationship to money itself.
As we are all too painfully aware at times, the UK economy is awash with cheap money. Interest rates remain virtually the lowest they have been for decades. Even unsecured loans are available for less than 10% APR (annual percentage rate). Household borrowing now amounts to over £150 billion – greater than the total debts of the 49 ‘least developed’ countries, which inspired thousands to join the Jubilee 2000 campaign in the late 1990s. Is this a sensible way of sustaining demand within an otherwise sluggish economy, or a foolish credit bubble? Clearly, for the majority of UK citizens, credit is now a way of life, and a convenient means of enabling ‘us’ to buy anything from foreign holidays to this week’s supermarket shop.
However, my main concern is not the implications of the scale of borrowing on the wider economy, or on the whys and wherefores of over-inflated levels of consumerism, although both are cause for concern. No, my question in relation to the right use of money is quite simple: why should those who have least pay the most?
Ironically, concern about financial exclusion has arisen not because more people cannot gain access to financial services but because use has increased, leaving a minority of people on low incomes behind.
Abstract
We live in an era of fantastically cheap money and easy credit. Unless that is, you are poor. One of the cruellest paradoxes about the use of money within the modern market economy is that those who have least pay most. That is nowhere more true than in relationship to money itself.
As we are all too painfully aware at times, the UK economy is awash with cheap money. Interest rates remain virtually the lowest they have been for decades. Even unsecured loans are available for less than 10% APR (annual percentage rate). Household borrowing now amounts to over £150 billion – greater than the total debts of the 49 ‘least developed’ countries, which inspired thousands to join the Jubilee 2000 campaign in the late 1990s. Is this a sensible way of sustaining demand within an otherwise sluggish economy, or a foolish credit bubble? Clearly, for the majority of UK citizens, credit is now a way of life, and a convenient means of enabling ‘us’ to buy anything from foreign holidays to this week’s supermarket shop.
However, my main concern is not the implications of the scale of borrowing on the wider economy, or on the whys and wherefores of over-inflated levels of consumerism, although both are cause for concern. No, my question in relation to the right use of money is quite simple: why should those who have least pay the most?
Ironically, concern about financial exclusion has arisen not because more people cannot gain access to financial services but because use has increased, leaving a minority of people on low incomes behind.
Chapters in this book
- Front Matter i
- Contents iii
- Foreword v
- Scope of this book and acknowledgements vii
- List of contributors ix
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Overview
- Towards a ‘right use of money’ 3
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The role of money in 21st-century Britain’s economy
- A ‘full investment’ approach 13
- Meeting economic, environmental and social challenges simultaneously 19
- Restoring the link between money, price signals and ethics 29
- Encouraging enterprise and decentralisation 39
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Ethical dimensions
- Linking money and morality 49
- Encouraging a ‘giving’ culture 55
- Managing the power of money 59
- Money: what is it for? 67
- Returning business ethics and philanthropy to corporate social responsibility 71
- Reducing inequality 79
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Empowerment
- Living on a low income 89
- Hearing but not listening: why charities fail 97
- Responding to cultural diversity 103
- Conquering helplessness: ones and zeros 113
- The myth of easy money: developing financial services that would really help 123
-
Conclusions
- Promising approaches and mechanisms 135
- Index 141
Chapters in this book
- Front Matter i
- Contents iii
- Foreword v
- Scope of this book and acknowledgements vii
- List of contributors ix
-
Overview
- Towards a ‘right use of money’ 3
-
The role of money in 21st-century Britain’s economy
- A ‘full investment’ approach 13
- Meeting economic, environmental and social challenges simultaneously 19
- Restoring the link between money, price signals and ethics 29
- Encouraging enterprise and decentralisation 39
-
Ethical dimensions
- Linking money and morality 49
- Encouraging a ‘giving’ culture 55
- Managing the power of money 59
- Money: what is it for? 67
- Returning business ethics and philanthropy to corporate social responsibility 71
- Reducing inequality 79
-
Empowerment
- Living on a low income 89
- Hearing but not listening: why charities fail 97
- Responding to cultural diversity 103
- Conquering helplessness: ones and zeros 113
- The myth of easy money: developing financial services that would really help 123
-
Conclusions
- Promising approaches and mechanisms 135
- Index 141
