[Plura-list] Ant, Uber, and the true nature of money; Scarfolk & Environs

[Cory Doctorow]

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Baycon 2020 - where I was scheduled to be Guest of Honor - has
reconstituted as a series of online panels. I'm doing one on Saturday:

How do we survive Social Engineering?
https://baycon.org/baycon-2021-zoom-mini-con-3-november-7th/

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Today's links

* Ant, Uber, and the true nature of money: Money vs finance.

* Scarfolk & Environs: "Road & Leisure Map for Uninvited Tourists."

* This day in history: 2010, 2015, 2019

* Colophon: Recent publications, upcoming appearances, current writing
projects, current reading

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👊🏿 Ant, Uber, and the true nature of money

The US election news has largely overshadowed a seismic moment in global
finance: Ant, a fintech company that spun out of Alibaba/Alipay, was
scheduled to have the world's largest IPO, topping even Aramco, the
Saudi sovereign wealth fund.

Then Chinese regulators canceled it.

As Yves Smith writes in her excellent Naked Capitalism breakdown, the
consensus narrative on this is capricious Chinese regulators changed
their minds and jerked the rug out from under Ali's billionaire owner
Jack Ma.

The reality is a lot chewier.

https://www.nakedcapitalism.com/2020/11/china-takes-step-against-securitization-consumer-borrowing-with-suspension-of-ant-ipo.html

To understand it, you need to understand the difference between the
Chinese and American "money story." In the US, there is widespread,
unquestioning faith in the fairytale that money predates the state and
is separate from it.

In this story, people come together to trade but are plagued by
disparate goods: if I want to pay for your chickens with a cow, how do
you make change? They spontaneously decide that something (gold?) is
money and price their cows and chicks in it.

Then, governments come along tax our gold away, and then to add insult
to injury, governments abandon gold and insist that paper is as good as
gold, print too much of it and crash the economy!

This probably sounds familiar to you, but it's just not true.

The actual historical reality, supported by history, archaeology and
anthropology, is that governments created money by creating tax. The
first "money" was the Babylonian ledgers that recorded how much of their
crops farmers owed to the state and their creditors.

Money took a leap forward with imperial conquest: emperors solved the
logistical problem of feeding and billeting their occupying soldiers by
charging the occupied a tax that had to be paid for in coins stamped
with the emperor's head.

They paid the soldiers in these coins, and demanded that their conquered
populations somehow get the coins in order to pay their tax, with
violent consequences if the tax wasn't paid. So the people sold food and
other necessities to soldiers to get the coins.

Money, in other words, is how states provision themselves, and it
derives its value from the fact that you have to pay your taxes in it.
Governments spend money into existence by buying labor and goods from
the public, and then tax it out of existence once a year.

The money the government spends, but does not tax, is the public's money
- the money left over for us to transact. All the money in circulation
is the sum total of all the money the government spent but didn't tax -
that is, the government's deficit is the public's asset.

When governments run "balanced budgets" (or budget surpluses), they
remove money from the economy, leaving the public with less to spend.
That can be a good thing - a way to fight inflation, which is when too
much money chases too few assets.

Low government spending slows growth by taking away the private sector's
ability to spend. When the private sector is at full employment, when it
is buying all the stuff that's for sale, you need to do something to
keep inflation at bay.

During WWII, the USG competed with the private sector for stuff and
labor. Uncle Sam spent lots of new money into existence, paying people
to build munitions - but then convinced people to buy war bonds, burying
that new money for years to come.

https://www.nakedcapitalism.com/2019/07/taxes-for-revenue-are-obsolete.html

But when governments run so lean that there isn't enough money in the
economy for the private sector to buy the stuff it needs, it seeks out
other forms of money, like bank loans (which generate interest income
for shareholders - one reason the market likes austerity).

In theory, bank lending is tightly regulated. Banks are the government's
fiscal agents, creatures of the state, only able to trade because of a
government charter. But when there isn't enough money in the system,
unregulated banks spring into existence.

Another word for "unregulated bank" is "fintech" (h/t Riley Quinn).

And now we're back to China and the money story. Chinese finance
regulators have always treated money as a public utility, to be spent or
withdrawn to accomplish public purposes.

During the country's rapid industrialization, regulators loosened the
flow of money to allow for rapid capacity-building, directing the
country's productive capacity to building factories that would multiply
that capacity.

