Episode 77 – Banking Surveillance & Racial Taxation with Raúl Carrillo

Macro N Cheese Episode 77
Banking Surveillance & Racial Taxation with Raúl Carrillo

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Raúl Carrillo [music/intro] (00:00:04):

If something is a right or something is integral to due process or to your constitutional safeguards, that should be funded by the federal government. That only seems to make common sense to me. Well, we have to remember who has, for instance, the largest facial recognition database in the world, and that’s Facebook. Do we want Facebook scanning people’s pictures to determine the interest rate on their loan?

Geoff Ginter [music/intro] (00:00:41):

Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

Steve Grumbine (00:01:34):

All right. This is Steve with Macro N Cheese. Today, we have the chairman of the board, chairman of the board of the Modern Money Network in Raúl Carrillo, and Raúl is a friend of mine. He’s been on the show before. And our last show was just amazing. We touched on some things I doubt many of you have ever even thought of, which is regarding education and the rights to education.

Well, today we’re going to go in a different direction today. We’re focusing on racial taxation and surveillance, and this is a very important two-banger folks. This is really important. It’s right here. It’s right now. It’s happening. And for our audience, this is right up your alley. This is going to be exciting stuff for you to prepare, to attack the world with great advocacy and precision. And with that Raúl, welcome to the show, sir.

Raúl Carrillo (00:02:28):

Thank you very much, Steve. Really happy to be back on.

Grumbine (00:02:31):

Yeah, absolutely. It’s been a while and I really am glad to have you on here. Cause the two subjects we’re talking about are so vital. I mean, with everything going digital these days and folks looking at cryptocurrencies and the like, and then you’ve got Facebook coming into the mix.

You’ve done a great amount of work there, but right here, right now we’re watching the incredible disparity in racial equity in terms of justice, in terms of economics, in terms income and just life expectancy with this COVID-19 virus, you name it and here’s yet again, one more way that minorities are torn apart through racial taxation. Could you go ahead and lay the groundwork for that discussion?

Carrillo (00:03:14):

Sure thing. So we talked a little bit about racial taxation in the context of education as you mentioned Steve, last time I was on here. So a lot of those insights from that discussion carry over to what is essentially a fight for not just rights but political power right now for a lot of folks, right? So when I’m talking about racial taxation, we’re talking about people being taxed differently and treated as taxpayers differently and having been classed differently as taxpayers based on racialization, right?

And last time we were talking about the inequities within the property tax, local property tax, funding, schemes, for education, and how that reproduces segregated schooling despite, you know, federal law to the contrary. Now I think, you know, this is a good opportunity to talk about it a little bit, something different, which is how the criminal law enforcement system has been used to punish people monetarily in the form of small T taxation.

And also how kind of taxpayers as a cultural identity have stood in the way of a better system. So the typical example that people give of what’s called monetary sanctions or the making of money through the criminal legal system, through the creation of debt, through the criminal legal system or misdemeanor system is Ferguson, Missouri, right?

So as we know, Ferguson, Missouri turned into essentially around, you know, years before Mike Brown was murdered, became a open air debtor’s prison, essentially. And as all MMTers know, states and municipalities have very severe restrictions on their monetary powers and their ability to thus provision for themselves financially.

And that Missouri, like many states, there’s a balanced budget requirement, but more than that, a lot of the municipalities are handicapped from raising property taxes and other taxes as a resort of taxpayer action, which as we discussed last time on the show, was racialized. Camille Walsh, the legal historian in Washington, did that great work about showing how taxpayer associations fought against the integration of schooling.

And it’s the same forces in primarily the suburbs and in the exurbs who have made it so that taxes are hard to come by [inaudible] is about as like Ferguson and what they’ve turned to is fining people and charging people fees often through petty crime designation to the courts themselves through incarceration and really bleeding people dry in a way that only exacerbates racialized poverty for black folks and other folks of color in Ferguson.

So that’s the situation that we’ve seen on the ground. I’ll go ahead and pause here, Steve. Cause I imagine you have some comments as an MMTer and or some perspective as to how sort of messed up the situation.

Grumbine (00:06:18):

Well, I absolutely do, but I’m here to hear you because this is something that you have done the hard work for. And really I’ve got more questions than I have answers at this point. When it comes down to areas like Flint, Michigan, and other areas throughout the country that have seen the industry leave and have left people behind destitute and have left the communities barren and without revenue.

Without the ability to provision itself, without federal block grants or any kind of service enabling infusion of cash, these communities are left to vie for themselves in what I’ll call the race to the bottom. And this race to the bottom clearly is exhibited in this racial taxation scheme because when you see the businesses up and leave or to prevent them from leaving, they have to shift that burden elsewhere. And what do they do?

They put it on the people least capable of absorbing that shock and the people that are more likely to be seeking alternative ways of providing for their families. And so they end up in these schemes where they are easy prey for being arrested for breaking some petty crime rule or breaking some law that is on the books that really doesn’t necessarily serve the community, but provides yet again, another fine, fees or penalties type of revenue stream for the city, given the structure that they’ve put themselves into.

So I guess my question to you is, is that this race to the bottom, it seems to be very much a macro micro thing. And it has exhibited itself in racial taxation, I think at the end, or is racial taxation the goal, or is it just the ends justifying the means?

Carrillo (00:08:03):

Yeah, I mean, that’s a great question and certainly a complex one. I think Steve, you know, there’s sort of no accounting for the intention, the hard hold intention of people who want to reproduce white supremacy and it’s sort of hand in glove, I would say. And sometimes it’s not clear, which is the hand, and which is the glove.

