Posts Tagged ‘Wonga’

The Bulgarian Peasant Party’s Solution to the Housing Problem

June 1, 2014

Last week I blogged on the several contemporary issues, which were similar to those tackled by the Bulgarian peasants’ party, BANU, nearly a hundred years ago. These were a local village power company, which was run as a co-operative by the whole community. It was thus similar to the idea of the Utopian British Socialist, Thomas Spence, for the communal ownership of land by the individual parishes, and also to the idea of the Bulgarian peasants’ party for the transformation of Bulgarian agricultural society through the formation of peasant cooperatives. I also remarked on the way the Bulgarians had also set up a policy of allowing the banks to provide loans on reasonable rates to credit cooperatives as a way of driving out the moneylenders. This is a problem that now besets British society, through the return of loan sharks and payday loan companies, like Wonga, that offer extortionate rates, because of wage freezes and cuts to welfare benefits.

Bulgaria, like modern Britain, also suffered from a housing crisis, made worse by the influx of thousands of refugees displaced by the First World War. They attempted to solve it through a mixture of policies, one of which was similar to the Bedroom Tax. They laid down the maximum amount of space that a family could occupy in a property, so that there would be more space available for the homeless. They also set about building cooperatively owned tenement blocks. R.J. Crampton describes these policies in A Short History of Modern Bulgaria (Cambridge: Cambridge University Press 1987) 90).

The principle of maximum holding was applied to urban as well as rural property. The post-war refugee invasion had placed severe strains upon the already hard-pressed housing resources of Bulgaria’s towns, particularly Sofia. According to Agrarian legislation no family was to occupy more than two rooms and a kitchen, with an extra room for every two children over fourteen. Office space was also subject to restriction, and in the case of both domestic and office accommodation commissioners acting on behalf of the ministry of the interior had extensive powers to enforce the new and widely resented regulations. A second and more popular response to the housing shortage, and one much in conformity with Agrarian philosophy, was to encourage the building of new apartment blocks cooperatively financed and thereafter owned by their inhabitants. This reform survived the fall of the Stamboliiski regime and cooperative building continued through the inter-war period.

The German radical Socialist party, the USPD, also had a similar policy in the same period, for the same reasons: to solve the shortage of housing caused by the First World War.

What’s needed isn’t the Bedroom Tax, which is really an excuse to cut Housing Benefit by pretending to withdraw a subsidy that never in fact existed, if tenants of supposedly under-occupied properties don’t move out to suitable homes, which also don’t existed. What is needed to solve the problem is simply building more social and genuinely affordable housing, which the Conservative actively seem to oppose. When the ‘right to buy’ legislation was passed, councils were forbidden from building more council houses, and ‘affordable’ properties are only pegged at 80 per cent of the market worth, which means that in many parts of the London houses are well out of the price range of the very poorest, who need them. It’s possible that cooperation schemes, like those enacted by the Bulgarians, might be part of the solution.

Something like the Bulgarians’ legislation limiting the maximum amount of space families can occupy could also be applied to private housing. The Bulgarian policy was based on the view that you should only possess what you can actually work yourself. Thus there was a maximum amount of land allowed to be cultivated by peasant farmers. Large landowners were forced to sell the excess land to the smaller peasants, so that each peasant farmer had just enough for his needs and those of wider Bulgarian society.

The great French anarchist, P.-J. Proudhon, had a similar view. Much of his Mutualist anarchist system was based on his experience of peasant society in the Jura, where he grew up. While he didn’t set the maximum amount of space people could occupy in their houses, he did recommend that people should lawfully own only what they could actually practically use themselves. Thus, landlords, who held multiple properties, which they rented out, should have all but the property they themselves lived in expropriated and given to the people, who needed them.

I believe a similar policy could be usefully implemented today. Perhaps we need the ‘right to buy’ principle extended to all the private tenants, now forced to rent homes at exorbitant rents because of the way available housing was bought up by people seeking to rent them out later in the housing boom of the 1990s. I also believe that there are many under-occupied private homes, with considerable space going without tenants, in certain parts of London, such as Knightsbridge, Kensington and Westminster.

And possibly Chipping Norton. I can’t see how Dave Cameron, whose government is responsible for the Bedroom Tax, and who has said repeatedly that ‘We’re all in it together’, would possibly object to having to share his home with a couple of crusties.

Peasants of Britain Unite and Kick Out the Pay Day Loan Sharks

May 29, 2014

In my last blog post, I looked at the similarities between a community power company set up by the people of a village here in England, and the various schemes for the cooperative reorganisation of society from Thomas Spence’s Land Plan, for the communal ownership of land by each parish community, and Bulgarian Agrarian National Union’s plans for a national and then international society of cooperative peasant communities.

There’s another policy of the party of the Bulgarian peasantry, which I feel very strongly should be adopted by 21st century Britain: legislation and the reform of the banks to cut out and suppress the pay day loan companies, like Wonga and the rest of the sharks. After the liberation from Ottoman rule hundreds of villages in rural Bulgaria had been forced into serious debt to private moneylenders. Many of the Muslim and ethnic Turkish landowners had emigrated or fled to Turkey, leaving large amount of land available for the Bulgarian peasants. There were, however, no banks available to provide them with the loans and credit they needed to purchase the land and essential tools, and so they turned instead to private moneylenders.

