[Plura-list] QE, inflation, slave labor and a People's Bailout

[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; mine's today at 1:45 Pacific:

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

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Today's links

* QE, inflation, slave labor and a People's Bailout: Uber is a
(terrible) job guarantee program.

* This day in history: 2005, 2010, 2015, 2019

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

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🦺 QE, inflation, slave labor and a People's Bailout

The Obama administration inherited a vast economic crisis. They
responded with Quantitative Easing, pumping trillions into the finance
sector to rescue the banks that had knowingly gambled on bad mortgages,
losing so much they were about to go under.

https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-years-ago--these-four-charts-show-its-impact.html

At the time, deficit hawks predicted inflation, which is a commonsense
prediction: inflation is what happens when the amount of money chasing
goods and services goes up faster than the supply of those goods and
services, creating bidding wars.

They were right...and wrong. What we got was asset bubbles, especially
in housing markets, driving up the price of putting a roof over your
head rewarding speculators and landlords, especially Wall Street landlords.

And Obama's handling of the financial crisis put a lot of us under the
thumbs of landlords! Obama bailed out the banks, but not the mortgage
holders, kicking off waves of foreclosures.

Thanks to lax oversight, banks that had cheated to originate or service
mortgages were able to cheat on foreclosures, too - stealing houses from
borrowers who were up-to-date on payments or who were entitled to
forebearance.

https://web.archive.org/web/20101017014628/http://news.yahoo.com/s/yblog_upshot/20101014/bs_yblog_upshot/is-david-j-stern-the-poster-boy-for-the-foreclosure-mess

I mean, literally stealing houses by the hundreds or even the thousands.
The very same people who created the great financial crisis got bailed
out, rather than punished, and used their new lease on life to commit
even worse crimes with total impunity.

The houses that were foreclosed (and sometimes stolen) were flipped to
Wall Street, who LOVE financial products based on peoples' homes. After
all, people will move heaven and earth to keep shelter over their kids'
heads.

https://www.motherjones.com/politics/2014/02/blackstone-rental-homes-bundled-derivatives/

Corporate landlords built a sturdy, three-legged stool to guarantee the
flow of rents to their investors.

I. Jack up rents to consume the majority of tenants' income:

https://www.nakedcapitalism.com/2017/09/wall-street-owns-main-street-literally.html

II. Cease maintenance, knowing that your tenants have no recourse if
their homes are crumbling and unsafe:

https://www.reuters.com/investigates/special-report/usa-housing-invitation/

III. Perfect the eviction, heretofore an American rarity:

https://www.bloomberg.com/news/articles/2017-01-03/wall-street-america-s-new-landlord-kicks-tenants-to-the-curb

America's housing crisis - substandard homes rented at unsustainable
costs to people who had their own homes stolen from them by the same
investors they're currently paying rent to - is a major legacy of QE,
and it's definitely inflationary.

But it's a highly selective form of inflation. Many people won't
experience it at all: if you owned your house before the crisis and
weathered it, the asset bubble has made your home more valuable, while
falling interest rates let you refi at rock-bottom rates. You're great.

You're paying less than ever for a home that's worth more than ever, but
that's a spillover effect of the main show, which is the process by
which millions of Americans were robbed of their homes and then moved
into high-priced slums to the benefit of the 1%.

Both Obama and Trump have boasted of the economy's performance since QE,
pointing to soaring share prices - share prices that are totally
decoupled from company performance. Companies lose money and still gain
value.

Indeed, predatory companies (like Grubhub, Postmates, Door Dash and Uber
Eats) that destroy profitable companies (restaurants) while still losing
money are booming in value.

https://pluralistic.net/2020/05/18/code-is-speech/#schadenpizza

Investors understand that consumers have no money, due to rising housing
costs plus crashing wages, largely thanks to the "gig economy," a polite
term for "worker misclassification."

Companies that get bailouts would be stupid to spend the money on jobs
or new productive capacity to make stuff no one can afford to buy.
Instead, they buy their own shares and declare dividends, driving up
share prices.

https://pluralistic.net/2020/10/20/the-cadillac-of-murdermobiles/#austerity

We have seen an incredible market bull-run since the Great Financial
Crisis, a run that has largely continued since the pandemic. It's the
other asset bubble: a bubble in investment assets.

