Episode 127 – The Rent’s Too Damned High with Cory Doctorow

Macro N Cheese – Episode 127
The Rent’s Too Damned High with Cory Doctorow
July 3, 2021

 

[00:00:02.910] – Cory Doctorow [intro/music]

About six or seven years ago, a lab at Yale started to document a surge in evictions, and what had happened was that through a combination of a couple of bad precedents and a couple of statutory adjustments here and there, a cabal of high priced landlord lawyers had figured out how to streamline eviction and take a thing that had once been really rare and required a high evidentiary burden and a lot of compliance into something that was like the robo-signing epidemic.

[00:00:28.380] – Cory Doctorow [intro/music]

Hope is why when your ship sinks, you tread water, not because you can see how treading water will get you to the land, but because everyone who was ever rescued treaded water until the rescue arrived. It’s a step that you can take that gets you closer to your goal.

[00:01:35.220] – Geoff Ginter [intro/music]

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

[00:01:43.050] – Steve Grumbine

All right. And this is Steve with Macro N Cheese. Today’s guest is none other than Cory Doctorow of craphound.com. He’s a science fiction author, activist, and blogger. He also has a podcast, newsletter, Twitter feed, Tumblr feed, and Mastodon feed.

The guy’s written an awful lot of great works, but two reasons why I brought him on. Number one, he is the rare unicorn, as I said to him offline prior to saying that, that understands MMT. And also beyond that, he wrote a phenomenal piece in Medium that works directly hand in hand with our work on The New Untouchables: The Pecora Files podcast.

And it’s called ‘The Rent’s Too Damn High: A Human Right Commodified and Rendered Zero Sum.’ And I fell in love with him. He was kind enough to do a podcast where he read his article so my eyes didn’t have to get too tired trying to read through it. And we tried to schedule this a month or so ago and I ran into a conflict at the very last minute. He was kind enough to reschedule. And here we are. Cory, thank you so much for joining me.

[00:02:49.490] – Cory Doctorow

It’s my pleasure. Thank you for having me on. Always happy to talk MMT because I am in physical contact with a vanishingly small number of people and they’re all very bored of hearing me talk about it.

[00:03:00.180] – Grumbine

It’s like you come to the family cookout instead of talking politics and making everybody cringe, you talk MMT and they cringe just a little bit harder, right?

[00:03:08.770] – Doctorow

Well, growing up in what we now call progressive circles about which used to be called leftist circles, and I have an awful lot of friends who think that we can’t have nice things until we make billionaires agree. And I keep trying to talk to them about how it is that we don’t have to be held hostage to billionaires and how that’s a more progressive position than the idea that first we have to tame billionaires and then and only then can we have nice things.

[00:03:35.730] – Grumbine

The funny thing about that, Kelton goes around saying, let’s make the rich irrelevant, let’s do shit without their permission.

[00:03:41.550] – Doctorow

Yeah, that’s where I land too.

[00:03:44.210] – Grumbine

I’m so there with you, and the thing about ‘The Rent’s Too Damn High,’ you really layer cake this. You really bake in the goodies from how it got to where it is and based on the pandemic and the wealthy being able to basically swipe up large amounts of properties. And we already were in the midst of a slowdown going back to 2008, 2009 housing crisis where everybody stopped building.

And so now BlackRock and others have a stranglehold on the economy and a stranglehold on housing. And your article really lays this out in a way that maybe I had never considered before. And I think that this perspective is absolutely complimentary and adds to the body of knowledge. So what I’m going to do is I’m going to let you give us an overview of the article and then we’ll go from there.

[00:04:35.060] – Doctorow

Sure. Well, it’s been a while since I wrote the article, so just to tap into what the thesis is there. But I guess there have been some people who’ve tried to cool down the rhetoric about BlackRock and Blackstone, both of whom are involved in different ways in the asset bubble that we’re living through. And I start by saying, look, it’s a complicated asset bubble.

It’s not merely that Wall Street has become a significant landlord in a bunch of different communities. That happened a while ago. It was five or six years ago that many towns in California found that nearly all the rental stock, or at least the majority of rental stock was owned by a Wall Street landlord that had securitized the rent. There’s also been some supply shocks as a result of the crisis. Right?

So we do have lumber problems and we have problems with other material, as well as labor shortage arising from a reset in what workers consider to be a fair wage, which I think is long overdue, which means that it’s becoming harder for firms to convince people that they are precarious enough to work for a wage that doesn’t rise to the level of a dignified wage or even a survivable wage.

And there are a lot of explanations for this. People lean very heavily on a relatively small number of stimulus payments and some expanded unemployment benefits, and surely those played a role. But I also think that if the precarity that scares you into working for less than you’re worth or less than you need to survive is the fear of what happens if it all goes sideways and then you live through it all going sideways, maybe the fear is blunted, right?

Maybe the fear that gets you out there and hustling at a wage that you know is not sustainable in the hopes that eventually something better will come along or the situation will sort itself out – maybe that fear is just blunted. So we have that. And the supply chain shocks are also exacerbated by the fact that the supply chains themselves were made very brittle. Right?

So it’s not merely that there’s a lumber shortage arising from a labor shortage and problems with shipping and so on, it’s also that we have leaned out the supply chain so that there are a whole bunch of single points of failure within them and a single thing going wrong can hurt the situation. And then finally, of course, there’s the fact that people haven’t been building, right?

That since the GFC, since the great financial crisis and the mass bankruptcy of housebuilders, there has been a great deal of risk aversion. And so you put that all together and you get this moment where it is really hard to get a house. Homeownership is slightly up from where it was a few years ago, but it’s still at historic lows in the US. The US made homeownership one of its two primary means for class mobility and intergenerational wealth transfer and intergenerational mobility.

So the US historically had a labor pathway to social mobility where if you got a better job than your parents, you could live a better life than them. And then it had an asset pathway where an asset that you or your parents bought might appreciate so much that as generations went by, if you were able to hand it down, that each generation would be more affluent than the last.

