[Plura-list] The zombie economy and digital arm-breakers

[Cory Doctorow]

Today's links

* The zombie economy and digital arm-breakers: Debts that can't be paid
won't be paid, but still...

* This day in history: 2016, 2020

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

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🤱🏻 The zombie economy and digital arm-breakers

It's a zombie economy. For 40 years, we've eroded the wages of workers
and transfered their share of profit and productivity to owners of
capital. This is a problem, because people need money to buy things, and
if they run out of money, they stop buying and profits vanish.

Time and again, capitalism has kicked any reckoning over this down the
road. First came the great liquidation: pension cashouts, raided
savings, reverse mortgages. Then came consumer borrowing, a tidal wave
of unrepayable debt.

That's the zombie part: all the unpayable debt, which has been turned
into bonds that enrich debt-holders. As Michael Hudson has told us again
and again, debt that can't be paid, won't be paid. Our debt-based
economy is the walking dead, a zombie.

We can either stabilize the economy (by forgiving debts, so that
producers can pay for necessities and go on producing); or we can
stabilize finance (by coercing debtors into destroying their lives in
order to keep up on payments):

https://pluralistic.net/2020/03/24/grandparents-optional-party/#jubilee

Think of the loan-shark's arm-breaker: he wants to collect on debt, so
he threatens to break your arm. You steal your kid's college fund. You
secretly mortgage the house. You sell your wedding-ring. You end up
divorced and homeless. You still owe. So he breaks your arm.

Now you're divorced, homeless, and you've lost your ability to earn, and
you've got medical bills. He threatens to break your other arm. You
start breaking into cars to steal the toll money in the ashtrays. You go
to jail. Finally the arm-breaker and his boss are out of luck.

Debts that can't be paid, won't be paid. But as loan-sharks know,
fortunes can be collected by applying the right incentives.

Give debtors the choice of immediate ruin from nonpayment, and making a
payment today and ruining their lives tomorrow, and they're pay.

They'll pay...until they can't. Because debts that can't be paid, won't
be paid.

The zombie economy is the subprime economy. "Subprime" came into
collective consciousness thanks to the great financial crisis, where
banks tricked poor homebuyers into predatory loans.

The banks knew that the loans couldn't be repaid - they had "balloon"
clauses that jacked up payments beyond the borrowers' ability to repay a
few years into the mortgage - but they also knew that threats of
homelessness are powerful motivators.

The inscrutable equations used to "guarantee" subprime bonds all shared
an unspoken assumption: people who face homelessness will go to
extraordinary lengths to pay their mortgages. Behind every subprime loan
is an arm-breaker.

The zombie economy shambles on. Obama's loan-shark bailout and the
eviction crisis let the architects of subprime buy up whole towns' worth
of homes and turn them into hugely profitable slums: high-rent,
low-quality deathtraps.

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

Wall St landlords package rents from subprime rentals into bonds, backed
by the loan-shark's guarantee: arm-breakers will evict the shit out of
anyone who stops paying.

America-a land where eviction was once a rarity-now faces an eviction
epidemic.

https://www.newyorker.com/magazine/2016/02/08/forced-out

The foreclosure crisis was only possible because Wall St and the courts
collaborated to streamline the historically complicated and
time-consuming process of taking away someone's home. Same goes for the
eviction epidemic.

It's a simple equation: the more loan-sharks spend on arm-breakers, the
lower the expected profits.

Improvements to arm-breaking processes - cost-savings on traditional
coercion or innovative new forms of terror - are powerful engines for
unlocking new debt markets.

When innovation calls, tech answers. Our devices are increasingly
"smart," and inside every smart device is a potential arm-breaker.
Digital arm-breakers have been around since the first DRM systems, but
they really took off in 2008.

That's when subprime car loans boomed. People who lost everything in the
GFC still needed to get to work, and thanks to chronic US
underinvestment in transit, that means owning a car. So loan-sharks and
tech teamed up to deliver a new lost-cost, high-efficiency arm-breaker.

They leveraged the nation's mature wireless network to install cellular
killswitches in cars. You could extend an unrepayable loan to a
desperate person, and use an unmutable second stereo system to bombard
them with earsplitting overdue notices.

https://edition.cnn.com/2009/LIVING/wayoflife/04/17/aa.bills.shut.engine.down/index.html

If they didn't pay, you could remotely cut off the ignition and send a
precise location to your repo man.