But when they shut off the spigot and told factory owners that their
future growth would come from making and selling things, the wealthy
rebelled and sought out money from unlicensed banks or banks that were
willing to break the rules.

This led to a string of subprime debt crises over the past five years,
as regulators crushed these wildcat money-creators as fast as they
popped up.

https://www.bloomberg.com/opinion/articles/2016-02-17/china-s-600-billion-subprime-crisis-is-already-here

China's 1% fought back. They emigrated:

https://www.macrobusiness.com.au/2012/08/rich-chinese-flee/

They used cryptocurrency (aka fintech) to evade capital controls,
inflating the Bitcoin price-bubble and the Vancouver/Sydney/etc
real-estate price bubble as they laundered their money and stashed it in
safe-deposit boxes in the sky:

https://www.ft.com/content/bad16a88-d6fd-11e6-944b-e7eb37a6aa8e

As China's shadow economy ballooned it also grew in criminality. There
was the wave of Chinese debt-kidnappings, which became so widespread
that hostage-taking was described as "China's small claims court."

https://foreignpolicy.com/2017/08/08/chinas-police-think-hostages-arent-their-problem/

No wonder regulators fought back.

China's regulators didn't win a decisive victory, but they retained
enormous control over their money-supply, and that *really* paid off
when the pandemic hit and they suspended all debts, rents, and taxes and
mothballed the entire productive economy.

https://pluralistic.net/2020/09/01/cant-pay-wont-pay/#jubilee-now

Contrast with the US where the finance sector is an industry, not a
public utility. Finance flexed its political muscle and diverted nearly
the whole stimulus to itself, then crushed the productive economy by
demanding debt service and rents.

https://www.nakedcapitalism.com/2020/09/michael-hudson-how-an-act-of-god-pandemic-is-destroying-the-west-the-u-s-is-saving-the-financial-sector-not-the-economy.html

The ability to use finance as a utility is one of China's crucial
assets, and it defends that asset ferociously. And *that's* why the Ant
IPO got killed. Ant's major source of income is short-term,
high-interest lending, what Chinese regulators call "pawnbrokering."

China's pawnbrokers are a $43B shadow banking sector, and the country's
regulators have been cracking down on them for the past year.

https://www.bloomberg.com/news/articles/2019-03-12/china-is-said-to-scrutinize-43-billion-pawn-shop-lending-boom

$43B is a drop in the bucket of China's shadow economy (valued at $9T!),
but it has real metastatic potential.

Ant's innovation is to fintechify the pawnbroker industry, by tying it
to apps (on the front end) and to a US-style debt-brokerage (on the back
end).

IOW: Ant's business model is that desperate people use an app to request
and quickly receive high-risk, high-interest loans.

Then Ant sells the loans to "investors" (AKA "securitization").
Converting debts into income streams for third parties is the true basis
of the finance industry. It's the means by which socially useless
intermediaries extract ever-mounting rents from the productive economy.

And as Smith writes in her breakdown, the fact that Chinese finance
regulators weren't going to let Ant explode its mass-scale, app-based
payday-lending pawnbrokerage is not a surprise. They've been telling
Jack Ma this for *months*, publicly and privately.

Ma thought he could simply bull his way past the Chinese regulators -
that because he runs Alibaba and its subsidiaries, that they would defer
to him. But the whole point of a finance regulator is NOT to let the
finance sector write its own rules.

That's because bankers will cheerfully set the whole economy on fire to
turn a buck (see, e.g., America).

Ant was on track for the largest IPO in world history due to investors'
appetite for converting Chinese money from a public utility to a private
enrichment vehicle.

So yeah, you're goddamned right the Chinese regulator wasn't going to
let him do it. Their whole *job* is to not let him do it.

If you read this far, you may be asking yourself why, if governments
don't need taxes to fund programs, they bother to tax at all?

There are two important reasons. The first is to fight inflation, by
removing existing money from circulation so that when the government
spends new money into existence to pay for the things it needs, that
money isn't bidding against the existing supply.

But the other reason is to deprive the wealthy of the power that money
brings, lest they use that power to pervert policy. Jack Ma's billions
are what got him to the brink of a disastrous IPO for his unregulated bank.

