Adam Curtis (the British documentary filmmaker that brought us /The Century of the Self/ and /The Power of Nightmares/) has a new film that just aired its third of three segments last Sunday night. It is a very provocative text, strining together many arguments about, as is his usual method, the way ideas are used by people in power or in resistance to that power.
This is, I think, his boldest undertaking yet, trying to string together, in the first episode, the ideas of John Nash in game theory and James Buchananan on Public Choice to those of Isaiah Berlin and the US Neo-Conservatives like Fukuyama with ideas of negative liberty in the third episode--all posed in opposition to the concepts fo freedom (and revolutionary violence) posed by Fanon and Sartre which are then adopted by one of the architects of the Islamic Revolution in Iran and then other Shia revolutionaries afterwards. It is a sweeping attempt at addressing the role of ideas in world history, even if it is a bit prone to ideologism at times, and I'm sure he has pressed some events too much to fit his hypothesis, but this is hard not to do when you're trying to compress fifty years of history, theory and world politics into three hours. Definitly a case where the medium determines to some extent how complex the message can be, but it is a useful alternative to most documentaries like this which show, inevitably, the best side winning in the end (I think here of the PBS documentary /The Commanding Heights/ which takes a similar swath of time.)
I also see that, though there are things he is working out in a synchronicity between the three documentaries, there are many moments when he could be seen to be contradicting himself. But as interested as I am in
the text, I'm also interested in how it is playing in Britain, which, so far as I know, is the only place it's been officially released thus far. I know on the web, Curtis has quite a following around the world, and his films have been exchanged vigorously via vorrents and now, as seen below (at least for the time being) via Google video and you tube. But his popularity seems a bit more muted in his home country.
Anyway, I think people on these lists would enjoy the films and I'd be interested to hear what people think about his assertions. I have been trying to work out the origins of these ideas of negative vs. positive freedom in writing on my dissertation so his argument was particularly interesting for me. For those in the Cult Studs list, I'll note that I was pleasantly surprised to see an interview with Stuart Hall in the last episode explaining the ideas of Fanon (or a 30 second snippet of him doing so.)
It so happens that I'm currently reading Jessop, et. al. critique of Hall et. al.'s thesis of "Authoritarian Populism" from /Policing the Crisis/ and I'd say Curtis, while stimulating, has very little alternative explanation for what drives events other than a sort of ideologism and a will to power; there is no sense of an alternative version of human nature except as a different political project and it seems that whatever the leaders say or think simply trickles down into the population and also defines their world view (though the destruction of social institutions many of these theories
are founded on seems to make it a little less hierarchical: even if people don't believe that they should be free in this way, when the government is quickly dismantled, that's the reality they live with.) I'm still working a lot of this out. I will say that, if nothing else, it is an entertaining set of films, in particular when he counterposes the Bush and Blair govenments with images of the Jacobins. It is hardly an apt comparison but I know of many people who would be more than slightly upset by this.
See what you think (all links are to streaming video, but the MVG group should have torrents on mininova or TPB if you do a search. I think their rip of part two has a progressive audio glitch but it seems only to bother purists):
Part one: Aired 3/11/07
here:
http://www.veoh.com/videos/v307015829gh4cB
or here:
http://video.google.com/videoplay?docid=8372545413887273321
Part Two: aired 3/18/07
Here: http://www.veoh.com/videos/v3148379a35jXxp
or Here: http://video.google.com/videoplay?docid=-7849982478877371384
And
Part three: aired 3/25/07 (for some reason this one doesn't have as neat a packaging)
Here (broken into six segments)
1- http://www.youtube.com/watch?v=WUYkCktEalA
2- http://www.youtube.com/watch?v=GJfRngggTBI (with Stuart Hall interview a
few minutes in)
3- http://www.youtube.com/watch?v=xiK_cN19lek
4- http://www.youtube.com/watch?v=ozLwgqEns0M
5- http://www.youtube.com/watch?v=UcSSw8CISS4
6- http://www.youtube.com/watch?v=k6nQc91Xyf0
And here (Broken into 3)
1- http://video.google.com/videoplay?docid=3291992041130722257&hl
2- http://video.google.com/videoplay?docid=-121006630030775636&hl=en
3- http://video.google.com/videoplay?docid=1343199130780182696&hl=en
I'll also give this interview by the UK website "Blairwatch" w/ Curtis, which also includes links to the author's synopsis of the first two episodes.