Corporate leaders claim responsibility for these rises, but the reality
is that it's the predictable result of bailing out banks and companies
rather than workers and homeowners.

Société Générale's analysts say that about half of the stock market's
gains since 2008 can be attributed to QE.

https://www.marketwatch.com/story/without-qe-the-s-p-500-would-be-trading-closer-to-1-800-than-3-300-says-societe-generale-11604688442

Top-down bailouts have multiplier effects. The banks are made whole,
then they get to steal our houses, then they get to steal our rents,
then they get to goose their share prices.

This is how the super-rich got even richer, before and after the
pandemic. It's also why the tiny minority of Americans with adequate
retirement savings saw them swell - it's another spillover effect of the
great upward transfer of national wealth.

Why does all of this matter now? Well, between my writing my first
paragraph and this one, Biden was declared, giving us what the Biden
campaign signalled would be "Obama's third term."

Biden's taking office amidst a financial crisis that's far worse than 2008.

Biden has a long track-record of giving legislative gifts to the finance
sector at the expense of the American people. They called him "The
Senator from MNBA" for a reason.

https://www.gq.com/story/joe-biden-bankruptcy-bill

If he addresses this crisis the same way that he did in 2008 - the way
that Congress and the Senate addressed the crisis in 2020 - by bailing
out finance, not the public, we're seriously fucked.

Sure, the stock market will continue to rise and rise, as will house prices.

If you are in the 1%, you will get SO MUCH richer. If you're in the 10%,
your retirement savings will swell, your mortgage will get cheaper, and
your house's value will go up.

For everyone else: evictions, foreclosures, soaring rents, worse wages.

Last week, California voters passed Prop 22, safeguarding the right of
gig economy companies to misclassify their workers as contractors and
pay them sub-minimum wages, withhold benefits, evade payroll and
unemployment taxes, etc.

Uber/Lyft spent $200m to secure that win.

As Prop 22's promoters remind us: Gig work is the new unemployment
benefit: it's a private-sector jobs guarantee, work you can get at the
tap of your screen. It's a perfect labor market - workers effectively
bid to offer the best price to perform servant work for others.

The more workers there are, and the more desperate their situation is,
the lower the payments go. A lot of those savings are siphoned off by
the (money-losing, stock-soaring) gig companies, but some of it is
passed onto customers.

This is by design.

Since the Reagan years, neoliberal regulators and lawmakers have hewed
to a radical anti-monopoly theory called "consumer harm." Under
"consumer harm," monopolies are only a problem if they drive up prices.

Since gig companies lower prices, they are totally kosher - even if they
secure monopolies through predatory pricing.

But there's an even more insidious side to "consumer harm" and the gig
economy.

Misclassifying workers as independent contractors converts a brutally
exploited workforce into a collection of "small businesses." If they get
together and demand higher wages, THEY violate the consumer harm
standard. They're a group of companies fixing prices!

We're 12 years into the QE experiment and it has demonstrated the
relationship between government money-creation and inflation: inflation
isn't the result of government spending, it's the result of government
spending that leads to bidding wars.

Giving trillion to the rich created inflation in the things that rich
people buy: our houses (out from under us) and stocks.

Now, imagine what a People's Bailout could do.

Imagine replacing the gig economy job guarantee (a workfare program with
no workplace protections, job security or minimum wage) with an actual
Job Guarantee as described by the economist Pavlina Tcherneva:

https://pluralistic.net/2020/05/05/the-hard-stuff/#jobs-guarantee

Federally funded, locally administered: good jobs at inclusive wages
that served community needs proposed by community groups and approved by
local governments.

Would that be inflationary? Recall that inflation is what happens when
the number of buyers goes up and the supply of things they're buying
doesn't keep up. Inflation is the result of bidding wars.

For a jobs guarantee to be inflationary, there would have to be a
bidding war for the US workforce. That is the opposite of what we have now.

https://wolfstreet.com/2020/11/06/picture-emerges-of-a-weird-recovery-to-still-historically-awful-levels/

The reason no one wants to buy Americans' labor is that no one has any
money to buy the things Americans make with their labor. The only people
with money - the wealthy - primarily buy our homes out from under us,
and stocks.

QE for the wealthy has made the economy incredibly perverse. Productive
companies are being driven to bankruptcy by gig economy companies that
lose money. Millions of workers compete to provide services for the
lucky few, for dwindling wages.

