Friday, November 07, 2014

The Face of Neoliberalism

We live in an era of neoliberalism.  Corporate power has merged with political power.  Don't go babbling about your democratic rights and freedoms when, in fact, you're pretty much down to the right to shut up and do as you're told - if you know what's good for you.

It's not hard to catch glimpses into the neoliberal playbook.  They're never pretty. Here's one - selling cars with kill switches installed.  It's a backup for those in the highly lucrative business of high-interest, subprime car loans.

You know those TV ads about "no money down, no credit rating, no problem" car loans?  Now, if you're good enough to be given the keys but not good enough to be trusted with them, the finance company can have a remote-control kill switch installed in the car before you drive it off the lot.

Car dealers and automotive lenders are targeting those with poor credit by installing GPS-based kill switches, or starter-interrupt devices, on the cars that they sell.
The New York Times recently reported that about 2 million cars are now outfitted with such kill switches in the U.S., which is about one-quarter of subprime car loans, and creditors are not shy when it comes to remotely disabling cars whose owners are behind on their payments:
"Some borrowers say their cars were disabled when they were only a few days behind on their payments, leaving them stranded in dangerous neighborhoods. Others said their cars were shut down while idling at stoplights. Some described how they could not take their children to school or to doctor’s appointments. One woman in Nevada said her car was shut down while she was driving on the freeway.
"Beyond the ability to disable a vehicle, the devices have tracking capabilities that allow lenders and others to know the movements of borrowers, a major concern for privacy advocates. And the warnings the devices emit — beeps that become more persistent as the due date for the loan payment approaches — are seen by some borrowers as more degrading than helpful."

There was a day when courts protected lenders and debtors alike and a certain process was required to interfere with rights to property in possession.  Now they've cut out that middle man.  Who knows what other wonderful uses they can find for their newfound ability to track your every move, rattle you with onboard beepers and, of course, kill your car wherever and whenever they choose?  The possibilities must be limited only by the human imagination.

This is a very, very slippery slope and that's quite deliberate.  Maybe some day they'll write books about the descent and degradation of the Precariat under the heel of the plutocracy.  If we're lucky, the final chapter might chronicle revolt.


Lorne said...

To me, Mound, this sounds like a massive lawsuit waiting to happen when someone is killed as a result of such foul practices. Or will the U.S. Supreme court rule that debtors are not legally 'persons' anymore under the law?

The Mound of Sound said...

Of course it's a bit flawed, Lorne, but hey - it's just a start. Wait till you see what's next.

Ron Waller said...

They are bundling up these subprime car loans into CDOs - asset backed securities - like they did the subprime mortgages which caused the housing/derivatives crash in 2008.

Back in 2000s, they built a "synthetic asset" casino on top of the junk-mortgage derivatives which bet the on value of real-world assets. There was more money in the casino than the referenced assets were worth.

They used flaky math (Gaussian Copula formula) to assure themselves - and regulators - the whole system would never crash - but then made bets banks would fail (Credit Default Swaps.)

When the house of cards came tumbling down, capture of The Fed by bankers meant taxpayers bought up many of these toxic assets for 100 cents on the dollar. An oxymoronic free-market bailout (as Joseph Stiglitz points out in "Freefall".)

Hard to tell if this will be the next house of cards to come crashing down. But the fact is the Great Moderation ironically brought back boom-to-bust business cycles. First the dot com bubble. Then the housing/derivatives meltdown.

Hard to tell what will trigger the next collapse. But since they have did little to change the underlying economics and regulations, the next collapse is coming.

Masters of the Universe are once again playing musical chairs with the global economy. Either the people take responsibility and say enough is enough at some point in time, or civilization will collapse as economic chaos spills over into the political realm. Last time around this kind of economic anarchy led to world war.