And we can see that that asset pathway was moderately successful or actually relatively highly successful because there’s a kind of natural experiment we have because of racism, where a large cohort of Americans were, black people, who were redlined and restrictive covenanted and discriminated against in ways that deprived them of home ownership as a means for effecting intergenerational wealth transfer and social mobility.

And there’s a bunch of good empirical work that shows that the wealth gap between black and white households is largely attributable to things like working class white families using the New Deal and the GI Bill to get themselves into an asset class that subsequently appreciated and that was either mortgaged and then that cheap access to capital was used to fund new home for the next generation or to defray the costs of tertiary education or to just limit the amount of debt emburdenedness that people had.

But the other path, the employment path, which again, it wasn’t like it was egalitarian, right, the black people have a right in America, enjoyed less of an employment path to wealth and than white people, but the employment path through unionized workforces was the one that we got rid of. And of the two, it was the more universal. And getting rid of unionized employment and with it a check against the concentrated power of capital when negotiating with the diffuse power of labor, right?

Your boss need only agree with himself as to what he should pay you, whereas you and all of your coworkers need to agree with each other in order to push back against him. And unions are that vehicle by which we make that happen. And so we got rid of unions. We tip the negotiating leverage in favor of bosses and we’ve seen wage stagnation in the face of productivity gains as firms became more profitable, the share of the profits and the real terms wages of the workers who generated those profits all went down.

And CEO compensation, executive compensation went up and up and up. And one of the most immediate consequences of that was that bosses were able to eliminate the defined benefit pension. This started with Carter accelerated under Reagan, and since then we’ve just seen more and more of it. And so now if you want to survive into your dotage without forcing your children to give up their most productive labor years to take care of you.

You have to either get unbelievably lucky with your 401k – and again, empirically, American 401ks are not and will not be sufficient to carry them through a dignified retirement – or you have to liquidate your family assets. And so what’s happened is that in about in a generation and a half or two generations, we’ve gone from asset appreciation as a vehicle for intergenerational wealth transfer and social mobility into a regime where on the one hand, your kids are unlikely to be able to afford a home because of that same asset appreciation.

And on the other hand, you’re unlikely to be able to pass on your home because you either have to liquidate it for your retirement or, if you’re lucky, for your retirement and to help defray some of their student bills. And the reason that we got rid of retirement benefits and the reason that education became so expensive is that there wasn’t an organized working class with an institutional trade union movement to defend those things.

And the great irony of this all is that the houses don’t appreciate on their own. There are some reasons that houses might appreciate that are separate from my analysis, like it might be that a lot more people want to move to cities. That’s certainly been the case with increasing urbanization. But irrespective of everything else that’s going on with the demographics of your city and so on, to the extent that not owning a house is worse than owning a house becomes better.

So if tenants have rights then owning a house is less value on the one hand, because if you rent your house out to people, they have rights and so you can’t just kick them out if someone better comes along or you might be expected to maintain the house in a livable situation or control your annual rent hikes or to exercise forbearance if they get behind on the rent and to not evict them.

All of those rights make your house less valuable because they make it less of an income generator. And it also means that when your house comes up for sale, people who might be contemplating buying it as a source of income are willing to pay less because they expect to earn less from it. So the corollary of that is that the worse things are for tenants, the better off housing owners are.

[00:12:21.840] – Grumbine

It’s a paradox.

[00:12:22.830] – Doctorow

Yeah, well, or it’s just the flip side, right? If you can evict your tenants at will, if you can charge them unreasonable fees, if you can use the fact that they are your tenant to lard on other expenses. So it’s not uncommon in big cities for landlords to strike deals with a cable operator and say, every one of my tenants is only going to use you for their cable and Internet and you can charge them double the going rate for that. And so now you can split the difference with that cable operator. If your tenants have the right to choose their own service provider, energy provider, what have you, then you have fewer rights as a homeowner. And so all that housing appreciation has come with the steady erosion of life as a tenant.

And so as tenancy becomes worse and worse, the amount people are willing to pay to not be tenants, right, the things they’re willing to give up to not be a tenant, the amount of unsustainable debt that they’re willing to enter into, the amount of commuting they’re willing to do, the amount to which they are willing to doom their parents to an undignified “seniorage” by demanding or wheedling that their parents give them some of the money they need to live out their old age so that they can afford to not be a tenant, all of those things make houses worth more.

And so here’s the great kind of monkey’s paw irony is that for 40 years, the class of people who thought that they were insulated from the depredations of tenancy and were therefore free to make tenancy as horrible as possible in order to increase the value of their assets in order to protect their children, are now staring down the barrel of a future in which their kids are going to be tenants and they’re going to be deprived of all of those comforts that they themselves conspired to take away from tenants as a class in order to protect the value of their house.

[00:14:14.390] – Grumbine

That’s just insane. There was an article in Bloomberg the other day, it talked about the wonders and the greatness of being a tenant, and they tried to sell being a renter as some supremely mobile thing. And it sounded remarkably like the same exact gigafy apologetics that the Uberization of America tries to use. And so as I’m reading this, I’m thinking this is a fiasco waiting to happen.

We already don’t have any kind of meaningful assets. Most of us are one paycheck away or one management decision away from complete and utter destitution. And so now you’re stuck in the situation where this moratorium, this forbearance from the covid crisis is about to come to a close – the mortgage forbearance. You’ll also have the eviction moratorium coming to a close.

And ultimately, due to that scarcity you laid out, there’s going to be a huge bid for all these rental properties. And now the scarcity model of capital is going to kick in. And who’s going to be left out? Well, we thought San Francisco was bad with homelessness. I think you’re going to see a lot more of that. What are your thoughts about post-covid housing?

[00:15:29.540] – Doctorow

Well, first, let me speak briefly in defense of a fair tenancy because houses are a really shitty way to accumulate wealth, right? They are hugely illiquid. Economists describe the illiquidity penalty for homes, right? So homes are actually worth less than they would be if there were another kind of asset because they’re just hard to sell. They’re a pain in the ass to sell. And highly liquid housing markets are terrible.

I lived in London for 13 years through the worst of its housing bubble, and the housing bubble in London was driven by liquidity in the housing market in the sense that there were so many people looking to buy homes, many of them offshore criminals looking for a way to buy a safe deposit box in the sky, that any home that was listed could be sold on 24 hours notice.