http://www.blairwatch.co.uk/node/1704
and these two critiques of the film which were recommended by Isaiah Berlin's estate via their website http://berlin.wolf.ox.ac.uk/
http://www.guardian.co.uk/tv_and_radio/story/0,,2042945,00.html#article_continue
http://liberalpolemic.blogspot.com/2007/03/trap-whatever-happened-to-our-dreams-of_1716.html
And of course there is always the wikipedia entry on the series:
http://en.wikipedia.org/wiki/The_Trap_%28television_documentary_series%29
Friday, March 30, 2007
Friday, March 23, 2007
Arjun Appadurai and my fear of his popularity
I picked up Arjun Appadurai's book this evening, which I had bought as an impulse buy on Amazon last week. I really shouldn't have bought it, I realize now, but I hadn't heard of it when it came out and the topic (subtitle: "An essay on the geography of anger") seemed to be promising, perhaps as a corrective to his academic version (in Modernity at Large) of Thomas Friedman bombast about, 1. the existence of something called globalization 2. its essentially progressive and unstoppable nature. I really should know better than to make an impulse buy on a book like this, even if I can see myself producing the equivalent of Barthes S/Z on the text itself. It is much better to take it from the library and use it while i can.
(On a tangent here, I've really enjoyed taking the Hayek and Von Mises books out of the GMU law library. There is something ironic and almost counter culteral about borrowing their books from a public institution so committed to the destruction of public institutions using justifications hewn by these very theorists. I may have to summon all my strength not to treat the texts as my own and perform a tragicomedy of the commons in the margins of the books, saying exactly what i'd like to about their inane apologetics that, despite sounding high minded are basically the most stultifying ideological rantings I've ever read. They make some interesting observations from time to time, but they do so with such pride and conviction, such a sense of novelty and insight, that it's like, despite having read many things in their lives, they've forgotten how many other thinkers have said precisely what they are saying, save a very important exception: the thinkers before allowed some sense of human feeling and literary flair to creep into their prose. For the most part, they were also embatteled by a very different set of circumstances. when you consider that the things Hayek is trying to caution against and overturn aren't popular movements to abolish property rights, expropriate the expropriators, or communism or totalitarianism in any real sense, but social security, welfare and progressive taxation, it is really hard to envision him as anything more than a cranky uncle whose pearls of wisdom are lost in his generally smug self satisfaction at cynically evaluating anything you enjoy as the root cause of the eminant fall of western civilization. That the main foil of their argument--Marx or anyone remotely inspired by him--remains almost completely unexplored except as a straw man makes their desciples's animosity towards socialism almost comical. It also makes me very happy not to shell out the $100 or so it would cost me to buy the three very slim volumes of Hayek's work on "Law, Legislation, and Liberty" and pleased with the fact that the only way his ideas are then made available to me or anyone who won't pay this extraordinary price is through a public institution. Since I'm on a tangent, i've noticed the same thing with Milton Friedman's more technical/historical work--i.e. not his major ideological centerpieces like Capitalism and Freedom but the /monetary history of the united states/--and with Hernando De Soto's /Mystery of Capital/. Not only are they fairly expensive by publishing standards (the former more than the latter) but, no matter how many are available on the "Used" menu, the people selling them seem to want to defy any of the rationality of the market and keep their price high despite an obvious oversupply. Though de Soto's book--which seems to be assigned by someone somewhere in a class or just the product of even more impulse buys than my own--often has well over thirty or forty copies available for sale, the people selling them seem to really get behind his ideology and see their book as a real source of capital for them, refusing to accept anything less than an ideal price. Of course, unlike the small land owners that de Soto thinks would be the vanguard of capitalist led development in the "everywhere else" of the world where capitalism isn't "triumph"ing, they don't find themselves compelled to sell their books. Thus, though today there are 87 copies of the book available through used or new sales, only 10 or so are listed underneath the Amazon price for a new copy of the book. And only two or threee of those even approach a 50% discount of amazon's new price. I used to look at it to see if the price would ever go down to the $1 the book is really worth in terms of the wisdom it provides (which is to say, it is really important to see what bill of goods the World Bank and Corporate do-gooders are being sold): now I just go to the page to witness what has become comic evidence of both the irreconcilibility of these theories with actual real markets and the stubborn will to power of the people who think that they, finally, at last, have found the answer to saving people from poverty--and in the most unlikely of places: in a restatement of that genius of expropriation and "improvement" of private property, John Locke. Super stuff, really. The only thing that saves it from sounding like a sequence from a Kurt Vonnegut book is that the guy's name is Hernando de Soto: it is just way to obvious to not come off as contrived. Shame on the Cato institute for not being more literary about this.)