Smart killswitches let you impose fine-grained control over debtors -
say, enforcing a rule against driving over the county line.

https://dealbook.nytimes.com/2014/09/24/miss-a-payment-good-luck-moving-that-car/

Within a decade, the bond-market for payments from subprime car drivers
was edging up on $1T; not because borrowers didn't default, but because
they defaulted later, and the car could be easily re-leased to another
desperate person.

https://www.youtube.com/watch?v=4U2eDJnwz_s

The zombie economy shambled on. Tech built undeletable, always-on
kill-switches, lo-jacks, and spyware into an ever-expanding
constellation of devices, like laptops.

https://www.theatlantic.com/technology/archive/2016/04/rental-company-control/478365/

Rent-to-own subprime laptops were tepicenter of innovation in digital
arm-breaking. Laptops shipped with spyware for covert operation of
cameras and mic and access ot files.

That went beyond repoing a laptop! Lenders could make and share covert
sex-tapes of their customers!

They spied on children, plundered MP3 collections, stole passwords, read
email. It was beyond the wildest dreams of analog loan-sharks.

https://www.ftc.gov/news-events/press-releases/2012/09/ftc-halts-computer-spying

To make a good digital arm-breaker, you need always-on network
connectivity, a device that people really depend on, and a strong
presumption that the device has core software that its owner is never
allowed to remove.

Basically, a smartphone.

Mobile carriers were early to this party. They collaborated with device
manufacturers to create a "subsidized phone" market. They would "give"
you a phone in exchange for a long-term, abusive contract, and then repo
it by terminating service if you missed payments.

This was only possible because the manufacturers helped, creating phones
that could be locked to a single network, so you couldn't un-repo your
phone by sliding in someone else's phone.

They relied on the "anti-circumvention" laws that the music industry
lobbied for in the late 90s (like Section 1201 of the DMCA) to make it a
felony to unlock these phones. Arm-breaking is a lot easier if it's a
felony to evade the arm-breaker.

The smarter the phones got, the more subprime opportunities there were.
Remember, there's a new market in every arm-breaking innovation and in
every arm-breaking efficiency.

Which brings me to India.

India has a huge subprime market. As one of the world's inequality
capitals, whose national government runs on performative culture war
bullshit and giveaways to the super-rich, it's a land ripe for subprime
innovation.

Phone manufacturers like Samsung are key to India's vast collateralized
subprime smartphone market: first-time buyers get their phones on the
installment plans at predatory interest rates so high that most will default

https://restofworld.org/2021/loans-that-hijack-your-phone-are-coming-to-india/

Remember: subprime isn't about debts being repaid in full. It's about
making borrowers so desperate that they ruin their lives to make
payments before they default.

Samsung's uninstallable arm-breaker app allows lenders to brick a
smartphone without help from a carrier.

Writing for Rest of World, Nilesh Christopher describes an "escalating
series of annoyances" culminating with a full lockout for failure to repay:

*  audiovisual prompts in regional languages as reminders

* changing the wallpaper on their cellphones

That escalates to coercion based on analysis of the users' device activity:

* For "a prolific selfie-taker," notifications every time

* frequently used messaging and social apps like Facebook or Instagram
are progressively blocked

One step at a time, the phone is made progressively less usable, until
it is fully bricked.

It's a fully automated, self-configuring arm-breaker, one that
substitutes a thug's unscientific ladder of mounting terror with
bloodless, statistical science.

This is probably a good point to mention the Shitty Technology Adoption
Curve: any disciplinary technology is tried out on powerless people
first, and gradually works its way up the privilege gradient to
encompass the whole world.

https://pluralistic.net/2021/02/24/gwb-rumsfeld-monsters/#bossware

Debt, after all, is consuming all of us except for the lucky few at the
very top of the wealth distribution who have not faced wage stagnation
and forced liquidations.

The covid crisis pushed whole countries into subprime status. Pfizer has
told poor countries that they can only get access to vaccines if they
stake their sovereign assets as collateral to settle claims related to
its products:

https://www.thebureauinvestigates.com/stories/2021-02-23/held-to-ransom-pfizer-demands-governments-gamble-with-state-assets-to-secure-vaccine-deal

And the shitty-tech adoption curve is putting arm-breaking tech into
every kind of device, spreading with alarming speed from the bottom of
the social order to its apex.