And so that only drove the price of housing up and up and up and also set up a precarious regime where as soon as the housing prices dipped a little, all those people who bought houses as safe deposit boxes in the sky immediately panic-sold which drove the prices down and down and down. So it’s just a rotten way of doing things. There’s that older model of tenancy.

Me growing up in Toronto in the 70s and 80s, we had a pretty stable tenancy market where we had more or less enough rental stock to accommodate the people who wanted to rent. We had rent controls. We had eviction controls. We had duties and responsibilities for landlords to maintain their properties in a habitable state. A rental property would generate some income, but not a ton of income. It was considered a safe thing to buy. Was like buying a T bill.

[00:17:03.290] – Grumbine

Right. Yeah.

[00:17:04.100] – Doctorow

It wasn’t a thing you bought if you wanted to get rich. People would buy them as annuities. Right? You would cash out your retirement at 65 and you would buy a fourplex and live in one of the flats and rent out the other three and maybe pay someone a little to help maintain the other three. You know, that was the kind of modest income that landlording used to get.

And in Germany, there was much the same before and after the fall of the wall, but especially in Berlin, leading up to the fall of the Wall in West Berlin, there was this idea and a good, well regulated rental market really undermines things like the postcode lottery for schools – where you live determines what kind of education your kid gets. There are lots of ways to remediate that, right.

We can equalize how much money we pay per pupil at the regional level, the state, or the province. We can say we’re just going to normalize that across all of it. But even so, that was the regime in London when we lived there. Our daughter went to a very working-class state school, public school for elementary school, and they had no money at all because the base per pupil was very low.

And they rely very heavily on soliciting donations from parents to actually fund the school. And when we got to Burbank, to California, it was the same thing. Right? Burbank has the same amount of funding across the board as other L.A. County schools, more or less. But Burbank parents chip in a lot of money. After the first year that our daughter was in third grade here, we got a letter from her public school thanking us as part of the parent group for having contributed a quarter-million dollars to their fund, right, through the bake sales and the fundraisers, the jerseys and so on.

So, you know, one of the ways that you can equalize access to quality education for your kids is to make it easy to move. It also means that you can equalize your opportunity for employment because there might be a job that’s worth having somewhere that’s too far away from where you live now to effectively commute. But because your house is illiquid, you either have to give up the job or give up hours and hours of your life in order to make that commute.

And a good rental market does mean that you’re not stuck with the jobs in your neighborhood. You can get the jobs wherever they are. And obviously, other things help with that, too, like transit, and good zoning policies that encourage mixed-use so that there’s employment all through a city and not concentrated in one area with long commutes and all of that stuff, but being able to move really does confer some real advantages.

And so I would say that there’s nothing wrong per se with wanting a well-regulated rental market in the same way that there’s nothing wrong with the idea of a sharing economy. I write science fiction novels. That’s kind of my gig. Right? And so.

[00:19:41.650] – Grumbine

Right.

[00:19:42.430] – Doctorow

I wrote this novel “Walkaway” that’s kind of a post-scarcity novel. But the thing that makes it post-scarcity is not that everybody gets one of everything they might ever need. It’s that the things that they might someday need are available so readily because of networks that they are spared the burden of trying to figure out where to put that drill that they might use once a month. And instead, the minute they need a drill, there it is ready at hand.

And when they’re done with it, they don’t have to store it because it goes back to the next person or to a depot or what have you. I compare that with my life as a suburbanite in Burbank, where I own what I call the minimum viable drill. Right? Like I have a drawer with a drill that knocks the one hole that I need every month in a wall somewhere. But no one would call it a good drill.

But it doesn’t make any economic sense for me to have bought a better drill. And there’s a very good podcast out of British Columbia called SRSLY Wrong where they call this library socialism. I call it the vision of circulating abundance. So there’s nothing wrong with them. The problem with the sharing economy is when it turns into Uber or Airbnb, where you have an economy that is like a bezzle. Right?

That’s grounded in a predatory investor subsidy to drive out rival forms of business, a labor force that is underpaid and subject to rampant wage theft, and whose inability to do depreciation calculations on the fly means that they have no idea of how badly they’re being underpaid. And that ultimately creates more problems than it solves. You can keep adding Uber to Los Angeles city streets. It won’t help the traffic.

[00:21:22.330] – Grumbine

No, it won’t.

[00:21:23.350] – Doctorow

Adding more cars just makes it worse in the same way that we won’t solve our housing problems by allowing Airbnb to convert every rental property into an unlicensed hotel room.

[00:21:31.480] – Grumbine

So isn’t it true that all Californians on Pacific Coast Highway are given a catheter for driving in that traffic? Is that correct?

[00:21:39.920] – Doctorow

Yeah. If you think the PCH is bad, I used to work for Disney Imagineering in Glendale and go down to Disneyland and Anaheim and you take the Five to get down there. And I’ve been coming to California to go to Disney theme parks because that’s kind of one of my fandoms, for now, 30 years. And they have been widening the Five for 30 years.

There’s never been a time in which a stretch of the Five wasn’t being widened. And there are stretches of the Five, which I swear to God, are 72 lanes wide. And it still looks like a Hieronymus Bosch painting. You can add lanes to the Five until you reach Oregon and you will still run out of space on the Five, not least because you will have to push people further and further away because the road is so wide that you’ll need more cars.

So anyway, as with so many technological questions or policy questions, we can ask what something does and that’s important. But it’s also really important to ask who it does it for and who it does it to. And so an economy in which you don’t have to sink all of your disposable income into a single illiquid asset, we have lived through this anomalous period. But historically, housing prices go up and down. Right? And there are a lot of people in Detroit who thought that they’d found some stability by buying a home. They didn’t.

[00:22:55.780] – Grumbine

Yep.

[00:22:56.230] – Doctorow

So homeownership is not a great way to produce affluence, certainly like the employment path, like stable and high quality, employer-employee relations that are balanced out by a strong trade union movement that also flexes its muscles on the national stage for controls on things like health care costs and education costs and so on, as well as keeping Social Security at an adequate level.