But the way it occurs, I think for folks on the ground, and I’m saying this, not just from a scholastic angle, but also my time fighting racial taxation as a litigator in New York City, is that it really, you know, whether it’s race or class or whether it’s a macro problem or a micro problem really kind of ceases to matter on the point of the spear. Right?

Of course that doesn’t mean these questions aren’t important, but this is racialized class. This is gender class, this is, you know, everything pretty integrated together, but I think what’s really important, and what that says is that you, shouldn’t say you or any individual, but movements need the intelligence on my lens, right? It’s I think extremely helpful to understand the hierarchy of monetary power that we were just going through.

And that is to say the legal design of monetary power to so, you know, why things are bad of course, but also to plan a counterstrike, counterpart. And that’s also where MMT comes in. So my contention in this, you know, this sort of just came up at a convenient, but an interesting time. My contention in this UCLA article that I just published is that the tax payer money rhetoric is sort of especially toxic in this scenario, racial taxation and criminal legal enforcement.

Historically what we’ve actually seen on the bipartisan push for decarceration, or, you know, I won’t say abolition because they don’t go quite that far, but for shrinking the security and surveillance, state often relies in fact, on the tax payer money, whether again, it’s people appealing just to pocket books and I’m sort of questioning how useful that is at this point.

You know, I think MMT does a great job of sort of carving up again the lay of the land and showing what’s what, but then there’s power dynamics within that. And I think if you look at this problem with an MMT lens, it sort of makes immediate sense as to materially why taxpayers is such an unwieldy class like this idea that we all generate taxes and give them to the government in some way.

So we all have each other’s best interests in mind. I don’t think it was right. When you look at racial taxation, it seems sort of absurd to think that we all think of each other as one big blob of taxpayers. You know?

Grumbine (00:10:57):

You know, it’s interesting. I had Keeanga-Yamahtta Taylor on not too long ago, followed up by David Freund, two sides of the same coin here. One was talking about colored property before the end of redlining, and then Keeanga took it for post redlining America. And the idea of watching predatory inclusion, which I’m going to call it tax, even though it’s not necessarily a tax in the sense that we know it, it serves functionally as a tax with these people.

I mean, they’re really being targeted and penalized and it’s all part of a macro scheme. It seems to be wherever you turn your head, minorities are trapped in these schemes to keep fattening capital and to keep fattening these power structures. And you can clearly see in my opinion, anyway, the dynamic of the local community, the city and state, and then into the national conversation, but at a local level, you can clearly see the predators in all these different places.

You got them in the police. You’ve got them in real estate. You’ve got them in purchasing vehicles and payday lending and all sorts of other ways, predators, predators, predators, everywhere, predating, especially on these most vulnerable communities. What is it that has driven us to this point where these people have been so marginalized, but yet they’re seen as a cash cow?

Carrillo (00:12:18):

Yeah. I mean, it’s a lot of inner twisted forces, right? We could be here all day talking about the intricacies of the special features of American history that brought us this far. But I think it’s really for the purposes of this show in this conversation important to realize that you can’t separate neoliberal penalty or this, you know, the punitive aspect of hurting folks on the peripheries of the economy, from the decision not to spend public money for not just public purpose, but to produce a society that is less violent, that is less extreme.

And, you know, there’s all kinds of problems that come with neo-liberalism in fundamentally within that the core embrace of austerity. And one of them is obviously that, you know, with mass unemployment, you find more people, you know, incarcerated, and there’s some level of design intentionality within that as David Stein, the historian would say, and as folks like Keeanga-Yamahtta Taylor and others have written about.

But in general, it’s that when public money is not spent for public purpose, where are folks going to get the means of subsistence to get by? You have to borrow, right? If the government is going to be stingy, then people wind up sort of automatically at the mercy of whoever’s on the block. And that’s not to suggest that folks don’t have agency, but the fact is you have to get money from somewhere. You have to pay the tax at the end of the day. You have to survive.

And as we’ve discussed here before in a monetary production economy that means getting the money. And if the federal government is not going to do its job, is not going to pump money into the bottom of the economy in the way that we want them to through a job guarantee through the green new deal, et cetera, folks are always going to be at mercy predators and people who are, you know, oppressed for other reasons, or even just in a worse economic situation for those reasons.

So most black folks having very little wealth to draw on, especially at a time like this, with the combination pandemic protest, then we’re going to see more and more predation as things move along. I’m only afraid.

Grumbine (00:14:32):

So what would you say is the key driver behind this construct that you’re laying out here in this recognition of racial taxation? You have mentioned the power dynamic. We clearly understand that the individuals that we’re talking about are largely on the lower end of the income scale. So taxation and penalization and all these various components impact them very differently than it would say somebody that has more means and more agency, et cetera. Right. What do you think is the key here? What is the driver here?

Carrillo (00:15:08):

Yeah, so it’s hard not to think it’s subjugation and discipline at the end of the day in some of these municipalities, at least as far as the fines and fees going with predation by the government. If you look at the Ferguson budget, and some of this was included in the DOJ report that came out after the murder of Mike Brown, is that, you know, black pedestrian money is not a great source of revenue for local budget anyway.

And you know, when you try to draw blood from stones, it often doesn’t work, but you wind up into more fiscal problems, but really people, you know, and this sort of passed into relief, like the law in the middle of taxpayer ideology. A lot of these folks don’t care so much about balancing the budget or fiscal health or sound finance, all these sort of concepts that we bat around, you know, all the time in our neck of the woods, it’s that they’re interested in not carrying the burden themselves, right?

