crankecon

One of my crankeries is my notion that the U.S. made a very wrong turn back all the way in 1911. Glenn Beck is notorious for being a maniac about the same period, but where he is a maniac about the communization of the U.S. that was birthed by the progressive movement, my position is just the opposite: the progressive movement, lacking a strong socialist movement, created half measures that have been decaying ever since. One of them, a crucial one which is now costing every 99 percenter thousands of dollars per year, was the defeat of a law that would have required interstate companies to register with the Commerce Department.

The bureaucratic quibble of a committed statist? No, this is the reasoned response of another underground and underwater man to a system set up to be gamed by the powerful. And gamed it has been.

In Treasure Islands, Nick Shaxson's book about tax havens, there is an interesting tale about how usury became one of the quotidian parts of American low life. It begins, of course, with that plutocratic mainstay, the Supreme Court – the pillar of the White Republic:

“In 1978 ... a new era began when the First National Bank of Omaha started enrolling Minnesota residents in its BankAmericard Plan. At the time, Nebraska let banks charge interest up to 18 percent a year, while Minnesota’s usury limits were 12 percent. Minnesota’s solicitor general wanted to stop the bank from charging higher interest rates. Could the Nebraska bank “export” the 18 percent rate to charge Minnesota residents?
The Supreme Court ruled that it could—and Wall Street noticed. If one state removed interest rate caps entirely, Wall Street could export this deregulation across the United States. Then in March 1980, South Dakota passed a statute eliminating its anti-usury interest rate caps entirely. The statute was, according to Nathan Hayward, a central player in this drama, “basically written by Citibank.” A new opportunity for U.S. banks had opened up: By incorporating in South Dakota, they could roll out credit card operations across the country and charge interest rates as high as they liked.”

The number of elements aligned by the financial services industry in the late seventies, all waiting to ripen under Reagan (and, let’s not kid ourselves, under Carter if he had been re-elected – the Democratic Party has only opposed plutocracy at sword point, and for small intervals of time), is amazing. This was a crucial moment in the real economic history of America. For if, as became the case, labor costs in the U.S. were stifled by stifling labor’s power to negotiate, then U.S. corporations faced a problem: how to keep the treadmill of consumption going? There were two obvious and interrelated answers: replace wage increases with easy credit (while allowing the financiers the ultimate power of yanking the rates higher whenever they wanted), and – using tax incentives – opening the sluices to the accumulated capital of the wage class (accumulated through such now quaint objects as pensions) through scams like the IRA account, etc. This was not only a matter of greed – greed playing a very small part, really, in class warfare. It was part of an ideology that was even believed by the plutocrats, who think that class warfare is something the Other engages in (in this, it takes on the asymmetric semanticity of such terms as terrorism – checkers on the board, invested with hero/villain values by the players). Utopia would arrive when the worker was on both sides of the capitalist equation – both a wage earner and an investor. Nirvana such as only Jesus and J. P. Morgan could have dreamt up at the Billy Graham cotillion! The small problem – so tiny we could just overlook it – is that, in truth, the amount of power welded by the wage earner as investor was microscopic, for which he or she traded in all the advantages of conglomerating with other wage earners to press for higher wages. Instead, for an iffy gain, subject to rents and recessions and the conglomerated power of money managers (as is shown by the profiles of the 401k set, employees have an almost pathetically virtuous idea about money, and will invest their pittances wholly in the stock of the company they work for, a gull’s strategy that ends up repeatedly in disaster), the wage earner submitted to a strange treadmill of credit based consumption, and the American household debt started its world historic ascent – a veritable firecracker, heading towards the boom moment when all the hedgefunders would oooo and ahhh and go to uncle sam to collect their 16 trillion in easy loans (but not at the BankAmericard rate – you can be sure of that!) to slog ever onward, heroes in the world of free enterprise. Free being the key word here.

The progressive moment has long past, and it looks like the train has left the station for the 99 percent in the U.S. – although who knows? One thing is for sure, though: through the Democratic bipartisanship that is so lauded in the editorials when it happens, the Supreme Court has been loaded with a vile band of Pluto proxies who would, no doubt, rule as unconstitutional any attempt, now, to do what the Roosevelt Republicans attempted to do in 1911. Or, in the tunes of the merry song: we are so fucked!