All of those things are far more reliable as a means of producing widespread prosperity and more importantly, they don’t divide working people. The thing about housing is everybody needs housing. But homeownership as a means to affluence turns the people who have homes into the enemies of the people who don’t. Alright. Don’t build more housing on my block because if you do, the only asset I have, my child’s only hope of going through university without being debt-burdened, my only hope in a dignified retirement will be in danger.

We make fun of nimbies, but that’s not an irrational thing to be afraid of. It’s just a stupid situation to have gotten into. And, you know, we’re in this collective action problem right now. So that’s my first reaction is let’s stick up for renters here and say that there’s nothing wrong with renting provided that it’s a well-regulated economy.

At the end of covid, as with so many things with covid, what we’ve seen is that trends that were latent and slow-moving and therefore either hard to see or easy to ignore were accelerated to the point where they’re so obvious that we can’t look away from them. That’s very definitely the case with what’s happening in the housing market. Eviction in America used to be incredibly rare.

Historically, states and cities have had really strong laws that placed a high burden on evicting landlords, and some cities more so than others. You know, New York and San Francisco very famously had really strict limits on eviction. And about six or seven years ago, a lab at Yale started to document a surge in evictions.

And what had happened was that through a combination of a couple of bad precedents and a couple of statutory adjustments here and there, a cadre or cabal of high priced landlord lawyers had figured out how to streamline eviction and take a thing that had once been really rare and required a high evidentiary burden and a lot of compliance into something that was like the robo signing epidemic.

[00:25:21.240] – Grumbine

Yes. That’s still going on.

[00:25:23.190] – Doctorow

Yeah. And so now we’re going to see lots of it. We’re going to see a huge number of evictions after the pandemic unless we see some forbearance. And, you know, here’s the MMT story. California has a shit ton of money. A lot of it came from money creation in the form of stimulus. And the governor has just announced that he’s going to pay off all the overdue rent of every low-income renter in the state. Now, he’s also fighting for his life, right? He’s facing a special election.

[00:25:50.310] – Grumbine

Right.

[00:25:50.940] – Doctorow

If you were a right-winger, you would say, “Oh, here is evidence of why government shouldn’t be allowed to tax and spend because they will use it to buy votes.”

[00:25:59.970] – Grumbine

Dance, Gavin, dance, huh?

[00:26:01.620] – Doctorow

Yeah. But this is what the Chicago school means when they say regulatory capture. But I don’t think it is. Yes, I do think that Governor Newsom has found a newfound hatred for austerity that was sadly lacking when he was the mayor of San Francisco and that it’s driven by his political fortunes. But his political fortunes drove him to do the thing that he should be doing.

California will not be better off if 115,000 people who are already sleeping in their cars are on the streets are joined by another 200,000 or 300,000 people who get evicted all in one go. That’s not going to help our businesses. I live on a quiet suburban block in Burbank and my neighbor, who’s a cool, tattooed hipster bartender from a working-class family who moved in with his aunt during the crisis to help take care of her.

He took me aside the other day and said the surging population of homeless people in Burbank is a thing that I had been OK with. But someone walked into our house last week and just sort of made themselves at home and they were having a mental health crisis.

[00:26:57.900] – Grumbine

Wow!

[00:26:57.900] – Doctorow

And someone did it to the neighbor across the street again this week. And you should just know, maybe you should start locking your doors. Having hundreds of thousands of people in crisis dumped onto your city streets is a crisis for them, obviously. It’s a humanitarian tragedy. But even if you’re a sociopath whose copy of The Turner Diaries can no longer be read because the pages are all stuck together.

[00:27:18.060] – Grumbine

[Laughter]

[00:27:18.060] – Doctorow

You should not like this anyway, right? This won’t make your life nice, even if you don’t care about any of those people. This is bad for you.

[00:27:26.130] – Grumbine

Yes. Yes. It’s interesting you say that because I don’t think people think that way. They often just are “You should have made better choices.” I literally have heard when we’re debating this on Twitter saying, “Hey, I paid my rent through December. You chose to do something irresponsible,” has nothing to do with irresponsibility.

We are not currency issuers. We are currency users. And we are at the end of a bayonet on just about everything from health care to housing to food, utilities, communications with the Internet. It’s all a tragic story of the neoliberal stronghold that the Chicago school was largely influential in creating. Let me ask you one quick question.

[00:28:12.460] – Doctorow

Sure.

[00:28:13.260] – Grumbine

You made the point that Donald Trump had dumped trillions into the financial markets and that led to the buying up of those houses. And I mentioned BlackRock at the beginning. One of the things that we noticed throughout our research, Patrick Lovell and Eric Vaughan, who are the producers for the docuseries, The Con, they uncovered incredible amounts of asset inflation through assessments done by the local, state, and county because they lacked tax revenue to be able to fund the initiatives at the state level.

So they’re in the process of bloating assets while this financialization occurred and they, in turn, are buying up those assets. Houses are at a high level akin to 2007-2008 timeframe when everything collapsed. I really think that we are in the crosshairs of a perfect storm beyond the eviction crisis. I think we’re going to be looking at a foreclosure crisis once again. And I think those same financial markets that were buoyed up by Trump are going to now, in turn, buy up houses as well as people get foreclosed on. What are your thoughts on that?

[00:31:16.770] – Doctorow

So if prices go down because workers get squeezed, then that’s fine under consumer welfare, because we are only allowed to ask ourselves whether or not consumers are being harmed. And the fact that most consumers are workers is irrelevant because you can only wear your consumer hat while you’re living in that regWell, look, the personal responsibility narrative, it’s not new, right? It’s been a big piece of the story since the Reagan years, at least.

And it’s been a big piece of doctrine with Margaret Thatcher and so on. And it’s a very convenient doctrine for lots of reasons. If you are conceived of as a consumer and not as a citizen, then, first of all, your ability to consume determines how many votes you get. If you vote with your wallet, then the thickness of your wallet determines your ability to vote.