And if you have to throw folks who were already in poverty further into debt, so be it, as long as the bottom, doesn’t all the way come out and you can just hang around the edge where people are preyed upon, but managed to still serve the past. And this continues. And it’s hard to see it changing unless we wed the fights for, you know, the anti-racist fights and the decarceration fights, the abolitionists fights with a vision of public money that allows people to flourish and not be trapped in this sort of situation.

Grumbine (00:16:40):

You bring up a great point of bringing together these various struggles into basically one movement and the fact that they are all interrelated. But I guess being that we do focus a lot on modern monetary theory. I guess my question is in the currency, issuer currency, user dynamic that we know in MMT, the states are left with a revenue constraint.

I think there’s only one state in the country that doesn’t have a balanced budget amendment. I think it’s Connecticut or something like that, but the rest of them have a balanced budget amendment. I know they can get grants. I know they can get loans. I know that they can do their own investment portfolio through probably treasury bonds and the like, but states are largely dependent on revenues, tax revenues.

And we see that in order to lure businesses into their jurisdictions, oftentimes we’ll cut the bottom out and give those folks a sweetheart there, you see what Amazon tried to do in New York. The idea that we’ll give away the farm to wealth, who is the least needy of it, we’ll give away the farm to wealth for just the lure of a few jobs.

And rather than putting the burden on them to fund the local and state government of which they are the largest users of services by far and away, the idea that somehow or another, we would put that on the poor seems to be a very interesting thing because you can almost hear the debate happening as we say this well, there’s moochers, they just want things.

Why don’t we cut spending? Why don’t we reduce services and lo and behold, they do. And it’s all in the name of those moochers, those bad people. And you framed it perfectly because of the taxpayer dollar. But in the state and local jurisdictions, the taxpayer dollar actually holds some merit, as opposed to the federal side.

I’m curious in an MMT lens, this is one of the great challenges, because in order to fix this dynamic, even let’s say it wasn’t racially motivated, let’s say it was just in general. Each of these states is highly dependent on tax revenue just to fund roadways, just to fund libraries, whatever. How do we craft a policy? How do we even attack this issue? Given that it is a real constraint?

States do have to have revenue. I mean, obviously we can tax the rich. That’s great, but there’s a reason why they’re not. The rich pick up and leave or whatever, or is that a myth? Is the white flight, is the capital flight in this case? Is this a myth or is this real?

Carrillo (00:19:24):

Well, I think the capital flight or the white capital flight is real. And that happens probably not to the extent that Republicans will threaten not these days, but I mean, this is how the settlers were built. Right. And sort of the issue I think now is that yes, it’s tricky for MMTers because taxpayer money, taxpayer identity does have a different valence sort of, a different flavor on the local level. Right?

But at the same time, I would say that MMT’s core insights, that money is a creature of public law rather than private markets or private property, is still what’s important for framing, right? And that’s for numerous reasons. States will still be in trouble and there will still be struggling for the foreseeable future. Like the pandemic, as we know, has reeked, absolute havoc on state, municipal budgets.

And I think, you know, along with everybody else in our camp that, you know, the federal government needs to open the spigots and there needs to be better lending to municipalities and outright grants to both states and municipalities. But what needs to happen as a fundamental design about design change in how we fund certain things, right?

Our enemies, the people who have created the sort of twisted fiscal federalism knew exactly what they were doing. And Camille Walsh’s book makes that apparent with respect to the Supreme Court justices in the fight for school integration. If they want to give lip service that something is a right for us, that is something that we should truly have, but they want to hamstring it, nonetheless, they tie the funding to the local level, right?

That’s what happened with schooling. That’s what’s happening with criminal legal services. Most of the people who have an experience with criminal legal system are not necessarily automatically for it. I’d say, and it’s not as if anybody asks for, you know, the carceral state, and this is something, you know, that we’re demanding a right to.

But the thing is, even if it’s of great importance and especially if it is of great importance, but they don’t want to fund it themselves, they will trap it in a web of local school control. Right? And so the sort of theme that’s starting to run through my scholarship and, you know, as well as just our activism generally, is that if something is a right or something is integral to due process or to your constitutional safeguards, then that should be funded by the federal government.

That only seems to make sort of common sense to me. If it’s something that the federal government has designated is available to you by virtue of just being a person, then that is something that the federal government should always stand by to fund, right? And that’s a long battle, but otherwise, what is it mean to have fundamental rights in this country?

Grumbine (00:22:26):

That discussion just real quickly. It goes right back to the initial conversations, the debate about the individual mandate and the whole concept of the ACA, even. The idea of this whole federalism thing has really caused more pain than I think anybody has any idea of. It’s interesting. The way you’re bringing this up, because honest to goodness, this is 1865 — wasn’t the end? Was it?

I mean, it’s still going on. It looks to me from a person that doesn’t have the legal side of this, that anything that’s not a right, is something that’s easily taken from us. And anything that is a right has to be defended. Rights are only as good as your ability to defend them and to litigate them and to ensure you maintain them.

I see an incredible amount of effort put into protecting property rights, but not the rights of individuals like the rights we’re talking about right now in terms of the right to liberty and freedom and justice and so forth. And the right to an education is one that we’ve already talked about and is very important as well. We just don’t have a lot of rights and by putting them into the states, now you gotta fight it 50 times to get anywhere.