Workers can't afford to buy stuff so companies have no reason to make
stuff and so they become finance grifts, until they collapse, like Hertz
did (after it converted itself from a car-rental company to an
accountancy trick company):

https://pluralistic.net/2020/05/27/literal-gunhumping/#hertz-uranus

The gig economy jobs guarantee can't last. Eventually the number of
workers bidding to serve the wealthy will exceed demand by such a wide
margin that wages turn negative - the depreciation and payments on your
gig economy car will exceed your income.

But a real, public sector, federal Jobs Guarantee? Yes please.

Paying workers good wages to do productive things that their communities
need will create demand for the thing companies have decided not to make
anymore.

In other words, it will enable companies to make profits again, and it
will drive out the companies whose share prices soared on the
expectation of losses (accompanied by dividends and buybacks). It will
dampen the stock market, but improve the economy.

This will mean the end of those spillover effects - soaring
house-valuations and 401ks for the lucky few - but those came at a VERY
high price - vast un- and underemployment, the gutting of the productive
economy, crushing debt for the majority.

America bought those house price rises and 401k gains at a steep price:
it cost the nation its resilience and political stability.

If the goal of QE was to secure middle-class Americans' retirements, it
was spectacularly wasteful.

A tiny fraction of QE's trillions went to middle-class retirements,
while the vast majority went to making the 1% far, far richer. Most
middle class Americans still don't have secure retirements - their
dotage will be spent competing for gig economy jobs.

For the price of QE, the US government could simply have guaranteed the
necessities of retirees: shelter, food, care. This spending would crowd
out jobs, sure - the worst-paid, most precarious jobs, from fast food to
gig economy "jobs."

It would make America into a country of secure and prosperous people,
instead of food-delivery drivers and dog-walkers.

12 years of finance bailouts and 0 years of People's Bailouts have only
exacerbated this, and the pandemic metastasised it.

When it comes to stimulus, America can't afford a third Obama term. We
need to demand better of Biden - we need to demand a People's Bailout.

For almost* all our sakes.

*Offer not valid in America's richest ZIP codes.

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🦺 This day in history

#15yrsago Singapore’s stocking-foot executioner
https://web.archive.org/web/20051105032756/https://www.news.com.au/story/0,10117,17057851-2,00.html

#10yrsago Colorado DA drops felony hit-and-run charges against
billion-dollar financier because of “serious job implications”
https://web.archive.org/web/20101108122254/http://www.vaildaily.com/article/20101104/NEWS/101109939/1078&ParentProfile;=1062

#5yrsago Typewriter portraiture, the strange story of 1920s ASCII art
https://theattic.jezebel.com/the-typewriter-ascii-portraits-of-classic-hollywood-and-1738094492

#5yrsago TPP will let banks write their own regulations and stick
taxpayers with the bill
https://theintercept.com/2015/11/06/ttp-trade-pact-would-give-wall-street-a-trump-card-to-block-regulations/

#5yrsago Paid Patriotism: Pentagon spent millions bribing sports teams
to recognize military service
https://www.huffpost.com/entry/defense-military-tributes-professional-sports_n_5639a04ce4b0411d306eda5e

#5yrsago Once again, the SFPD blames a cyclist for his own death without
any investigation
https://sfist.com/2015/11/04/sfpd_once_again_blames_cyclist_for/

#5yrsago Religious children more punitive, less likely to display
altruism
https://www.theguardian.com/world/2015/nov/06/religious-children-less-altruistic-secular-kids-study

#5yrsago A Freedom of Information request for UK Home Secretary Theresa
May’s metadata
https://www.techdirt.com/articles/20151106/07380432733/uk-home-secretary-says-dont-worry-about-collection-metadata-foia-request-made-her-metadata.shtml

#1yrago Leaked internal docs show that Facebook shuts down access to
user data to kill competitors, but claims it is protecting users
https://www.nbcnews.com/news/all/leaked-documents-show-facebook-leveraged-user-data-fight-rivals-help-n1076986

#1yrago The case for breaking up Disney
https://mattstoller.substack.com/p/its-time-to-break-up-disney-part

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🦺 Colophon

Today's top sources: Naked Capitalism (https://www.nakedcapitalism.com/).

Currently writing: My next novel, "The Lost Cause," a post-GND novel
about truth and reconciliation. Yesterday's progress: 525 words (79380
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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