And so people with thicker wallets get more votes. It also requires that we no longer conceive of problems as being systemic and think of them as being individual. And so if you find yourself worried about the climate, you need to just turn inwards and ask yourself how diligently you recycle. And if you find any flaw, then you have no business complaining about oil companies.

And this works on many levels and it works across a lot of different policy areas. Good example would be the way that we do antitrust and antimonopoly enforcement before the Reagan era. The basis for antitrust enforcement was to consider whether a firm’s actions or proposed actions like a merger contributed to what they called harmful dominance, which was when the scale of the firm did something that harmed someone and that gave you standing to challenge a merger or to ask for a breakup or to seek limits on a company’s conduct, what’s called a conduct remedy.

And under Reagan, we adopted another formula which was called Consumer Harm and Consumer Harm, or Consumer Welfare says that monopoly law should only be enforced when we find companies doing things that lead to problems for us as consumers, notably prices going up and not problems for us as workers, right. Ime. And so you see that the doctrine of individual welfare, as opposed to collective or systemic thinking, always leads to this world in which these highly concentrated industries and blocks of power, where on the one hand you have individuals who have a lot of money or power, and then you have small numbers of firms that dominate industry that are allowed to operate collectively.

But the rest of us are considered to be illegitimate when we act collectively. Somehow it’s OK for Uber and Lyft to spend $200 million on Prop 22 to make sure that gig economy workers aren’t allowed to unionize, but unionizing, right? Working together to demand that they get more money from Uber and Lyft is illegal. So it’s legitimate for capital to collude to suppress wages, but it’s illegitimate for labor to collude to increase wages.

[00:32:26.880] – Grumbine

That’s insane.

[00:32:27.960] – Doctorow

The reason for that is consumer welfare. Right? If you only think of us as people who ride in Lyfts and not as people who drive Lyfts, then that makes perfect sense. It only falls apart when you realize that we are all both consumers and citizens, and that as citizens we might take an interest in these things in a way that goes beyond that narrow question of prices. This is something that comes up whenever we talk about the Fight for 15. People say, “Well, if wages go up, maybe prices will go up.”

And we sometimes argue about whether it’ll be a lot or a little. Chipotle raised a price some infinitesimal amount and the far right had to freak out and said, “Look, look, it’s inflation.” And then the left said, “Well, if that’s the inflation we get for a living wage, then so be it and so on.” All of that is fair as it goes, but we also might ask ourselves, what would we gain from changing the apportionment of different actors in the economy such that workers all had a living wage and yet some prices were higher as a result?

And that the consequence of that was that for a small cohort in the top quintile or top 40 percent, that they might pay a little more for some of life’s necessities and reduce their consumption, right, have their aggregate consumption reduced. But for everybody else, their aggregate consumption would increase. People who couldn’t afford adequate nutrition or adequate health care or dental care or what have you or who were in precarious housing or whose kids were not getting an adequate education, they would be well off.

That is a trade that you can only conceive of as good if you understand that there are limits to what individual action can get you, that the tautology of meritocracy, that the wealthy are meritorious and therefore merit is accrued to the wealthy, and therefore anyone who is not wealthy lacks merit. Until you dispense with that, until you realize that what you’re calling merit is actually emerging from the correct orifice, then you’re never going to be able to escape that trap.

[00:34:37.920] – Intermission

You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT or modern monetary theory. Please help our efforts and become a monthly donor at PayPal or Patreon. Like and follow our pages on Facebook and YouTube and follow us on Periscope, Twitter, and Instagram.

[00:35:13.420] – Grumbine

What do you see as the future of rank and file everyday people, not in the one percent in terms of housing, as we move into what looks to be a new way of the market working and what we consider to be homeownership or rental-ship? What do you project out to be the future of that based on what you’ve seen?

[00:35:51.040] – Doctorow

Right, well, the future is very hard to predict, and as a science fiction writer, I’m very skeptical of people who say that they can do it. There is something very fatalistic about being either optimistic or pessimistic. If you’re optimistic, then what you’re saying is what we do doesn’t matter, but it’s OK because it’s all going to be fine.

And if you’re pessimistic, then what you’re saying is what we do doesn’t matter. And it’s terrible because it’s going to be awful. And so instead, I brief for hope. Right. I think that what we do changes the outcome. And I am alive to the possibility that if this trend line continues with decreasing homeownership, decreasing rights for tenants, and increased precarity, that that puts increased demands on that single asset that is the sole asset of most families in the middle third of American wealth, maybe even middle 40 percent of American wealth.

The people below them having nothing and the people above them having everything, that we will end up with a situation that is very precarious indeed, where people will pay an ever larger slice of their salaries for a decreasing quality of home and where they will find themselves slapped with all kinds of fees and so on. And as someone who works in the field of technology and equity, I can see how this could go even worse.

There’s a lot of people on Twitter these days talking about how Texans woke up to discover that their thermostats had been reset by their energy companies. They had these smart thermostats that locked them out of the ability to change their air conditioning settings when the temperature got too high. And again, consider it as a maneuver made by an energy company that has a public duty, either because it’s regulated to have one or because it’s in public ownership and it’s well regulated, that’s preferable, right, to having a blackout.

If the two alternatives are nobody gets any air conditioning in the middle of this heatwave because the generator shuts down or we all have our thermostats automatically adjusted up by three degrees and we have so much social cohesion that we trust one another not to go and turn it down again unless we say have a sick relative who’s combating heat stroke.

And we need to make the house a little cooler or we have an infant who’s at risk of dehydration or whatever. Then again, that’s not a terrible thing. The problem with technology is not just what it does, but who it does it for and who does it to. But these smart devices, which are increasingly a feature of a smart home, enable a whole spectrum of activities that can pressurize the people who live in the home into putting an undue importance on paying their rent as opposed to some of their other bills, like maybe paying their car note so that they can drive to their job and continue to pay their rent or paying for health care or health care for a family member like a child or what have you.