And the US election demonstrates just how badly public policy fares when
concentrated money is brought to bear on it for parochial purposes. Take
Prop 22, the California ballot initiative to allow Uber and Lyft to
misclassify their employees as independent contractors.

No on Prop 22 is a no-brainer. Vast numbers of gig workers are full-time
employees, not contractors, and Lyft and Uber and other gig economy
companies have pioneered labor misclassification as a tactic for paying
literal starvation wages.

https://pluralistic.net/2020/10/14/final_ver2/#prop-22

And yet, Prop 22 passed, thanks to the largest-ever spending on any
ballot initiative in California history: $205 million ($628,854/day!),
spent pn 19 PR firms (including Big Tobacco's cancer-denial specialists).

https://jacobinmag.com/2020/11/proposition-22-california-uber-lyft-gig-employee/

The spend included a bribe to the NAACP Chair's consultancy that made
sub-minimum wage jobs with no benefits for people of color (the majority
of gig workers) seem like a blow for racial justice.

All told, Uber/Lyft's campaign outspent 49 out of 53 CA House races
*combined*.

And it was a bargain. Lyft and Uber have stolen $413m from California's
employment insurance fund since 2014 - and that's just one cost they
ducked through this victory. Far more important are the savings they'll
realize on worker safety and job-related death claims.

The gig economy companies are the epitome of the financial economy
destroying the productive economy. None of these companies turn a
profit, after all - all they do is destroy actual, profitable businesses.

Currently the entire restaurant sector is being laid to waste by
Postmates and Uber Eats (even as both lose vast sums):

https://pluralistic.net/2020/09/19/we-are-beautiful/#man-in-the-middle

And the workers who lost out with Prop 22 are being "chickenized" -
having all the risk of operating a business shifted onto their side of
the ledger:

https://pluralistic.net/2020/07/14/poesy-the-monster-slayer/#stay-on-target

(No surprise, one of Prop 22's signature achievements was denying
workers the right to unionize).

The desperation of chickenized workers is downright dystopian:

https://pluralistic.net/2020/09/02/free-steven-donziger/#phone-trees

and chickenization (not automation) is the major cause of falling wages:

https://pluralistic.net/2020/06/17/on-face-interaction/#zombie-robots

Lyft, Uber, Postmates, and the whole gamut of gig economy companies are
all haemorrhaging money. Uber alone lost $4.7B in the first half of
2020. That's how you can tell they aren't tech companies: tech companies
profited during the pandemic.

Gig-economy companies aren't part of the productive economy - they're
part of the finance economy. They rely on investors, not profits from
delighted customers, to stay afloat. They make nothing. They destroy
everything: workers' lives, productive businesses.

They will never be profitable. Ever.

Take Uber. The company only exists because the Saudi royals amassed so
much money that they could bend reality. The "Saudi Vision 2030" plan
calls for the creation of new sources of post-oil wealth.

To that end, the Saudis have poured money into the Softbank VC fund,
which then supported global-scale, money-losing, predatory businesses in
the hopes of securing a monopoly (or, failing that, unloading the
company onto dazzled suckers).

When the company IPOed last year, it had already lost $10b. It loses
$0.41 on every dollar you spend on your fare. And yet, the Saudis got
away clean, off the backs of investors who assumed that a pile of shit
this big must have a pony under it somewhere.

Some believed the company's lies about the imminence of self-driving
cars. Uber is not going to make a self-driving car.

https://pluralistic.net/2020/09/30/death-to-all-monopoly/#pogo-stick-problem

Some believed the company's lies about profitability via growth. It
can't grow to profitability. By its own disclosures, profitability
depends on every public transit system in the world shutting down and
being replaced by Ubers. #Nagahappen.

https://48hills.org/2019/05/ubers-plans-include-attacking-public-transit/

The Saudi strategy - and its punishing, economy-destroying
reality-distortions - are exemplary of what happens when government let
too much money accumulate in unaccountable, private hands. Prop 22 will
kill and starve workers, and the public will pick up the pieces.

The businesses that profit from these deaths and immiseration will fail
anyway, but not before their major backers and top execs make hundreds
of millions or billions.

Recall: the Ant IPO was set to smash the existing record: Saudi Aramco
(AKA the money behind Uber).

Meanwhile, all the blood and treasure squandered on Prop 22 - the $205m
spent on the Yes side, the $20 spent by unions on the No side - won't
save Uber or other gig economy companies.