Back from the tangent...I bought Appadurai's book. I started reading it. And so far I am, unfortunately, disappointed and surprisingly unsurprised. After reading Fukuyama's mea culpa after the botching of the Iraq war I thought certainly his cosmopolitan cultural studies equivalent would have to make a bit of a concession to the far from rosy world we've inherited from him. At the very least, not having looked at the number of pages, I thought it would be on par with Castells volume on "The Power of Identity," if not in its breadth, at least in its attention to the issue. In some ways the analogy is apt, as Appadurai places this book in between his earlier theoretical celebration and an extensive forthcoming volume on those pillars of democratic society "NGOs" and how they step in to help people work through the problems of globalization and, one must assume, to help assauge their geographically bounded anger. I look forward to the two sentance caveat in that book about how NGOs aren't actually democratic. In the meantime, I have "The Fear of Small Numbers" which he assures readers, is merely a "transition and a pause in a long-term project" which "seek[s] to make globalization work for those who need it the most and enjoy it the least." This book is basically just the gunmetal and baby's blood sorbet to clear your palate of the good stuff in the first book about globalization and make you all the more ready to savor the even better stuff in the next book on globalization.
Like Hayek above, I sincerely wonder if he's aware of his own location in the intellectual field he inhabits. I suppose I could give him the benefit of the doubt and say that much of his value is in synthesizing his own ethnographic data, in being able to bring me anecdotes from the frontlines even if they support his basically rosy view of the world to come, with a few tweaks here and there. But he presents his perspective as if it is a watershed, as if he has something original to say about it and then describes the thin book in this way:
"culturally-motivated violence"? What is that you ask? It is the violence that comes from deploying hundreds of thousands of US troops to protect our 'way of life," to use one of Raymond Williams's definition of culture? No that's not it. Even if it is much more "large scale," the people they kill, the houses and infrastructure they destroy, the chaos they cause has no organic link to our way of life whatsoever except that deep in the ground underneath all of this lies a fermented pool of dead dinosaurs and peat bogs that we could use to power the inefficient food, shelter and transportation systems that we identify with our "culture," thus this is not culturally motivated violence. No, by culturally motivated violence he means two things: on the one hand, Rwanda and Yugoslavia and on the other, in his words, "the war on terror" (though he's just being sloppy here in trying to deploy contemporary lingo: what he really means is "terrorism" which, just for a program note, is not large scale.)
I don't normally feel the need to, basically, mouth the words of Noam Chomsky with regard to the violence of the US in its actions around the world, but in this case I had to make an exception. On the other hand, my real exception to the book so far--and, admittedly, I've barely gotten through the intro and first pages of the first chapter--is that he is already being completely non-sensical in his use of the term "culture." I could get behind his definition of the "violence" in Rwanda as "Culturally Motivated" if what he meant was that there were key aspects of the culture that were involved in pushing the political conflict into a genocide. If he was talking about how the "cultural" division of the society into Hutus and Tutsis--a product of the colonial era--had created circumstances in which the World Bank and IMF programs (which first advised they stop growing any food for domestic consumption [a major cultural change] and to grow only coffee for export, advice they replicated across the globe, helping to reduce the price of coffee and thus significantly reducing the possible livelihood of Rwandan coffee farmers,
arguably creating the economic crash which, then, was exacerbated by several IMF devaluations of their currency) had an important, if not determining effect on creating the famine conditions in Rwanda, which made for a lot of angry, hungry people who could easily be enlisted in, first, the ongoing civil wars in the region and, then, using a fairly novel media of mass communication (i.e. the radio) a genocide; well then, yeah, I could see how that could be called "Culturally Motivated"
But he doesn't mean any of this. Though he promises to draw a distinction between himself and the likes of Samuel Huntington, I do wonder how much of a difference there will be in this distinction. My prediction, having not read the book, is that his major quibble will be that civilizations aren't unitary in the beliefs of its peoples, especially within the global "mediascape" of what he terms "high Globalization." I will try to withhold judgement, but for the most part, his first steps are down a very tedious and politically suspect path which, in the end, will likely shed very little light on either culture or the motivations of violence.