So there’s a smartphone subprime market in India that relies on a custom android build that spies on everything you do. And if you miss payments, it takes the apps you use the most and uninstalls them and won’t let you reinstall them. So first it takes away, say, your Instagram and it says you’ve lost Instagram because you missed a payment. Miss another payment and we’re going to take away your TikTok. Well not TikTok because they banned that in India. Miss another payment and we’re going to take away your MySpace, which I don’t think is banned in India. And . . .

[00:39:05.080] – Grumbine

Does it even exist anymore?

[00:39:07.390] – Doctorow

Yeah, well, I think it probably does, but in some terrible form. But this process, it’s what loan sharks do. A loan shark knows that ultimately you’re going to default. But they also know that if they break your arm, that you might raid your kid’s college fund to make a payment. And then the next month, if they come along and rough up your kid on the way home from school, you might burgle a neighbor’s place and steal their jewelry to make your next payment.

They know that eventually, you’re going to go to jail or you’re going to get shot or you’re going to die or whatever. So the goal isn’t to make themselves whole on the debt. When you talk about these usurious arrangements, as you see with corporate landlords, where they will pile a late fee onto a service charge onto another late fee, onto another service charge, the debt is made whole several times over without actually adjusting your principal.

The goal is to extract as much money from you as possible before you arrive at your default. And unless we foundationally restructure it, we might end up with an arrangement a little like the Affordable Care Act, where we say that usurious arrangement is legitimate and that the problem is that the state isn’t giving enough subsidy to low income people to help defray the cost of the usury. So that will just prolong it.

And we’ve seen that a little under a decade with the ACA has produced a regime of even more concentrated health care, even more concentrated pharma and even more concentrated hospitals, as well as intermediaries like pharmacy benefit managers that charge higher prices, extract more money, spend it on useless financial engineering like stock buybacks.

And people are in more health precarity, the degree to which people are underinsured by plans that just shouldn’t exist, that don’t really cover anything. There’s a great podcast called An Arm and a Leg that just covers this. And they recently had a story on someone who bought an intermediate plan to fill in the gap between two jobs and saw that it came with a million dollar cap and so on, and it covered surgery.

And he had appendicitis and needed appendix surgery. And he came out of it and the hospital hit him with a bill for $100,000. But wait. I’m insured. They say, “Yeah. The total cap on your insurance is a million dollars, but the surgery cap is $2,000.”

[00:41:25.100] – Grumbine

Jesus!

[00:41:25.100] – Doctorow

That’s not an insurance plan, right? That’s just a scam.

[00:41:29.590] – Grumbine

Yeah.

[00:41:30.230] – Doctorow

You are entitled to a million dollars worth of insurance, but each item is capped such that there is no way you could ever come up with a million dollars and none of it will cover any kind of major medical issue that you have. So we could end up in a world in which that becomes the regime for renting, where we have expanded Section 8 vouchers and expanded bailouts for people who are facing eviction and so on.

But where we never reform the sector and so the sector becomes more predatory and the state blunts its worst excesses for a while, kicking the can down the road and accumulating a kind of policy debt, right, a different form of debt that’s much harder to default on.

The policy debt that arises when people just don’t believe in the system anymore, when they don’t trust experts or institutions, and when they are prepared to secede, prepared to believe everything from all of our institutions being run by lizard people to believing that viruses aren’t real. Because why would you trust any of those institutions when they have in fact been so unreliable and so unfit for purpose?

[00:42:34.870] – Grumbine

That’s just an absolutely mind-blowing way of describing QAnon. This is exactly what’s going on even now to some degree. I guess the final question I have and by the way, you’ve been amazing. The question really points towards an understanding of corruption. And as we create these unequal relationships throughout, these power dynamics are extremely tilted.

There is no equity in terms of the power dynamic in this country at all. We have baked into a new feudal society, like a neofeudalism, as Michael Hudson says. And I’m curious, what, if any, protections do we have outside of unionization like a citizens union? We couldn’t get Bernie in there. We watched as the powers that be consolidated power and knocked us out of the way.

To some great surprise, a gentleman, just the other day, the head of the Banking Committee, Yarmuth, come out and basically recite the deficit myth on C-SPAN, which is shocking, but is it too little, too late? Do we have any kind of way of fighting back as citizens? I see an incredible amount of capture. You can call it cynicism. I consider it eyes wide open. I watch as politicians say the right things on Twitter and don’t do anything in practice.

What do you foresee as a meaningful way for citizens to in fact, unite beyond unionization? Because the world to some degree is change, right? The days of Lenin and Eugene Debs and the Bolsheviks, we don’t have a union floor like we did. We’ve got to get creative with our way of making work unionizable so that if we did go on a strike or we did exert power, that there would be a meaningful way of bringing capital down or changing the narrative, so to speak. How would you see a citizens’ type of union or is that just ridiculous?

[00:44:33.100] – Doctorow

Well, I don’t think it’s ridiculous. Everything starts somewhere. You’re right that relative to the peak of trade union strength, we are a ways off. And when we see things like the shameful conduct of Amazon in Bessemer and the lack of meaningful consequences for it, it’s easy to get discouraged. But we should also keep that in historic context, right? It’s within . . .

[00:44:54.310] – Grumbine

Sure.

[00:44:54.380] – Doctorow

Maybe not living memory, but there are probably people alive today who knew people who were involved in strikes where strikers were mowed down with machine guns.

[00:45:05.500] – Grumbine

Oh, yes.

[00:45:07.300] – Doctorow

Calumet, Michigan, Copper Christmas Union Hall fire, where the copper bosses barricaded the union hall on Christmas Eve as the families were celebrating and then burned it down and killed all the families and children in there.

[00:45:20.680] – Grumbine

So awful.

[00:45:20.980] – Doctorow

We are in a much better position to some of our forbearers in the trade union movement. I’m not going to minimize the problems that union organizers face today. And I’m not going to minimize the advantage that digital tools give to bosses, but digital tools also give advantages to workers. I remember I was living in Silicon Valley working in tech when there was a great exodus of tech jobs – after the 2000 crisis – to India.

And there were a lot of tech workers who were really pissed off about this. And they reminded me of the auto workers in Ontario when I was growing up who were really pissed off about jobs going to Mexico after NAFTA. And NAFTA introduced some big structural problems with maintaining union solidarity and the devastation of labor law didn’t help, but compare it again to the problems that people faced during the early auto strikes and the early coal strikes, these were relatively small problems.