The Bulgarian peasants’ party, BANU, and the peasants’ union which preceded it, attempted to combat this by establishing credit cooperatives. After BANU took power in 1919, they attempted to prevent the moneylenders from reappearing by passing legislation insisting that the banks lend money to the cooperatives on reasonable terms.

Britain too in the 21st century has seen the return of the loan shark and moneylender as thousands, perhaps millions, have got into serious debt. Some of this has been through the absurdly easy credit that was offered in the boom years, when people were encouraged to spend as much as they could through credit cards. Other causes include rising rents and mortgages as well as an increase in prices, while pay has been frozen or even cut. The government’s cuts to unemployment benefit have also forced some to turn to private moneylenders, as the amounts provided by Jobseekers’ Allowance is inadequate, sanctions are imposed seemingly arbitrarily according to the whim of the government and the targets set by the DWP to get people off benefit. Those, who are considered to have left their job without good reason are denied benefit for weeks, and the government is considering imposing a waiting time of about three weeks for new claimants before they can get their money.

As a result, Britain has seen a resurgence, not just in criminal loan sharks, but also in the payday loan companies, like Wonga, which offer easy loans at truly extortion rates. The Archbishop of Canterbury, Julian Welby, is recommending a system of Credit Unions to tackle this. Critics fear this will be inadequate. It may well be, but that doesn’t mean that Credit Unions need not part of a broader programme to combat this. We need legislation to cut down the rates at which Wonga and the other loan companies can lend, to reduce them from the 5,000 per cent odd interest rate they are at the moment to something far more manageable. In America, surely one of the most capitalist nations in the world, they aren’t allowed to lend at over 20 per cent. Passing legislation to insist that everyone gets a living wage would also be a massive improvement, as would a complete stop on benefit sanctions, delays in payment and actually raising the amount of money paid to something people can actually live on.

All this, however, would mean abandoning the harsh, neoliberal economic orthodoxy that demands that the poor be penalised, simply for being poor, under the pretext that somehow their poverty is their own fault. And the Tories and their Tory Democrat allies really don’t want to do that by any means. It’s time for the British peasants to follow the Bulgarians of 1919 to throw out the payday loan companies, and kick the Tories out of office.

Another Angry Voice on Payday Loan Sharks: You’ve Been Wongad

July 27, 2013

The payday loan company, Wonga, was in the news yesterday when it was reported that the Archbishop of Canterbury, Justin Welby, was furious that one of the companies in which the Church had invested its pension fund had put some of the money in Wonga. The Archbishop has severely criticised Wonga, and similar legal loan sharks, and stated that he wanted the church to ‘outcompete them’ through offering alternative sources of money in credit unions.

Way back in 2012, the superbly well-informed Yorkshireman at Another Angry Voice posted an excellent piece giving further details on the company. It describes its links and connections to the Tory party, and the fact that even in America, the home of free-trade capitalism, companies like Wonga are only allowed to offer interest rates of 36 per cent. Among other fascinating facts, the article states

Here’s some of the stuff that the majority of the mainstream media seem happy to remain silent about.

Did you know that the payday loan sector has been booming since the economic crisis and the resulting “credit crunch”? In 2011 Wonga handed out an astonishing 2.5 million super-high interest loans. The predatory loan sector is one of the very few sectors of the UK economy that seems to be booming through the turgid economic climate created by George Osborne’s ideologically driven, catastrophically miscalculated and economically destructive austerity agenda.

Did you know that these kinds of super-high interest loans are illegal in almost every other advanced western democracy? That other nations tend to protect their poor and vulnerable from this kind of brazen economic parasitism. Even the notoriously Ayn Rand inspired, free-trade preaching, banker friendly mob that run the United States have imposed a Federal maximum APR of 36% for loans to military personnel, which is less than one one hundredth of a typical Wonga APR. Predatory payday loans are illegal in 13 states and regulated in the other 37 states. In Canada these kinds of loan are prohibited by usury laws, with any loan exceeding 60% APR (including fees and brokerage) being considered criminal.

Did you know that some financial sector institutions use the receipt of a payday loan as evidence of credit-unworthiness? The fact that you can be credit blacklisted simply for taking out payday loans seriously damages the argument that these loans are just a “helping hand” and not predominantly marketed at the extremely poor, vulnerable and financially illiterate.

Did you know that these kinds of payday loan companies are so universally despised that even the Daily Mail readership are near unanimous in their condemnation (scroll down to the bottom of this article and click the “best rated” tab). Here’s what Bob, a Daily Mail reader from Bridport, had to say about them:

“These rip off organisations should be properly regulated. Their interest rates are appalling. Feeding on the vulnerable in society. The adverts are a disgrace to elderly people. Shut them down now along with all the other Payday loan sharks on TV.”‘

It says something about the firm’s extremely low moral standing when even the readers of the Daily Mail universally hate it.

The complete articles is at http://anotherangryvoice.blogspot.co.uk/2012/11/youve-been-wongad-tory.html. And it’s very well worth reading.