What I can say is that reading his characterization of this helped me to see that, in addition to m redefining the concept of culture in a more rigorous way, it is very important for me to set it in motion within a field of other kinds of efficacy, to be able to talk about culture itself as a motivating force--or at least address arguments of those who try to do so. My first instinct is to say that my main objection to Appadurai's use of this construction is a good indication of how i feel about it. In the first place, by using this construciton, he seems to be directly subverting his own stated goal, which was to talk about why this violence is related to globalization. But the upshot of his argument in its broad sweep seems to be that this "culturally motivated violence" is best understood as the result of people not understanding the process: if we can just get those NGOs in there to spread the good news, well then that violence might stop.
I'm being very unfair here. He stakes his position far from this; but it is just a bit further down the slope he's on and I think this has much to do with his flawed notion of culture here. Culture, for him, is progressive and worth having mostly when it emanates from the center: the periphery should accomodate its quiky traditional ways to this new reality and, perhaps, jazz it up a bit by performing their traditional cultures for the core in ways that can be pleasurably consumed. Again, a slippery slope. I'm tired and shouldn't be arguing right now, but I think I'm giving myself good advice here about the project and I'll probably still agree with my assessments when I get up in the morning. We'll see...
(On a tangent here, I've really enjoyed taking the Hayek and Von Mises books out of the GMU law library. There is something ironic and almost counter culteral about borrowing their books from a public institution so committed to the destruction of public institutions using justifications hewn by these very theorists. I may have to summon all my strength not to treat the texts as my own and perform a tragicomedy of the commons in the margins of the books, saying exactly what i'd like to about their inane apologetics that, despite sounding high minded are basically the most stultifying ideological rantings I've ever read. They make some interesting observations from time to time, but they do so with such pride and conviction, such a sense of novelty and insight, that it's like, despite having read many things in their lives, they've forgotten how many other thinkers have said precisely what they are saying, save a very important exception: the thinkers before allowed some sense of human feeling and literary flair to creep into their prose. For the most part, they were also embatteled by a very different set of circumstances. when you consider that the things Hayek is trying to caution against and overturn aren't popular movements to abolish property rights, expropriate the expropriators, or communism or totalitarianism in any real sense, but social security, welfare and progressive taxation, it is really hard to envision him as anything more than a cranky uncle whose pearls of wisdom are lost in his generally smug self satisfaction at cynically evaluating anything you enjoy as the root cause of the eminant fall of western civilization. That the main foil of their argument--Marx or anyone remotely inspired by him--remains almost completely unexplored except as a straw man makes their desciples's animosity towards socialism almost comical. It also makes me very happy not to shell out the $100 or so it would cost me to buy the three very slim volumes of Hayek's work on "Law, Legislation, and Liberty" and pleased with the fact that the only way his ideas are then made available to me or anyone who won't pay this extraordinary price is through a public institution. Since I'm on a tangent, i've noticed the same thing with Milton Friedman's more technical/historical work--i.e. not his major ideological centerpieces like Capitalism and Freedom but the /monetary history of the united states/--and with Hernando De Soto's /Mystery of Capital/. Not only are they fairly expensive by publishing standards (the former more than the latter) but, no matter how many are available on the "Used" menu, the people selling them seem to want to defy any of the rationality of the market and keep their price high despite an obvious oversupply. Though de Soto's book--which seems to be assigned by someone somewhere in a class or just the product of even more impulse buys than my own--often has well over thirty or forty copies available for sale, the people selling them seem to really get behind his ideology and see their book as a real source of capital for them, refusing to accept anything less than an ideal price. Of course, unlike the small land owners that de Soto thinks would be the vanguard of capitalist led development in the "everywhere else" of the world where capitalism isn't "triumph"ing, they don't find themselves compelled to sell their books. Thus, though today there are 87 copies of the book available through used or new sales, only 10 or so are listed underneath the Amazon price for a new copy of the book. And only two or threee of those even approach a 50% discount of amazon's new price. I used to look at it to see if the price would ever go down to the $1 the book is really worth in terms of the wisdom it provides (which is to say, it is really important to see what bill of goods the World Bank and Corporate do-gooders are being sold): now I just go to the page to witness what has become comic evidence of both the irreconcilibility of these theories with actual real markets and the stubborn will to power of the people who think that they, finally, at last, have found the answer to saving people from poverty--and in the most unlikely of places: in a restatement of that genius of expropriation and "improvement" of private property, John Locke. Super stuff, really. The only thing that saves it from sounding like a sequence from a Kurt Vonnegut book is that the guy's name is Hernando de Soto: it is just way to obvious to not come off as contrived. Shame on the Cato institute for not being more literary about this.)