For an auto worker to say, “How can I go to a border factory in Mexico and help unionize those workers so that wherever my boss takes my job, he will find members of my union – that’s impossible,” is to miss some historic context. That it is a big lift, but relative to the lift of “how can I go to the picket line today when yesterday on another picket line in the region, they machine-gunned all of the picketers,” it’s a much smaller question.

And then when you think of those tech workers, they don’t even have to go to Bangalore to try and organize the Indian workers who are doing the jobs they used to do. They have the Internet and they and their brothers and sisters half a world away are better at the Internet than their bosses. By definition, that’s why their bosses hired them, is to be better at the Internet than their bosses.

And so they have the most powerful organizing tool the human race has ever conceived of. It’s also the most powerful surveillance and control tool the human race has ever conceived of, but they’re good at it. And they have a group of workers halfway across the world who will speak English. It’s not even like going to a Mexican border town.

They would have to figure out how to speak Spanish to try and organize those workers and make solidarity with them. They all speak English. So it seems to me that it’s a mixed bag. We have a lot of opportunity ahead of us and we have a lot of risk ahead of us. And there’s a law professor and campaigner named Lawrence Lessig who says that the world is organized by four forces: law, the things that are legal,  markets, the things that are profitable, code, the things that are technologically possible and ethics, the things that are considered moral.

And oftentimes, if we run up against the limit of what we can do lawfully, then maybe it’s time to do an ethical or a technical innovation to try and shake something loose, to open the space for more law. Or maybe if the technological solution we’ve been trying isn’t getting us anywhere, maybe we need a legal reform or maybe we need a normative reform. Sometimes people need to start a business or boycott a business, make something less profitable or more profitable.

All of those are things that we can do to change the world. There’s a bunch of class-action lawyers who are hell bent on making it less profitable to screw people over, right. Those people are making a powerful intervention in the outcome of our market. And so rather than believing in this deterministic optimism or pessimism and rather than treating this problem like it was a novel . . . I write novels.

In novels, you have a set of challenges that you can adjust as needed to get your characters neatly from A to Zed or Z in a way that is emotionally satisfying and  also clear. Doesn’t involve a lot of backtracking. There’s a lot of extraneous stuff. Nobody has to stop for a while. That’s not how the world works. The world is unimaginably complex.

And if we were to try to plot a route from here to the finish line, by the time we had finished mapping the world, the world would have changed so much that the map would be of no use. And so instead I say we should do what they do in software when they contemplate very large datasets that are too big to enumerate, which is to use a rule of thumb.

If you are writing code that is trying to find a maximum within a large pool of data, you use something called a hill-climbing algorithm. So imagine that you’re an ant and ants have front-facing eyes so they can’t look up. And so if they want to get their way to a top of a hill, they can’t just survey the landscape to figure out what that local peak is and how to climb it, but ants have a lot of legs.

And so what they can do is they can poll each of their legs to see which one is standing on the highest ground, which one ascends the gradient towards their goal most steeply. And they can take a step towards that goal. And from that new terrain that they attain from the new vantage point, they can often spot another step that they can take. They find that they have another leg on high ground that they can use to get up.

And so we don’t know which step is going to take us towards the future we want to live in, but we can tell of the four directions we know how to move – code, law, norms, and markets – we can often tell which one of those seems like it’ll get us closer to that goal, which one makes the biggest difference. And so at each moment, we can ask ourselves, look, there is no law right now I want to support and it’s not in my power to support a law so I’m gonna try and talk to my friends normatively about what space the law could open up.

I’m going to talk to them about MMT or I’m going to use or help develop a software tool that might make it easier for people to make common cause to change the law, or I’m going to support a business, or I’m going to support destroying a business either through litigation or regulation as a way to change the shape of the market. Those four forces, code, law, norms, and markets, those are the four directions we get to move in.

And it’s always the case that there is a step that you can take on one of those. It’s a way of navigating the world by hope instead of optimism. Hope is why when your ship sinks, you tread water, not because you can see how treading water will get you to the land, but because everyone who has ever rescued treaded water until the rescue arrived. Right? It’s a step that you can take that gets you closer to your goal. You still may never arrive there, but it might get you there.

And, you know, I just was listening to a podcast, SRSLY Wrong, where they were talking about a civil rights fight that was the passage of the Civil Rights Act. And there were activists in that room who had fought for the cause all their life. And there were activists in that room who had inherited fighting for that cause from their parents who fought for that cause all their life.

And there was a palpable giddiness, the sense that this goal, long pursued, had finally been arrived at. And every significant goal that we have pursued as a species has had moments like that. It’s had long periods in the doldrums because change is hard and often precipitous. So it’s often the case that nothing changes, nothing changes, nothing changes, everything changes. And so it’s often hard to know when you’re about to have those breakthroughs.

[00:52:50.160] – Grumbine

That is really powerful.

[00:52:51.750] – Doctorow

And I just wanted to finish by saying even if we’re not sitting in the room looking at each other and laughing and saying, “I can’t believe it happened,” maybe our kids will. I worked on a treaty called the Access to Knowledge Treaty at the U.N. at the World Intellectual Property Organization. And the guy who convened the meeting, this guy named James Love, who’s this like ex-Naderite who runs an NGO called Knowledge Ecology International, got us all together in the basement of Meselson Frontier early on a Sunday morning.

We were all there for a regular meeting of the Standing Committee on Copyrights and Related Rights. We all got together to draft a treaty. And someone said to him, Jamie, what makes you think that anyone is ever going to adopt this treaty that we are drafting in the basement of Meselson Frontier on a Sunday? And he said, “You know, the WTO was drafted by a group of people, none of them any smarter than us and a couple of kilometers from where we’re standing on a Sunday morning. Right. It’s got to start somewhere.”

[00:53:49.090] – Grumbine

I lied. I’m going to give you one more. We are in the process of trying to create what I would call a civil rights like movement to root out corruption within the space that Bill Black has ferreted out, going back to the savings and loan crisis through the destruction of Glass-Steagall into the great financial crisis, the shorting of stocks that we all know the story well and to present.