And that’s what they’ve done with marijuana. And that’s what they’ve done with a lot of these things that feed that prison system. Absolutely. Anyway, talk to me a little bit about the racial component, if you will, of the drug war, which is a core part and parcel with this thing, even now, even as we’re legalizing or relaxing restrictions and so forth, there’s still fines tied to these things. There’s still a lot of nickel and diming people for these local funds.

Carrillo (00:24:14):

Yeah. Yeah. So the drug war is another good example of something that doesn’t make a lot of fiscal sense, but is clearly used for ulterior purposes to sort of tie in a few of the themes that you were just discussing, Steve, I think it might be useful or helpful for us to just pause here for a second and recognize what are the rights that are being defended via the war on drugs.

What is the government shelling all this money up for? Right. Certainly we can come up with a long list of things that people are entitled to, but as libertarian interlocutors would tell us, you know, no one gets hurt when you smoke weed. Right. That’s right. So what we’re talking about is defending the sense of propriety and, you know, arguably public health, but those are social rights.

Now what’s interesting is that in any other context, the sort of people who support the war on drugs will tell you that, well, the government doesn’t sign big checks for social rights, doesn’t sign big checks for economic rights. Well, you’re right to not have marijuana around you or whatever it may be is a social, right? The defense of your property is a social, right. It’s certainly a socioeconomic, right?

And it’s only when we talk about giving people, jobs and healthcare and housing and education and giving things to people generally that all of a sudden socioeconomic rights are too expensive. You can’t ask the government to do that as if it doesn’t, you know, spend literally unquantifiable sums every week, defending the rights to private property, you know, and all these sorts of other rights.

And this is sort of conceit and to their credit, some of legal realists and critical legal studies folks, you know, the sort of progressive and left of the legal academy, do you get this part? I think, and they make it clear, you know, like the typical defense of, you know, we don’t have to pay for positive rights, but the rights to have something as opposed to the right to be left alone when those are two sides of the same coin, always.

But where the legal realists and the crits get hung up is on this taxpayer thing still. Right. So last time we discussed San Antonio vs. Rodriguez, which is the big case where Camille Walsh says the fundamental federal right to an education was sacrificed on the altar of taxpayer money. And the justices decided that we wouldn’t have a fundamental federal right to education under the constitution in this country because their taxpayer rights at fault, even though tax payers were not members of the lawsuit.

Taxpayers had no standing. They’re just a cultural force hanging around in the background, right. And the crits and other really smart people sort of look at this. And so this is sort of always going to be there. So maybe we should fight the right so hard and we should just make open-ended demands and need to make other arguments and things.

And I started to say, hold on, you’ve made a lot of assumptions about taxpayers there, the technical ones that we know as MMTers, like you’ve assumed that they generate the money in the first place that is used to pay for rights. But you’ve also assumed that there is sort of, again, monolithic force here with a concerted set of interests and that we should somehow bow to them, which doesn’t really make any sense.

When again, we’re talking about something like fundamental rights, but that taxpayer money is in the way, in the doctrine, and the law. It’s in the way of legal thought. And not just, you know, you sort of other [inaudible],

Intermission (00:28:10):

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Grumbine (00:28:59):

That is very interesting. There’s a part of me that wishes I would have followed through and gotten the JD instead of going the business route.

Carrillo (00:29:07):

Be careful for what you wish for.

Grumbine (00:29:08):

Well, you know, but everything you guys say, I shouldn’t even say this out loud, but there was one time, way back when I went to a Grateful Dead show and I was sitting there in the parking lot and I was having this existential moment. And I’m thinking to myself, without knowing math, I can’t know anything. Cause math is truth. Math is power. And I just was having this wild moment here, right?

Everything was coming together. And you got to know math because you can measure a blade of grass. But what I’m finding is, is that forget economics in the sense of dollars, but in terms of rights, in terms of legal enforceable rights, you guys have been on the leading edge of making this case. And I think that this is a really important point that we’re making here because the dollar is a legal construct.

The whole concept of enforceable rights and property rights and rights in general are really what we’re talking about here. Because without having the right to these things, what do you have? What do you really have? I think that this is an important point because I don’t think most people feel like they have very many rights. In you watch the way that we’re predated.

And I say that as an educated white male, that has some privilege backing him. And even in my struggle, I look over around and I see these groups that are so marginalized. And so without a net. The only thing that would actually, in my opinion, provide any kind of security of any variety is a real bed full of enforceable rights that they could draw upon to keep themselves out of the hands of predators.

It seems like almost window dressing to talk about programs or other things. It’s so almost you have to jump straight to rights. You can talk about all this stuff, but I think in the end, I don’t want to jump to the conclusion, but keep me honest here, it seems like everything has got to come back to the point of rights.

Carrillo (00:31:05):

Yeah. So I’m inclined to agree with you, Steve. And this is a huge sort of debate amongst the legal left. What have rights gotten us? Are rights even a real, you know, I think you’re right. Excuse me. I think you correct. People feel like they don’t have rights in the society. And it says a lot that we keep pushing the rights. So a lot of people have, you know, asked us to pause, but what you’ve just articulated is sort of the counter critique about rights that I sort of wind up behind.

The original, critical legal scholars, most of whom were white men, said rights obfuscate. We say there’s a right to something, but it’s usually very vague and people say that they’re satisfying rights, or government say that they’re satisfying rights all the time when it renders nothing completely. And the answer to that sort of thesis from especially critical race theorists and feminist legal theorists was hold on.