Back from the tangent...I bought Appadurai's book. I started reading it. And so far I am, unfortunately, disappointed and surprisingly unsurprised. After reading Fukuyama's mea culpa after the botching of the Iraq war I thought certainly his cosmopolitan cultural studies equivalent would have to make a bit of a concession to the far from rosy world we've inherited from him. At the very least, not having looked at the number of pages, I thought it would be on par with Castells volume on "The Power of Identity," if not in its breadth, at least in its attention to the issue. In some ways the analogy is apt, as Appadurai places this book in between his earlier theoretical celebration and an extensive forthcoming volume on those pillars of democratic society "NGOs" and how they step in to help people work through the problems of globalization and, one must assume, to help assauge their geographically bounded anger. I look forward to the two sentance caveat in that book about how NGOs aren't actually democratic. In the meantime, I have "The Fear of Small Numbers" which he assures readers, is merely a "transition and a pause in a long-term project" which "seek[s] to make globalization work for those who need it the most and enjoy it the least." This book is basically just the gunmetal and baby's blood sorbet to clear your palate of the good stuff in the first book about globalization and make you all the more ready to savor the even better stuff in the next book on globalization.
Like Hayek above, I sincerely wonder if he's aware of his own location in the intellectual field he inhabits. I suppose I could give him the benefit of the doubt and say that much of his value is in synthesizing his own ethnographic data, in being able to bring me anecdotes from the frontlines even if they support his basically rosy view of the world to come, with a few tweaks here and there. But he presents his perspective as if it is a watershed, as if he has something original to say about it and then describes the thin book in this way:
This study is concerned with large scale, culturally-motivated violence in our times.
"culturally-motivated violence"? What is that you ask? It is the violence that comes from deploying hundreds of thousands of US troops to protect our 'way of life," to use one of Raymond Williams's definition of culture? No that's not it. Even if it is much more "large scale," the people they kill, the houses and infrastructure they destroy, the chaos they cause has no organic link to our way of life whatsoever except that deep in the ground underneath all of this lies a fermented pool of dead dinosaurs and peat bogs that we could use to power the inefficient food, shelter and transportation systems that we identify with our "culture," thus this is not culturally motivated violence. No, by culturally motivated violence he means two things: on the one hand, Rwanda and Yugoslavia and on the other, in his words, "the war on terror" (though he's just being sloppy here in trying to deploy contemporary lingo: what he really means is "terrorism" which, just for a program note, is not large scale.)
