In which an Icelandic prole shocks a member of the 1 percent...

John Lancaster’s review of Michael Lewis’s book is as disastrous as, alas, Michael Lewis’s book. Lancaster is very impressed by nominal debt. He is very clueless about wealth inequality. And he is a classic upper class type. His first story is about an Icelandic waitress he meets in Rejkavik. Now, the first thing to notice about this meeting is that Lancaster is in Iceland. He apparently finds that harmless and decent, since he apparently finds his position in the top 1 percent worldwide just a fact of natural history. But this waitress! Why, during the boom, she tells him, she used to go and fly to Milan and shop.

Now, how often the waitress flew to Milan and shopped is anybody’s guess. After hearing from the serf, no doubt after being served his meal, Lancaster is all agog. The story is exactly worth what he paid to find out if it is true. Zero.

But given a mindset so blind to the system that puts the herring in his belly, Lancaster is all set up for Lewis’s book, which strings together stories of proles spending money they don’t have (shamefully!) and governments with the gall to, well, have the kind of social services that were agreed upon in the fifties.

Lewis’s book, of which I’ve only read the articles in Vanity Fair, is, alas, not one of Lewis’s more insightful outings. For instance, he takes his cues on California’s situation from Schwarzenegger. Not once, in the VF article, does Lewis show the least awareness that Schwarzenegger was elected against Gray Davis on a Bushian economics ticket of cutting taxes for the wealthy and businesses. Not once does Lewis show any awareness that Schwarzenegger accomplished this shabby feat by simply borrowing shitloads of money. Using Schwarzenegger as his guide to the California economic crisis is like being taught fire prevention by a pyromaniac.

As for Lancaster, the blind snobbery of his piece is equivalent to the ignorance with which it is loaded. Telling us that the world owes 195 trillion dollars is as meaningless as telling us that the world is rich because, in 2007, the world had accumulated 60 trillion dollars in derivatives.

The question that leaps to mind is: who does the world owe this money to?
And the answer is pretty simple: it is owed to a relatively small handful of investors. Worldwide, they compose perhaps 1 percent of the population – perhaps less. And guess what? They can be ripped off without any consequences. What Lancaster didn’t seem to notice in his dinner in Rekjavik is that the waitress didn’t really care. Why should she? Iceland didn’t back its banks. When the banks collapsed, according to Lancaster, they left debts the equivalent of 330,000 dollars for every Icelander. And, it turns out, those debts went to heaven. Big deal.

What is obviously needed at the moment world wide is a change in the disproportion between the wealth of the wealthiest and the rest. And this is a political question that will come when, as is likely, people wake up, like Icelanders, and realize: no, they don’t owe that money. Because they have the power simply to cancel the debt. Just as the governments have the money and have used the money to back the banks, because backing the banks was in the interest of the elites, the people can, and will, once the issue is represented, be backed by the government too. The U.S. government that loaned out 16 trillion dollars at 1 percent interest or below to hundreds of banks and hedge funds around the world could, actually, do the same thing to the people. It would be terrible, John Lancaster’s sherry would go down his throat the wrong way at just the thought of waitresses from Iceland shopping in Milan, but it is, you know, more than possible.