Miss your Tesla payments and your car will lock itself, summon a repo
man, back itself out of the parking lot, honk its horn, and unlock its
doors for the repo man.

https://tiremeetsroad.com/2021/03/18/tesla-allegedly-remotely-unlocks-model-3-owners-car-uses-smart-summon-to-help-repo-agent/

As subprime climbs the shitty tech adoption curve, it gets a new name:
"software as a service." In a SaaS world, you cannot own the tools of
your profession. Adobe Photoshop becomes Adobe Creative Cloud, and any
designer who stops monthly payments becomes economic roadkill.

What's more, software is the ghost in the shell, the animating spirit
within physical devices. Remove software from a smart device and you
don't have a dumb device, you have a brick.

This lets the arm-breakers exert pressure over larger, more powerful
entities...like Hoboken, NJ. Hoboken had a payment dispute with the
software vendor for its robotic parking garage, so the vendor bricked
the garage and took all the cars hostage.

https://www.wired.com/news/technology/0,71554-0.html

The strange mutations of arm-breaker tech bodes ill, especially in light
of Chekhov's Law: "A phaser on the bulkhead in Act One will go off by
Act Three."

The universal spread of devices *designed* to be remotely repoed -
bricked, downgraded, turned into surveillance tools - means that
oppressive governments that coerce manufacturers will have the power to
reach into our homes, cars and pockets to attack us.

Same goes for unscrupulous insiders - like the subprime laptop jokers
making nonconsensual sex-tapes with their customers' webcams - and
criminals who can pressure insiders into acting on their behalf.

Nevertheless, subprime arm-breaking is bound to spread, and spread, and
spread. Covid forced millions to liquidate everything, left them in
precarious, sub-minimum-wage gig work, and there's the millions of
evictions waiting for the moratorium to end.

Debts that can't be paid, won't be paid. And yet, people must
participate in the zombie economy: they're not going to dig a hole,
climb in, and pull the dirt in on top of themselves. There is strong
demand for credit on any terms. Any.

Arm-breaker tech unlocks new markets by delaying defaults on unpayable
debts. The zombie economy shambles on.

Image: Cryteria (modified)
https://commons.wikimedia.org/wiki/File:HAL9000.svg

Sachab (modified):
https://www.flickr.com/photos/sachab/1422847855/

CC BY:
https://creativecommons.org/licenses/by/3.0/deed.en

Kat Northern Lights Man (modified):
https://www.flickr.com/photos/orangegreenblue/11375767914/

CC BY-NC:
https://creativecommons.org/licenses/by-nc/2.0/


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🤱🏻 This day in history

#5yrsago 33 state Democratic parties launder $26M from millionaires for
Hillary
https://www.counterpunch.org/2016/04/01/how-hillary-clinton-bought-the-loyalty-of-33-state-democratic-parties/

#1yrago Turn on wifi sharing
https://pluralistic.net/2020/04/02/eff-livestream-today/#digital-divide

#1yrago How you are subsidizing the otherwise unprofitable Fox News
https://pluralistic.net/2020/04/02/eff-livestream-today/#unfoxmycablebox

#1yrago Private equity titan squats on empty hospital
https://pluralistic.net/2020/04/02/eff-livestream-today/#joel-kills

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🤱🏻 Colophon

Today's top sources: Techdirt (https://www.techdirt.com/).

Currently writing:

* A cyberpunk noir thriller novel, "Red Team Blues." Yesterday's
progress: 1013 words (47787 total).

Currently reading: Analogia by George Dyson.

Latest podcast: Past Performance is Not Indicative of Future Results
https://craphound.com/news/2021/03/28/past-performance-is-not-indicative-of-future-results/

Upcoming appearances:

* All the Teachable Things I Know About Writing, Apr 13,
https://www.changinghands.com/event/april2021/virtual-writing-workshop-cory-doctorow-all-teachable-things-i-know-about-writing

* Interop: Self-Determination vs Dystopia (FITC), Apr 19-21,
https://fitc.ca/presentation/interop/

Recent appearances:

* The Right to Repair Movement, Monopolies, and Solarpunk
https://www.youtube.com/watch?v=mmosdDCrL-4

* The surveillance state, digital monopolies, and why we should be
worried (Podsongs)
https://anchor.fm/podsongs/episodes/Cory-Doctorow-on-the-Surveillance-State--digital-monopolies--and-why-we-should-be-worried-eso43k

* Conspiracy Theories (Utopian Horizons):
https://soundcloud.com/utopianhorizons/conspiracy-theory-w-cory-doctorow

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
https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "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
(print edition:
https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907)
(signed copies:
https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "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.

Upcoming books:

* The Shakedown, with Rebecca Giblin, nonfiction/business/politics,
Beacon Press 2022

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