I don't normally feel the need to, basically, mouth the words of Noam Chomsky with regard to the violence of the US in its actions around the world, but in this case I had to make an exception. On the other hand, my real exception to the book so far--and, admittedly, I've barely gotten through the intro and first pages of the first chapter--is that he is already being completely non-sensical in his use of the term "culture." I could get behind his definition of the "violence" in Rwanda as "Culturally Motivated" if what he meant was that there were key aspects of the culture that were involved in pushing the political conflict into a genocide. If he was talking about how the "cultural" division of the society into Hutus and Tutsis--a product of the colonial era--had created circumstances in which the World Bank and IMF programs (which first advised they stop growing any food for domestic consumption [a major cultural change] and to grow only coffee for export, advice they replicated across the globe, helping to reduce the price of coffee and thus significantly reducing the possible livelihood of Rwandan coffee farmers,
arguably creating the economic crash which, then, was exacerbated by several IMF devaluations of their currency) had an important, if not determining effect on creating the famine conditions in Rwanda, which made for a lot of angry, hungry people who could easily be enlisted in, first, the ongoing civil wars in the region and, then, using a fairly novel media of mass communication (i.e. the radio) a genocide; well then, yeah, I could see how that could be called "Culturally Motivated"
But he doesn't mean any of this. Though he promises to draw a distinction between himself and the likes of Samuel Huntington, I do wonder how much of a difference there will be in this distinction. My prediction, having not read the book, is that his major quibble will be that civilizations aren't unitary in the beliefs of its peoples, especially within the global "mediascape" of what he terms "high Globalization." I will try to withhold judgement, but for the most part, his first steps are down a very tedious and politically suspect path which, in the end, will likely shed very little light on either culture or the motivations of violence.
What I can say is that reading his characterization of this helped me to see that, in addition to m redefining the concept of culture in a more rigorous way, it is very important for me to set it in motion within a field of other kinds of efficacy, to be able to talk about culture itself as a motivating force--or at least address arguments of those who try to do so. My first instinct is to say that my main objection to Appadurai's use of this construction is a good indication of how i feel about it. In the first place, by using this construciton, he seems to be directly subverting his own stated goal, which was to talk about why this violence is related to globalization. But the upshot of his argument in its broad sweep seems to be that this "culturally motivated violence" is best understood as the result of people not understanding the process: if we can just get those NGOs in there to spread the good news, well then that violence might stop.
I'm being very unfair here. He stakes his position far from this; but it is just a bit further down the slope he's on and I think this has much to do with his flawed notion of culture here. Culture, for him, is progressive and worth having mostly when it emanates from the center: the periphery should accomodate its quiky traditional ways to this new reality and, perhaps, jazz it up a bit by performing their traditional cultures for the core in ways that can be pleasurably consumed. Again, a slippery slope. I'm tired and shouldn't be arguing right now, but I think I'm giving myself good advice here about the project and I'll probably still agree with my assessments when I get up in the morning. We'll see...
Wednesday, March 21, 2007
Race and the Housing Boom and Bust
I thought this was a particularly relevant example of the way racism is still alive and well--and a particularly problematic one considering that much of the recent boom in the financial sector
around these high interest loans and in the housing construction sector around new construction is related to practices like these. Here is the most damning statistic in my mind:
The article says that this is largely because the predatory lenders felt they could more easily prey on black and latino buyers because they had less knowledge about the process. The GAO of the US realized this many months ago but instead of regulating these kinds of loans, decided that they would just create an information sheet. I have a longer discussion of this on the lbo list here. In short, the GAO was less concerned with the fact that this might make a bunch of people lose their homes and incur massive amounts of debt from which they would never recover. It was more concerned that this might create instability in the banking sector: they do have a certain class interest to look out for, after all. Thus it is likely that stories such as this Reuters piece will get far less play than the news last week about New Century Financial Corp, which seems be the kind of thing the GAO was actually worried about: that investors wouldn't get their money out of the securities markets fast enough.
Poor, poor investors. They really do have it rough. Now Fannie Mae and the state of California are fueling the flames by banning New Century Mortgages. I smell a bailout coming if this thing gets much bigger. People might be kicked out of their homes, they might have to live in privately funded (mostly church) shelters for years trying to dig themselves out of this, but they will get little help from the government: that would defy the free market logic that we are now told is the essence of human interaction. Besides, as many of my students say, the poor are always with us--even the poor who weren't poor a few years ago but will be soon because they got scammed by inethical lending practices and the nascent racism of US society. It's just the breaks and, if we try hard enough, we can probably figure out a way to place most of the blame on the people who are the most fundamentally fucked by the meltdown. As Hayek says, this system of the market is a moral system and therefore we can always assume some proper morality to the dispossession of the poor, so much so that it is hardly news.
