“But they’ve repaid the debt several times over”

This gets repeated a lot in Debt (David Graeber), and in the world in general.  It annoys me as a criticism of lenders or lending.

Would you rather have $100 now, or in a month?  I’m guessing now, unless your tax circumstances are about to change drastically.  How much additional money would it take for you to prefer payment in a month?  $10?  $15?  What if there were significant transactions costs to receive payment?  What if there was risk involved?  The fact that you would rather have money sooner than later is known as the time value of money.

This is the principle behind interest on a loan: you’re compensating the lender for them not having the money until later.

How much of an increase would you need to agree to delay receiving some money by 50 years, instead of $100 now?  I’m guessing it is a lot.  Many times the original $100.  The implication of the phrase “but they’ve repaid the debt several times over” is that this is morally wrong.  But if you’re not referencing the timespan on which that repayment took place, the statement is meaningless.  To compare apples to apples you need to do a present value calculation, which tells you the equivalent of what they paid if it had been delivered as a lump sum at the beginning.

This statement often gets entangled with the idea of usury (unfairly or immorally high interest rates).  I am not a big fan of the usury taboo: you’re not hurting someone by giving them the option to take a loan .  The counterargument is that deal was opaque (which is a fair criticism) or that the borrowers circumstances were so bad they had no choice.  Which is definitely a thing, but… maybe we should fix the problem at that end?  Much like debt forgiveness this appears to be a call to give poor countries/people more money, with a layer of obfuscation added by debt.  I am extremely curious why this seems to be more attractive than my solution “just give them money”.