Well, rights might be indeterminate, rights might be unstable, rights might not mean shit without support from the courts, from the Fisk from movements. But they’re also the only thing that has achieved a sort of protection for marginalized folks and especially for poor people of color for women in this country. And so I still sort of fundamentally adhere to that principle. What I think MMT comes in is that it says yes to the criticism that the rights aren’t real if the money is not behind them.

Scott Ferguson likes to say no inalienable rights without inalienable money. If the pot is going to run dry or the pool is going to run dry by the time it comes for you to claim your right, then it’s not going to be real.

So I fundamentally think, especially when we’re talking about things like the green new deal, which contains at least four socioeconomic rights, housing, healthcare, education, and employment on the federal level, we have to be pairing those with essentially blank checks. Otherwise we’re not putting our money where our mouth is, and that’s going to hurt people who need the rights for protection the most to get back to your initial point.

Grumbine (00:33:20):

No, I love the way you tied in the green new deal. So let me ask you, we see the outcomes of racial taxation and it leads to jail. It leads to a lot of penalties. You know, I noticed that you had also written a really incredible document, this black paper on Facebook’s attempt at the Libra, which amounts a sort of a shadow banking, shadow currency of sorts.

It seems like there’s a surveillance issue at stake here as well. Because if you can’t catch him straight up and maybe we can catch it through some other way, maybe we can watch you some other way. Maybe we can get you tax ya or whatever some other way. Talk to me about the concept behind the Libra and surveillance within the monetary system.

Carrillo (00:34:10):

Absolutely. I think that’s a great bridge you just made there, Steve. So yes, surveillance very much is the additional expanding layer to what we were just talking about. Right? So in this vacuum of predation as Bill Black says, what’s going to happen when the government’s not spending to support people’s rights, they’re going to go into debt to satisfy the necessity, right?

And so for some people that’s not even a possibility and folks are just shut out of, you know, the economy sort of generally. Other folks have to rely on government benefits, but those are becoming stingier and stingier every day, especially utility payments, et cetera, we can go down the list. But what is happening is the wall street continues to only even serve fewer and fewer kinds of customers, right within the vacuum as wall street, you know, decides it’s not even worth it to prey on poor people, quite the same way anymore.

It’s coming Silicon Valley. And Silicon Valley will say, we’ll charge you fewer fees on the loan, our lowest, low interest rates. But what we need from you is of course your data. We need information about what it is you’re spending money on. We want you to open up your phone or your computer to let us derive information from other applications to determine your credit worthiness or whatever it may be. And Silicon Valley is sort of offering a alternative here that I would say is in its own way, fundamentally predatory. Right?

And you had Dr. Yamahtta-Taylor on here talking about predatory inclusion. And that’s when folks who– she literally wrote the books– when folks are offered things under the umbrella of inclusion, it’s because they’re in particular need of it, but the long term consequences evaporate or terminate those benefits, right? It’s not worth the cost at the end.

And my contention would be that we’re building, first of all, the massive surveillance web through finance now in the Libra Project by Facebook is sort of the epitome of that. But then we’re also uploading all this data about people who are in particularly vulnerable positions to the servers of these corporations who are in bed with law enforcement and in some sense have no choice.

So when we think of all the protests going on and everything right now and how the police are using facial recognition technology to catch protestors and the feds are doing that as well. We have to remember who has, for instance, the largest facial recognition database in the world and that’s Facebook. So do we want Facebook scanning people’s pictures to determine the interest rate on their loan?

Is that the sort of thing that we want in the future because the Libra Project is not just currency. It’s a name for a whole new parallel financial system, as you were indicating earlier. In Silicon Valley, you know, Facebook is the first and it’s in a consortium of other groups, including Uber, Lyft and all your faves, but it won’t be the last in Google and Amazon and Apple surely on the way,

Grumbine (00:37:21):

You know, it’s funny because everything Silicon Valley pushes forward, even games. Now you just don’t want to download them because they’re finding a way to get information. They’re finding a way to extract more money from you in very casual purchases, purchases so casual, you don’t even realize you did it. And they are really, truly sucking you dry.

And it’s interesting that they would be the biggest advocates of the UBI. And I know this is not a UBI discussion, but I see the UBI as part of this, even though it’s a slight fringy thing. I’m seeing the UBI as a way of fattening these shadow banks by here, here, we’ll give you some money, just keep pumping it back to us. I don’t know. I mean, the structural changes that they’re bringing here are not ones of security.

They’re ones of insecurity of gig economy, of gig living, of being on your own – of radical libertarianism, in my opinion. What is your take on that? We can come right back to the subject, but I was just curious where you fit on that.

Carrillo (00:38:21):

Absolutely. I think that’s a great tie into, Steve. And it’s important to hit on this, to understand the ethos of the Libra Project and other efforts as well. I said this in the Nation, when Mayor Tubbs’ proposal came out, you know, it was sort of astroturfed by Silicon Valley.

I said, you know, show me the document where it says, you know, everyone’s guaranteed decent income for living and I’ll sign it. But what is happening here is a vision — a whole vision of a social future, as you indicated, as being pushed by the people who were funding UBI, et cetera. There’s no vision of the other side of the coin of empowering people in the production process.

There’s no empowerment for workers generally, but there’s also no empowerment for debtors, right? And we’ve seen with the Covid checks, actually, what happens when you don’t think about income payments through the lens of debt collection, the banks were snaking the payments and judgment debt collectors are snaking people’s Covid payments, right?