But if the investor class faces a slight chance of having a fraction of their assets liquidated, well that, my friends is news. And though just a few months ago the government regulation of these subprime lenders would have been an unjust meddling in the economy by the state, as the crisis widens there will inevitably be a call for government intervention in the form of bailouts. The poor (and newly minted debtor nation) can be blamed for their moral failures, but investors just got a bad break. Besides, the story goes, if these investors don't get bailed out, who's going to run the economy? Where's the capital going to come from? Surely not the government! Why that's inefficient and creates incentives for people to abuse their power and exploit the uninformed--things the market, in all its phantasmic, orgasmic ideal perfection, protects us against.
If it sounds like a bedtime story for the upper class that's because it helps them sleep better at night.
around these high interest loans and in the housing construction sector around new construction is related to practices like these. Here is the most damning statistic in my mind:
Even more troubling, real-estate industry analysts say, is an alarming proportion of blacks and Hispanics who received subprime loans by predatory lenders even when their credit picture was good enough to deserve a cheaper loan.
In six major U.S. cities, black borrowers were 3.8 times more likely than whites to receive a higher-cost home loan, and Hispanic borrowers were 3.6 times more likely, according to a study released this month by a group of fair housing agencies.
"Blacks and Latinos have lower incomes and less wealth, less steady employment and lower credit ratings, so a completely neutral and fair credit-rating system would still give a higher percentage of subprime loans to minorities," said Jim Campen, a University of Massachusetts
economist who contributed to the study.
"But the problem is exacerbated by a financial system which isn't fair," he said. In greater Boston, 71 percent of blacks earning above $153,000 in 2005 took out mortgages with high interest rates, compared to just 9.4 percent of whites, while about 70 percent of black and Hispanic borrowers with incomes between $92,000 and $152,000 received high-interest rate home loans, compared to 17 percent for whites, according to his research.
The article says that this is largely because the predatory lenders felt they could more easily prey on black and latino buyers because they had less knowledge about the process. The GAO of the US realized this many months ago but instead of regulating these kinds of loans, decided that they would just create an information sheet. I have a longer discussion of this on the lbo list here. In short, the GAO was less concerned with the fact that this might make a bunch of people lose their homes and incur massive amounts of debt from which they would never recover. It was more concerned that this might create instability in the banking sector: they do have a certain class interest to look out for, after all. Thus it is likely that stories such as this Reuters piece will get far less play than the news last week about New Century Financial Corp, which seems be the kind of thing the GAO was actually worried about: that investors wouldn't get their money out of the securities markets fast enough.
Poor, poor investors. They really do have it rough. Now Fannie Mae and the state of California are fueling the flames by banning New Century Mortgages. I smell a bailout coming if this thing gets much bigger. People might be kicked out of their homes, they might have to live in privately funded (mostly church) shelters for years trying to dig themselves out of this, but they will get little help from the government: that would defy the free market logic that we are now told is the essence of human interaction. Besides, as many of my students say, the poor are always with us--even the poor who weren't poor a few years ago but will be soon because they got scammed by inethical lending practices and the nascent racism of US society. It's just the breaks and, if we try hard enough, we can probably figure out a way to place most of the blame on the people who are the most fundamentally fucked by the meltdown. As Hayek says, this system of the market is a moral system and therefore we can always assume some proper morality to the dispossession of the poor, so much so that it is hardly news.
But if the investor class faces a slight chance of having a fraction of their assets liquidated, well that, my friends is news. And though just a few months ago the government regulation of these subprime lenders would have been an unjust meddling in the economy by the state, as the crisis widens there will inevitably be a call for government intervention in the form of bailouts. The poor (and newly minted debtor nation) can be blamed for their moral failures, but investors just got a bad break. Besides, the story goes, if these investors don't get bailed out, who's going to run the economy? Where's the capital going to come from? Surely not the government! Why that's inefficient and creates incentives for people to abuse their power and exploit the uninformed--things the market, in all its phantasmic, orgasmic ideal perfection, protects us against.
If it sounds like a bedtime story for the upper class that's because it helps them sleep better at night.
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