Not only are they bleeding money, but as Edward Ongweso Jr explains,
"Uber is losing legal challenges in France, Britain, Canada, Italy,"
turning drivers into employees or allowing "lawsuits reclassifying them
as such."

https://www.vice.com/en/article/3annmb/proposition-22-passes-in-california-but-uber-and-lyft-are-only-delaying-the-inevitable

And other US states - NY, MA, NJ - are working to end the
misclassification of Uber drivers and other gig workers.

Permitting Uber and other gig economy companies to flout the law did not
make the economy better. All it did was transfer more money to the wealthy.

And the money they wealthy amass is converted to political power,
usurping money's role as a public utility and converting it to a means
to seek private gains at public expense.

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👊🏿 Scarfolk & Environs

One of the great delights of this decade is Scarfolk, Richard Littler's
long-running art-project about a English horror-town trapped in an
endless, looping Thatcherite decade, whose artifacts are pitch-perfect
comments on our own daily lives.

The period Littler focuses on - the dawn of neoliberalism - is a turning
point in our collective timeline, the ascendant moment of selfishness,
the elevation of sociopathy to a virtue, the moment in which corporate
personhood was elevated at the expense of human personhood.

As such, the parallels he is able to draw are incredible, savage and
brilliant, augmented by his biting prose and his superb draftsmanship
and outstanding design.

Littler's work was born digital, but it transitions VERY well to print.
Last year's SCARFOLK ANNUAL was one of 2019's best art-books.

https://memex.craphound.com/2019/10/30/the-first-scarfolk-annual-a-mysterious-artifact-from-a-curiously-familiar-eternal-grimdark-1970s/

This year's addition to the print Scarfolk canon is "Scarfolk &
Environs: Road & Leisure Map for Uninvited Tourists," endorsed by the
likes of Billy Bragg and Ian Rankin.

https://scarfolk.blogspot.com/2020/11/scarfolk-environs-road-leisure-map-for.html

For those of us who grew up poring over the endpaper maps in Lord of the
Rings or the giant hex-paper Greyhawk maps in our D&D; modules, this is
a weirdly comforting and profoundly discomfiting artefact.

It retails for £12.00; Britons can buy it from Waterstones, Foyles,
Blackwells or the Book Depository. There's also a web-exclusive run of
1,000 with Herb Lester that comes with "a Scarfolk bookmark made of
genuine imitation leather."

https://www.herblester.com/products/scarfolk-environs

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👊🏿 This day in history

#10yrsago Zoo City: hard-boiled South African urban fantasy makes murder
out of magic
https://memex.craphound.com/2010/11/05/zoo-city-hard-boiled-south-african-urban-fantasy-makes-murder-out-of-magic/

#10yrsago Crutchfield Dermatology of Minneapolis claims copyright in
everything you write, forever, to keep you from posting complaints on
the net
https://web.archive.org/web/20110914102214/https://www.crutchfielddermatology.com/about/cancellationpolicy.asp/

#10yrsago New Zealand proposes “guilty until proven innocent” copyright
law to punish accused infringers
https://arstechnica.com/tech-policy/2010/11/new-zealand-p2p-proposal-guilty-until-proven-innocent/

#10yrsago Toronto cops who removed their name-tags during the G20 to
avoid identification will be docked a day’s pay
https://web.archive.org/web/20101107144339/https://www.theglobeandmail.com/news/national/toronto/nearly-100-toronto-officers-to-be-disciplined-over-summit-conduct/article1784884/

#5yrsago Shortly after Murdoch buys National Geographic, he fires its
award-winning journalists
https://web.archive.org/web/20151104131240/http://reverbpress.com/business/rupert-murdoch-national-geographic-layoffs/

#5yrsago British government will (unsuccessfully) ban end-to-end
encryption
https://www.theguardian.com/politics/blog/live/2015/nov/04/surveillance-internet-snoopers-charter-may-plans-politics-live

#5yrsago Predatory lenders trick Google into serving ads to desperate,
broke searchers
https://www.theatlantic.com/technology/archive/2015/11/google-searches-privacy-danger/413614/

#5yrsago Chelsea Manning publishes a 129-page surveillance reform bill
from her cell in Leavenworth
https://s3.amazonaws.com/fftf-cms/media/medialibrary/2015/11/manning-memo.pdf