And Silicon Valley is now in the debt game. It doesn’t have any interest in a sort of wholesale financial picture for people. Income is one thing, but what’s going to happen. You know, if those very same people who are pushing these projects are the ones who are taking it on the backend. And that is really the vision for a lot of them. It’s not everybody, but that is part of the California ethos, so to speak.

Grumbine (00:39:49):

You know, it’s interesting. I’m watching third party movements and other groups coalescing, obviously the outcome of the primaries left a lot of people, millions and millions of people, very unsatisfied with the outcome and very unhappy with the direction of the nation, especially in the progressive community.

And I’m watching them and they are tying hands with the UBI community and the conflation with COVID payments and an overall UBI. And the concept of they take really nice feelgood sentences, almost like the GOP, quite frankly, where they take these bumper sticker ideologies, throw them out there. And it’s not even the tip of the iceberg, because if you look below what really comes with that with the fine print, it’s devastating.

And this is what the GOP so often does. What do you mean? You’re going to take away our right to a gun? What do you mean? You’re going to make us wear a mask? You’re a tyrant, you know, and all these things resonate with people and the UBI sounds so good and Libra sounds so good.

And the ability to do a cryptocurrency sounds so good and reality is, is that most people aren’t listening to these deep dive discussions where we peel below the iceberg. They only see the tip and they only have interest in the tip, just the tip. And so how do we take this? Because it’s the people who need to hear it most probably won’t hear it. How do we message these things are very complex.

Carrillo (00:41:20):

Wow. Yeah. So I mean the whole issue with, you know, surveillance, money and sort of these things popping up, it’s hard to follow, right? And that’s on purpose because, you know, as you can see the paper with the folks I work with in DC, like it’s layers of tech jargon, on layers of finance jargon, on layers of legal jargon. And then the coding on the package is pretty simple, right?

Like Facebook says, it’s building a public good. Just click here, agree to our terms of service. And now you can transfer money anywhere in the world, you know, bingo. But like the thing that can never be forgotten, despite all these noble promises, despite Silicon Valley’s version of UBI, despite you know, in the case of Libra them saying this is going to help immigrants send money back home. This is going to help the under bank, et cetera, is that’s never, ever really what they’re after.

And Bill Black has made this pretty clear. He says, when Libra came out, he said, you know, what’s the business model? Is the business model of Facebook changed? No, the business model of the internet hasn’t changed. It’s still data. It’s still mass surveillance. So even though, you know, for instance, in the case of Libra, they may code it even with cool tech and like talk about cryptocurrency, et cetera.

They’re still here to spy on you. That’s how they make money. And that fundamental fact cannot be forgotten. And it, especially, again, cannot be forgotten now in this era because justice taxation is racialized. Surveillance is racialized. Yes. You know, it may be the case for instance, that someone wants to use Facebook to send money back home to family in Egypt.

And then next thing they know they’re getting calls from law enforcement because Facebook is, you know, flagged that incorrectly and sent it to the wrong folks. You know, like that is the world that we’re seeing. And then there’s of course the more direct targeting of protesters, et cetera. But at a certain point, we have to ask, no matter how neat, you know, quote unquote, philanthropic, these sort of organizations are like, how much more power are we going to allow them to accrue?

And that turns us back to MMT that turns us back to public provisioning. There really is no reason that the U S government shouldn’t be, you know, supplying Covid payments through a system as fast and as ubiquitous as Libra wants to be without collecting data like Libra wants to. We can have that. The public sector seems to have an allergy to innovation and punt everything over to, you know, the corporate tech.

Grumbine (00:43:59):

Let me ask you, given the technical deficit, the racial technical gap as well, the access to the internet, the access to state-of-the-art stuff for people in poverty and so forth, the concept of the under-banked and all. Just the idea of taking something like that.

I mean, Mehrsa Baradaran has been on the forefront of that. So many folks, including yourself in terms of the real role of like public banking and postal banking and things like that. How does racial justice in a Libra like world look? What would the opposite be? What would be the positive image of that?

Carrillo (00:44:41):

Yeah. So if it’s truly the case that we think everybody deserves basic financial services, there’s just no need for a corporation like Facebook, which has been served with the largest, you know, fines in the history of privacy law, which is just constantly, constantly breaking promises to regulators and truly just showing contempt for its users.

There’s no reason an entity like Facebook or an entity like the Libra Association, it’s quote unquote nonprofit association, which is headquartered in Geneva, Switzerland, by the way, to be protected by the very strong banking laws there. It doesn’t have to be this way. And the alternative, I think in a lot of, you know, folks like Professor Baradaran or the folks that you’ve mentioned, that is truly that the government should provide this.

And I think that having multiple complementary ways of doing that. You can have that accounts that are available at the post office. You can have local public banks. You can have state public banks. This is all good. First and foremost, if it’s backed up by general fiscal spending, as we all know, because credit is not an answer to poverty. It’s an answer to some things, but it’s not a structural answer to poverty.

I think these are all great options. What’s very important, and that I think is becoming even more, really central to the debate into the discourse. As the Libra Project shows is purposing. When we create this sort of new form of public money, are people going to have the option to have essentially a public bank accounts and a public want where you can have, you know, low volume transactions that the government bank doesn’t have to see.

Or are we going to foreclose everything and just move completely into a bank account system. And, you know, perhaps push people out and not included in the public option, if they’re reasonably wary of government surveillance? Or of just keeping all their information where our government authority can reach it as easily as sending a subpoena.