And none of those bankers ever went to jail. The people that were hurt during that crisis are still fighting identity theft, still fighting, committing suicide. And as you say, no one ever knows. And it’s interesting because during the Great Depression, they were almost out of time. The hearings that they were going to have to bring the Wall Street bankers down that destroyed the economy back in the crash. And they found this guy named Ferdinand Pecora, an Italian immigrant of Sicilian heritage, and took it to Wall Street and rooted out the corruption.

Nobody saw it coming. I’m wondering if we are in a position today with hope, as you say, where people that are no smarter than those people that drafted up that resolution but have commitment and passion and desire, could, in fact, bring about a new Pecora Hearing today to maybe bring about some equity in this society. What are your thoughts on that?

[00:55:09.780] – Doctorow

Well, there’s this idea of survivor bias that by definition, the moment we remember as the turning point is the moment at which a thing that had failed suddenly succeeded. So I think that if you were to go through the history of all of the moments in which things could have changed for the better and which we could have had a new deal in which we could have seen a labor victory and a rebalancing of the interests in American and global society that you will find over and over again, there were deadlines and points of no return that were blown through.

Where people put everything on the line, people died, people gave up their families for months or years, went to jail, emigrated, were chased out of where they lived. There were a hundred fights that lost until the fight won. And so if it was a novel, we’re the protagonists, and so this would be the fight that won. But you read The Hobbit or whatever,

[00:56:11.250] – Grumbine

We’re still reading

[00:56:12.410] – Doctorow

You’re reading about all these times that they fought the dragon and lost. And you’re like, oh, well, this is obviously going to be the one in which they fought the dragon and won because otherwise, what a dumb novel it would be. Right? But, you know, if you think about it for a minute, all those adventurers whose charred bones they find on the way to the dragon, they’re all people who thought they were the protagonist.

Maybe we’re not the protagonist. Maybe things will get a lot worse before they get better. They don’t have to. I was raised by Trotskyists, but I don’t think things have to get worse before they get better. But even if they do get worse, if life gives us SARS, maybe we have to make SARSparilla, right? Maybe we have to figure out how that worst thing can be not squandered.

This is sad. And here’s our content warning for self-harm and suicide. I have a friend who took his life eight years ago, a guy named Aaron Swartz, who is a really brilliant kid. He helped create RSS. He helped found Reddit. He got rich. And then he decided all he wanted to do with his money is make good trouble. And so he did all kinds of cool stuff, activist stuff, access to information stuff.

Helped take huge corpuses of law that was paywall and made it public and so on. And he got hounded to death by a federal prosecutor after he went to MIT’s network and downloaded a bunch of scholarly articles he was allowed to use, but he violated their terms of service because the terms of service said, you’re allowed to download these articles, but you have to click on each link by hand and not download them by writing a little five-line Perl script.

And he did the latter. And so they charged him with 13 felonies and threatened him with 35 years in prison. And he really fought it hard. He didn’t want to settle because I think he wanted to run for office and he didn’t want to have felony rap. And eventually, they spent out everything he had and everything he could borrow and he hanged himself. Just he was in his 20s, 26 when he hanged himself. So we really lost something.

And I talk about Aaron’s story a lot and I talk about it a lot, not in this kind of maudlin way, but about policy issues. When access to information issues come up, I talk about Aaron. And a few people and every now and again, my conscience have pricked me about this and said, isn’t this just exploiting his memory to use it as a way to make a political point? When I think about it, I think the only thing worse than losing Aaron in that senseless, stupid way would be for us to salvage nothing good at.

[00:58:37.810] – Grumbine

Yes.

[00:58:38.650] – Doctorow

And if we lose, we’ll salvage something out of it and we’ll fight again because the comrades that we lose on the way, the people who throw themselves at the machine and get devoured by it, the only thing worse than losing them would be losing them and then not carrying on the struggle.

[00:58:56.790] – Grumbine

Chris Hedges said, “I fight fascists not because I think we’ll win, but because they’re fascist.” We’ve got to find a way to take every defeat and find something to glean from it so we keep going until we get to that final victory if we get to that final victory. And I believe that I come from a little bit of a Trotskyist-minded position at times, though, I’m probably more of a Leninist, my way of thinking.

But I am interested in movements and moments and the ultimate sacrifices. And I hate to see someone kill themselves out of desperation like that. But Lua Yuille, who is a professor, said things aren’t going to change until white people are willing to lose some stuff. And you said that, too. You said it in a little different fashion, but the bottom line is until people are ready to lose something, ready to stand on principle and fight, we probably don’t stand much of a chance.

So let’s make it count. Let’s make each sacrifice count. Cory, I want to thank you for your time. I really appreciate the time you took with me today. This was absolutely amazing. And I really do hope I can have you back because I had a whole different podcast I wanted to go through with you today. But because of the timing and that fantastic article, I just changed gears last minute and I think it turned out fabulous. Thank you so much for your time. Where can we find your work, by the way?

[01:00:20.970] – Doctorow

Well, the easiest thing is to go to pluralistic.net that has links to all of my multifarious feeds. So what I do is I write long-form articles that start off as Twitter threads and then I publish them simultaneously as blog posts in an ad-free and tracker-free newsletter on Tumblr, on Twitter, on Medium, and on Mastodon. And so you can choose which one of those you like.

There’s also a full-text RSS that’s all licensed Creative Commons by. So you can use it, including commercially, you can reprint it, you can sell it just for consumption. And my little influence on it and the parts of it that I control the mailing list and the RSS feed and the blog, they’re all totally surveillance and ad and tracker free. So I don’t even know how many people read it. It just goes out there.

[01:01:08.370] – Grumbine

Well, I’m going to be using your stuff. We’re going to be putting some of this great stuff onto Real Progressives.org. Look, I want to thank you so much for your time. Again, this is Steve Grumbine, Cory Doctorow, Macro N Cheese. We’re out of here.

[01:01:28.520] – Ending credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patron account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.