Collective Conscious

Rorty­bomb on Stephen Lerner:

But a follow-​​up inter­view with Lerner at Dylan Ratigan’s web­page made me think he is onto some­thing quite smart and even nec­es­sary: collective-​​bargaining for house­holds.  Interview:

LERNER: And what peo­ple are so frus­trated about is for a cou­ple of years now, peo­ple have been try­ing to fig­ure out how do we write down prin­ci­ple, how do we mod­ify mort­gages? And the banks, as you know, have – they’ve stopped leg­is­la­tion, they’ve stopped cram-​​down, they use their polit­i­cal power to inter­fere with this again and again. And so a lot of main­stream econ­o­mists, a lot of peo­ple have said, “Wait a sec­ond; when a busi­ness is in trou­ble, they rene­go­ti­ate their debt.”…

Well, I would say it’s not even orga­niz­ing. It’s an early dis­cus­sion of say­ing, “What if a bunch of peo­ple all agreed to say to the banks –”. Maybe what peo­ple would say is, “We’re going to put our money escrow, even.” But we’re say­ing we want you to nego­ti­ate with us on prin­ci­ple, and we think a lot of us are all going to say at the same time, “Lis­ten, we’re going to sign up, we’re going to say, “You should nego­ti­ate with us.” And when we get enough peo­ple who are signed on to say­ing the banks should nego­ti­ate, we’d say, “Well now we’ve evened the score a lit­tle bit. You’re the biggest, rich­est guys in the world, but a lot of us have signed up and said we’re ready to poten­tially walk away. Why don’t you nego­ti­ate on reduc­ing the prin­ci­ple?” So what we’re talk­ing about is peo­ple mak­ing a com­mit­ment to each other say­ing if enough other peo­ple agree to it, we’ll demand the banks nego­ti­ate and then if they’re not will­ing to nego­ti­ate, then peo­ple can take appro­pri­ate action and walk away if that’s what makes sense.

But even more than that, what we’re really talk­ing about is encour­ag­ing peo­ple to make a good busi­ness deci­sion because more and more busi­ness writ­ers and other peo­ple have writ­ten, and they’ve writ­ten time and time again, that if a busi­ness was in the sit­u­a­tion of most home­own­ers, they would walk away. And so what – we’re say­ing two things. One, we want the banks to nego­ti­ate and we want to fix it. But sec­ond, we’re say­ing peo­ple should be ratio­nal about their finan­cial life. And as you said, the amount of money that peo­ple wast­ing on a home that they’re not going to be able to stay in because they’re stuck in a bad mort­gage ver­sus that it may be a good busi­ness deci­sion to say, “I’m leav­ing and I’m going to rent an apart­ment.” So we’re try­ing to do two things: help peo­ple make a good finan­cial deci­sion for them­selves; and sec­ond, do it in a way that’s together that maybe we can start fix­ing the hous­ing prob­lem. And I’d take it a step far­ther; I don’t know how we fix the econ­omy unless we sta­bi­lize the hous­ing mar­ket. And we’re not going to sta­bi­lize the hous­ing mar­ket if we don’t write down principle.

To put it more specif­i­cally, he’s call­ing for a kind of col­lec­tive bar­gain­ing for home­own­ers. The banks are gath­ered through asso­ci­a­tions like the Finan­cial Ser­vices Forum. What is the equiv­a­lent for home­own­ers? Is there anything?

It’s an open secret that most “credit coun­sel­ing” agen­cies are in-​​part funded by banks, credit card com­pa­nies or other parts of the finan­cial indus­try. And even churches aren’t as trust­wor­thy as they used to be for peo­ple seek­ing fair advice on finan­cial deci­sions. And the banks look to esca­late their pres­sures on home­own­ers. Where can home­own­ers go for infor­ma­tion, and where can they pool their griev­ances, and where can they have a space where they have equal foot­ing as the banks?

[…]

Col­lec­tive bar­gain­ing is the cure to this kind of power dif­fer­en­tial – give con­sumers access to the same exper­tise that busi­nesses would draw on in these cir­cum­stances. Explicit in unions are that a small fee up front gets you full rep­re­sen­ta­tion later – an insur­ance fund against fraud and exploita­tion, some­thing that Marine could have used when pay­ing lawyer expenses by the hour out of pocket. It also cre­ates orga­ni­za­tions for putting polit­i­cal pres­sures on what are clearly polit­i­cal problems.

For my part, this power-​​distribution issue is symp­to­matic of a larger inequal­ity in our soci­ety. We sim­ply don’t have any way to bar­gain effec­tively with big cor­po­ra­tions. We can’t bar­gain about wages unless we’re orga­nized or extra­or­di­nar­ily gifted (the present thrust is of course to reduce this abil­ity even fur­ther, Wisconsin-​​style); we can’t bar­gain about prices unless we buy in bulk (and even then Repub­li­cans refuse to let our best bulk buy­ers, like Medicare, bar­gain effec­tively); we can’t gen­er­ally do much at all to change the behav­ior of big corporations.

The move­ment towards col­lec­tive con­sump­tion, and a cen­tral rep­re­sen­ta­tion for this col­lec­tive behav­ior, is only just now becom­ing pos­si­ble. The coor­di­na­tion prob­lems that col­lec­tive use entails just can’t be solved with­out mod­ern com­pu­ta­tional and com­mu­ni­ca­tions tech­nol­ogy. See Rachel Botsman’s excel­lent TED talk on the topic for a more thor­ough intro­duc­tion. This sort of approach moves the col­lec­tive bar­gain­ing aspect to a cor­po­rate form, which can prob­a­bly be much more effec­tive under cur­rent law and pol­icy. Cit­i­zens’ groups are sim­ply not well respected and com­mand no legal author­ity in the way that a good old profit-​​motivated firm can.

It would cer­tainly be a step in the right direc­tion, but the final ques­tion of whether that’s a suf­fi­cient level of col­lec­tive engage­ment with the cap­i­tal stock is cer­tainly still up for debate.