So that’s really what we’re looking at. Then of course, that relies fundamentally on broadband and upon building the digital infrastructure that underlies all of this. And that’s important on racial grounds. That’s also important for rural areas. There’s a sociologist at Michigan, Terri Friedline, who just put out an excellent book on this. I’d highly recommend people check it out.

Grumbine (00:47:01):

I think it’s interesting. In my world, I’m a project manager and I focus on these four things: inputs, outputs, tools, and techniques. And if I was to break down the inputs and outputs, you’re talking about the ability to transact. You’re talking about the ability to receive your paycheck through direct deposit. You’re talking about the ability to get a loan, a low interest loan.

You’re talking about a whole host of things that are a public good. Banking was never intended to be sexy, but it’s clearly become a great way of some people to get rich. And I think Bill Black again, wrote the great book, Greatest Way to Rob a Bank is to Own One. We’ve got an awful lot of opportunity here to redesign access to resources, access to money and so forth. But I think people conflate the idea of cryptocurrency with this idea of a public opportunity to do a digital currency as part of a public monopoly.

Can you explain the difference between crypto and what we’re kind of talking about here?

Carrillo (00:48:07):

Yeah, sure thing. So, yeah, when we’re talking about different currencies and coins and especially the distinctions between them and public forms of money, it’s probably useful to think about one access, which is usage like is this used for retail payments? Is this like more of an investment vehicle? And then another one, which is privacy, because you can have very private, like retail money – money just for everyday use.

You can have very public exposed money that you use for retail use. And as far as investment vehicles go, you can have sort of the same thing. So cryptocurrency just means that, well, depends on how you ask these days, but it uses encryption in some way or another. For most systems encryption is involved and, you know, logging into your account and trading, et cetera, and for most cryptocurrencies, but not Libra and a few other of these corporate currencies, it also means the data is kept in an encrypted form. Libra is arguably not a cryptocurrency anymore because they don’t give a single damn about privacy at all.

So it’s just a private money that is not serve… it’s private sector money that doesn’t provide privacy and doesn’t have the advantages of public money. Now, public money is useful in here. I mean, you know, government issued money for instance, but you know, anything issued by a policy with the strength to enforce, you know, the equivalent of taxation that money is backed up, you know, essentially by the law, but by force of course at the end of the day by the tax man.

And so it has useful retail value. Now, most cryptocurrencies don’t have useful retail value. Yet most of them like it’s easier to speculate on Bitcoin, obviously being the prime example. Libra is an attempt to create what’s called a stable coin to stabilize what sort of looks like a cryptocurrency into something like public money.

But at the end of the day, it’s only backed up by the money that the Libra Association has from sales of coins and other things. It’s not backed up by all the good and bad things that come with the government. So there’s never going to be a time where using Libra coins is as safe as it would be to use U S dollars for instance, but that’s not the case necessarily everywhere in the world, right?

So the real threat here is currency substitution. And some places where they’re subject to dollarization and instead, you’re going to get libralization. And if it’s easier to use Libra than the dollar than people are gonna flock to that. And then you have no monetary sovereignty in these countries that are essentially running through our economies on Facebook. Right? Right.

So that’s a big sweep, but I’m just sort of trying to show how different, very different these monies can be in several different respects. And at the end of the day, these private sector monies are never going to be as reliable or as strong as the public monies, unless they essentially usurp the backing of the government, unless Facebook sort of becomes too big to fail, right?

Grumbine (00:51:12):

So I want to stop you right there. Cause you hit something that I’m afraid that if I let it go, it’ll be lost. And that is the idea, no, this is perfect. This is a great segue into what I think is an important point. The idea of folks doing currency substitution, falling over to Libra. But going back a few years, even everybody was saying, Bitcoin is going to eliminate the dollar, all these crazy 3:00 AM type YouTube video screamers and stuff.

And clearly that’s not the case, but in this case, there is the chance of some dollar substitution. And the idea here is not a matter of whether, you know, dollar hegemony is such a good thing or a bad thing one way or the other.

The issue here is, is that when you’re looking at creating the public space, you’re looking at creating public spending, you’re looking at services, you’re looking at the public purpose. Libra doesn’t serve that. Libra as a private entity. It’s not a public good. And the idea of Congress writing a law to make Libra dollars pay for infrastructure, or Libra dollars to pay for whatever, right. It’s not how it works.

So there is no Medicare for All hypothetically with Libra. There is no Green New Deal with Libra. There’s none of that. I mean, this is purely somebody in a private sector making money off of it. And us exchanging dollars. By doing that, we end up hurting the ability to do these really important things that directly impact communities such as African American and Latinx and so forth. Can you talk a little bit about the difference between public money and private money in that vein?

Carrillo (00:52:58):

Yeah, absolutely. So I mean, the way that tech works in general is that it often finds something that they can sell because it’s convenient to the individual, even though it’s very harmful to society, right. And people say, Oh wow. And they don’t think about the bigger implications. And you’re right to say that, you know, the Libra Project is engaged in this sort of aim for substitution.

If it doesn’t replace other currencies, then there’s no point in having it because you want the data from the transactions, right? And from all the infrastructure that sort of surrounds the project, it needs to replace other currencies. Now what’s going to happen when some people swap, or what would happen to some people, you know, swap their, whatever money they happen to have, for Libra coins is individually, they might be able to make payments faster.

They may be able to buy certain things quicker. They might gain Facebook [inaudible.] They might get more likes. They might get content pushed. Who knows? The limits are pretty much boundless when there’s no antitrust law in this country. And Facebook can continue sort of doing what it wants, but there’s never going to be a point where Facebook and its partners have to invest money in the public good.

