Sunday, February 14, 2010

Capitalism and Resistance, Part II: In which people find ways to deal with insecurity about the future.

This is an installment in a series begun yesterday, in which I look at why we give the banking industry the power it has, and how we might start trying to take it back. If you haven't read the first installment yet, I recommend reading that first.

Looking back at the example in the last part of this series, in which I was the corn farmer and you were the barley farmer, let's suppose one year I had a bad corn harvest (never mind the fact that bad corn harvests never happen anymore because corn, in the proper sense of the term, doesn't exist in America). Supposing that we've eliminated money from our interactions, what do we do?

Well, there's a chance that you, sweetheart that you are, will simply give me some barley. But there's also a reasonable chance that you won't, and that I'll have to do without both corn and barley for the winter.

I think it's our desire to avoid this that makes us demand that our economy be arranged monetarily. If you want to store something for a rainy day, it makes sense that the value of that thing not depend at all on its freshness, and that that thing have a fairly steady value from year to year. So you need money.

So why banks?

Let's imagine, for a moment, that I have a savings account in a bank, in which I save for, say, retirement -- let's say (optimistically) it pays me one percent interest. Let's also imagine that you have a mortgage from that same bank -- and you're paying the bank six percent interest. And, for the sake of simplicity, that the size of my savings account is exactly the same as the size of your mortgage.

When we discovered this, you would no doubt say to me, "Jeepers, it's too bad we didn't realize this earlier, because I would've happily paid you four percent interest, and we would both have been better off." And I'd say, "Yeah, that would be great." But I wouldn't mean it.

Because the thing is, then you get into that messy business where you might lose your job, or your kid might get sick, or you might even just be a little irresponsible and pay me back late. And then what do I do? Break your kneecaps? I'm not that kinda guy. But I also don't want to just let you not pay me back -- I need that for when I retire.

This, then, is the purpose of banks. We feel morally uncomfortable with making people pay back the money we lend them -- fundamentally, because we think allowances have to be made in this sort of thing. But we're also scared of making allowances with the money that would go to our retirement, or our house, or our health care -- so we put other people in charge of that money, and then act morally outraged when they do the horrible things that need to be done in order to give us that security.

As another example, in a different industry: essentially, the purpose of health insurance is to distribute the costs of health care, so that if one out of every 100 people is sick at any given time, everyone just pays 1% of the cost of being sick all the time, rather than having to cope with the uncertainty of not knowing when you're gonna get sick. In a community without health insurance companies, this would take the form of us actually paying the health care bills of the sick people.

But the problem is, suppose some sick person wandered into our community. I know I wouldn't feel comfortable telling hir we weren't going to support hir sickness. But I wouldn't feel it was fair that we were expected to take care of that person, when ze hadn't taken care of any of us, and we had no reason to believe ze would.

So, in the real world, what we do is have a depersonalized industry tell that person they're going to die (literally). And the thing is, the responsibility is diffused: is it the hospital's fault? What about the health insurance company's? What does it even mean for such an institution to be at fault?

Every time we refuse someone support because it takes away resources we might need later, we are creating the need for such institutions. Every time we refuse someone support because they haven't earned it, haven't "played by the rules," we are legitimizing the mode of thinking that says sometimes people deserve to die for not seeking health insurance until they're 23. It is our insecurity, our unwillingness to trust one another, that creates demand for banking services.

I hope these problems are surmountable. I think they are. Tomorrow I'll talk about how.

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