#1yrago The inspiring story of how Cloudflare defeated a patent troll
and broke the patent-trolling business-model
https://blog.cloudflare.com/the-project-jengo-saga-how-cloudflare-stood-up-to-a-patent-troll-and-won/

#1yrago When the company that made your prosthetic feet won’t repair
them
https://www.facebook.com/photo.php?fbid=10217715938707821&set;=a.1092796157719

#1yrago “Christian” hospital charges its own nurse $900,000 for her
premature baby
https://www.propublica.org/article/how-one-employer-stuck-a-new-mom-with-a-bill-for-her-premature-baby

#1yrago Jeannette Ng was right: John W Campbell was a fascist
https://locusmag.com/2019/11/cory-doctorow-jeannette-ng-was-right-john-w-campbell-was-a-fascist/

#1yrago After decades of corporate theft, Spinal Tap is finally getting
paid by Universal
https://variety.com/2019/biz/news/spinal-tap-universal-music-settle-copyright-dispute-1203393300/

#1yrago Lynda Barry’s “Making Comics” is one of the best, most practical
books ever written about creativity
https://memex.craphound.com/2019/11/05/lynda-barrys-making-comics-is-one-of-the-best-most-practical-books-ever-written-about-creativity/

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👊🏿 Colophon

Today's top sources:

Currently writing: My next novel, "The Lost Cause," a post-GND novel
about truth and reconciliation. Yesterday's progress: 533 words (80939
total).

Currently reading: The Ministry for the Future, Kim Stanley Robinson

Latest podcast: Someone Comes to Town, Someone Leaves Town (part 21)
https://craphound.com/podcast/2020/11/01/someone-comes-to-town-someone-leaves-town-part-21/

Upcoming appearances:

* How do we survive Social Engineering? Nov 7, Baycon,
https://baycon.org/baycon-2021-zoom-mini-con-3-november-7th/

* How to Fix the Internet/Reboot 2020, Nov 9,
https://www.rebootconference.org/day-two

* Cyberterrorists, Post-Apocalyptic Landscapes, and
Were-Pomeranians/Texas Book Festival, Nov 12,
https://www.texasbookfestival.org/events/cyberterrorists-post-apocalyptic-landscapes-and-were-pomeranians-new-in-speculative-fiction/

* Let's Talk About Influence/Designthinkers, Nov 16,
https://www.designthinkers.com/week-2/strategy-lets-talk-about-influence

* Shaping the Digital Future Summit/Kaspersky, Nov 17, details TBD

* Misinformation and Disinformation in Science Fiction and Fantasy/LITA,
Nov 17, details TBD

* Keynote, Data Natives, Nov 18, https://datanatives.io/tickets/

* Keynote, Cologne Futures, Nov 20, details TBD

* Keynote, Cybersummit 2020, Nov 26 https://www.cybera.ca/cyber-summit-2020/

* Beaverbrook Lecture: How to Destroy Surveillance Capitalism, Nov 30,
https://www.mcgill.ca/maxbellschool/channels/event/2020-beaverbrook-annual-lecture-part-ii-cory-doctorow-325538

* Keynote, NISO Plus, Feb 22-25,
https://niso.plus/cory-doctorow-to-keynote-at-niso-plus-2021/

Recent appearances:

* Author Stories Podcast
https://www.youtube.com/watch?v=yxSPZn8EGTE

* The Gould Standard:
https://www.glenngould.ca/thegouldstandard/#cory-doctorow

* Attack Surface: A Reckoning
https://draxfiles.com/2020/10/26/show-278-attack-surface-a-reckoning/

Latest book:

* "Attack Surface": The third Little Brother novel, a standalone
technothriller for adults. The *Washington Post* called it "a political
cyberthriller, vigorous, bold and savvy about the limits of revolution
and resistance." Order signed, personalized copies from Dark Delicacies
* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet
analyzing the true harms of surveillance capitalism and proposing a
solution.
https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59

* "Little Brother/Homeland": A reissue omnibus edition with a new
introduction by Edward Snowden:
https://us.macmillan.com/books/9781250774583; personalized/signed copies
here:
https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime,
gender, and kicking ass. Order here:
https://us.macmillan.com/books/9781626723627. Get a personalized, signed
copy here:
https://www.darkdel.com/store/p1562/_Poesy_the_Monster_Slayer.html.

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