There’s never going to be a point where there’s any sort of democratic control beyond what regulators can sort of cajole them to across the world, but there’s no obligations that come with this money. You’re exactly right.

Grumbine (00:54:23):

So you see all the rage with, especially in neoliberal circles, the concept of public private partnerships, the idea that somehow or another, the federal government could conscript, if you will, the Libra from them is kind of a ridiculous thing, but I’ve seen so many times where the powers that be in the corporate sector somehow, or another secure the socialization of the win of the backing of the government while simultaneously spreading their losses amongst us in these public private partnerships, these [inaudible] things. Is that a real possibility here with Libra? Is that something that we could expect to see? Is that something we should be concerned about looking at?

Carrillo (00:55:05):

Yeah. It’s great that you highlight that Steve, because we actually are going to see a push. Some people in the building of whatever this new system is, whether it’s we call it central bank, digital currency, or a digital dollar or whatever this new public digital real time money that we create is in overlay across the whole system. It can take many different forms.

And some people very much are saying that the Fed should partner with, or the Fed should partner with MasterCard or the Fed should partner with Visa. And the goal here is always to say like, oh, it’s just more efficient. So you don’t cost the federal government money. Even though the fed has pretty much unlimited operating budget, which, you know, our friend Nathan Tankus is fond of repeating, and they’re doing this even though, and then the other thing, excuse me.

The other thing that they say is that, you know, well, the tech sector, you just knows how to do things quickly as if the government couldn’t, you know, like sort of hire the tech sector to build things and procure it rather than inviting them into the middle of the system, right. Then having Visa or Facebook Libra control the rails. But people are very much asking for this.

Trump’s former CFTC chairman wants to do a public private partnership for a digital dollar and involve a bunch of people from the crypto sector, involve major payments companies and what that’s going to do in addition to, you know, of course, allowing all these companies to what they’re being charged fees and et cetera, et cetera, it’s going to shred privacy. It’s hard enough to make the government respect again, rights, in this case, privacy rights.

There are very few of them that we have in the United States, especially compared to other legal jurisdictions, but that is difficult enough. But when you invite a private party into the transaction, your case for privacy becomes even weaker, right? Like if I’m in the room with just the government, I can be said to really be, you know, trying to keep things private into myself. If you and I are in a room and the government is listening to us, I’m already publishing things to you, so to speak, right?

I’m already breaking a privacy wall and certain protections that you have against government surveillance cease to apply essentially when there’s another party in the room. And so PPP is especially destructive within this context, that’s it?

Grumbine (00:57:27):

Wow. We’d never ever thought of it in that way, but that makes it even more insidious like these charter schools and other things. It all comes back to these public private partnerships. Wow. Wow. Is all I got to say. All right. So I want to give you a closing remark.

I have one final question for you, and that is in the context of racial taxation and the concept that we’re dealing with today with mobilization against a police state that has been oppressive and cruel to people of color. How do we tie this all up so the impact that communities can see how this concept of surveillance through currency and through cryptocurrency and through these public private partnerships impacts them directly?

Carrillo (00:58:13):

Yeah. So I think that, you know, we’ve had such a wide ranging discussion today, Steve, it’s an indication…[laughter]

Grumbine (00:58:20):

I’m so sorry.

Carrillo (00:58:22):

No, no, no, no. I think it’s good. It just shows that racial taxation and racial surveillance and, you know, other forms of oppression even are not inseparable from the design of the monetary system. And I think for instance, abolitionists are doing a great job right now of avoiding this taxpayer money credit part, or sort of weaving things into their point of view.

And we should be at the ready to help movements and vice versa, right? Like we have a lot to learn as well. And I think learning from the heat of the moment is really important. And these things that are becoming apparent as the Overton Windows not only shifts, but smash against the wall is really, really, really crucial.

And there’s a lot to learn right now. For instance, we had a talk about, you know, law enforcement surveillance, as it relates to the form of money and why we can’t jump on all these tech currencies, like really, there’s no substitute for just being there with an open hand and whether it’s with a movement leader or just your neighbor, sort of helping tie things together. The fact is that we live in a system with interlocked depressions right now. And we sort of all need each other’s vantage point [inaudible].

Grumbine (00:59:32):

Oh, that’s powerful. Look, man, thank you so much for joining me today. I really appreciate it. It’s been too long. We wanted to get you on here for so long yet. You’re so eloquent. So I really appreciate you taking the time.

Carrillo (00:59:45):

Thank you, Steve. Excellent questions. I think we did tie everything together pretty well. This hammering up predation and then MMT is the opposite the whole time.

Grumbine (00:59:56):

Well, listen listeners out there. So hopefully you all will be able to check out Raúl’s work. Raúl, why don’t you tell them where they can find these documents you’ve put together?

Carrillo (01:00:06):

Sure. So the essay Racial Taxation in the Era of Monetary Sanctions is available in the UCLA Criminal Justice Law Review. And then you can find the Libra Black Paper on the websites of either Americans for Financial Reform or Demand Progress Education. .

Grumbine (01:00:24):

All right. And with that, I want to thank you again for joining us, folks. If you have any questions, please leave us comments, let us know. We’ll do our best to find out the answers for you. And with that, I bid you all a good day. Thank you from Steve Grumbine and Raúl Carrillo. Thank you so much. We’ll talk to you soon. Bye. Bye.

Carrillo (01:00:49):

Thanks everyone.

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