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Life Inc: Introduction

INTRODUCTION
Your Money or Your Life
A Lesson on the Front Stoop

I got mugged on Christmas Eve.

I was in front of my Brooklyn apartment house taking out the trash
when a man pulled a gun and told me to empty my pockets. I gave him
my money, wallet, and cell phone. But then—remembering some-
thing I’d seen in a movie about a hostage negotiator—I begged him to
let me keep my medical- insurance card. If I could humanize myself in
his perception, I ﬁgured, he’d be less likely to kill me.

He accepted my argument about how hard it would be for me to get
“care” without it, and handed me back the card. Now it was us two
against the establishment, and we made something of a deal: in ex-
change for his mercy, I wasn’t to report him—even though I had
plainly seen his face. I agreed, and he ran off down the street. I fool-
ishly but steadfastly stood by my side of the bargain, however coerced
it may have been, for a few hours. As if I could have actually entered
into a binding contract at gunpoint.

In the meantime, I posted a note about my strange and frightening
experience to the Park Slope Parents list—a rather crunchy Internet
community of moms, food co-op members, and other leftie types ded-
icated to the health and well- being of their families and their decid-
edly progressive, gentrifying neighborhood. It seemed the responsible
thing to do, and I suppose I also expected some expression of sympa-
thy and support.

Amazingly, the very ﬁrst two emails I received were from people
angrythat I had posted the name of the street on which the crime had
occurred. Didn’t I realize that this publicity could adversely affect all
of our property values? The “sellers’ market” was already difﬁcult
enough! With a famous actor reportedly leaving the area for Manhat-
tan, does Brooklyn’s real- estate market need more bad press? And this
was beforethe real- estate crash.

I was stunned. Had it really come to this? Did people care more
about the market value of their neighborhood than what was actually
taking place within it? Besides, it didn’t even make good business
sense to bury the issue. In the long run, an open and honest conversa-
tion about crime and how to prevent it should make the neighborhood
safer. Property values would go up in the end, not down. So these
homeowners were more concerned about the immediate liquidity of
their town houses than their long- term asset value—not to mention
the actual experience of living in them. And these were among the
wealthiest people in New York, who shouldn’t have to be worrying
about such things. What had happened to make them behave this way?

It stopped me cold, and forced me to reassess my own long-held de-
sire to elevate myself from renter to owner. I stopped to think—
which, in the midst of an irrational real-estate craze, may not have
been the safest thing to do. Why, I wondered aloud on my blog, was I
struggling to make $4,500-per-month rent on a two- bedroom, fourth-
ﬂoor walk-up in this supposedly “hip” section of Brooklyn, when I
could just as easily get mugged somewhere else for a lot less per
month? Was my willingness to participate in this runaway market part
of the problem?

The detectives who took my report drove the point home. One of
them drew a circle on a map of Brooklyn. “Inside this circle is where
the rich white people from Manhattan are moving. That’s the target
area. Hunting ground. Think about it from your mugger’s point of
view: quiet, tree-lined streets of row houses, each worth a million or
two, and inhabited by the rich people who displaced your family. Now,
you live in or around the projects just outside the circle. Where would
you go to mug someone?”

Back on the World Wide Web, a friend of mine—another Park
Slope writer—made an open appeal for my family to stay in Brooklyn.
He saw “the Slope” as a mixed- use neighborhood now reaching the
“peak of livability” that the legendary urban anthropologist Jane
Jacobs idealized. He explained how all great neighborhoods go
through the same basic process: Some artists move into the only area
they can afford—a poor area with nothing to speak of. Eventually,
there are enough of them to open a gallery. People start coming to the
gallery in the evenings, creating demand for a coffeehouse nearby, and
so on. Slowly but surely, an artsy store or two and a clique of hipsters
“pioneer” the neighborhood until there’s signiﬁcant sidewalk activity
late into the night, making it safer for successive waves of incoming
businesses and residents.

Of course, after the city’s newspaper “discovers” the new trendy
neighborhood, the artists are joined and eventually replaced by in-
creasingly wealthy but decidedly less hip young professionals, lawyers,
and businesspeople—but hopefully not so many that the district com-
pletely loses its “ﬂavor.” Investment increases, the district grows big-
ger, and everyone is happier and wealthier.

Still, what happens to the people who lived there from the
beginning—the ones whom the police detective was talking about?
The “natives”? This process of gentriﬁcation does not occur ex nihilo.

No, when property values go up, so do the rents, displacing anyone
whose monthly living charges aren’t regulated by the government.
The residents of the neighborhood do not actually participate in the
renaissance, because they are not owners. They move to outlying
areas. Sure, their kids still go to John Jay High School in the middle
of Park Slope. But none of Park Slope’s own wealthy residents send
their kids there.

Our online conversation was picked up by New York magazine in a
column entitled “Are the Writers Leaving Brooklyn?” The article fo-
cused entirely on the way a crime against an author could threaten the
Brooklyn real- estate bubble. National Public Radio called to interview
me about the story—not the mugging itself, but whether I would leave
Brooklyn over it, and if doing so publicly might not be irresponsibly
hurting other people’s property values. A week or two of blog insanity
later, a second New York piece asked why we should even care about
whether the writers are leaving Brooklyn—seemingly oblivious of the
fact that this was the very same column space that told us to care in the
ﬁrst place.

It was an interesting ﬁfteen minutes. What was going on had less to
do with crime or authors, though, than it did with a market in its ﬁnal,
most vaporous phase. I simply couldn’t afford to buy in—and getting
mugged freed me from the hype treadmill for long enough to accept it.

Or, more accurately, it’s not that I couldn’t afford it so much as that I
wouldn’t afford it. There were mortgage brokers willing to lend me the
other 90 percent of the money I’d need to purchase a home on the
block where I was renting. “We can get you in,” they’d say. And at that
moment in real- estate history, putting even 10 percent down would
have made me a very qualiﬁed buyer. “What about when the mortgage
readjusts?” I remember asking. “Then you reﬁnance at a better rate,”
they assured me. Of course, that would be happening just about the
same time Park Slope’s artiﬁcially low property- tax rate (an exemption
secured by real- estate developers) would be raised to the levels of the
poorer areas of the borough. “Don’t worry. Everyone with your ﬁnan-
cials is doing it,” one broker explained with a wink. “And the banks
aren’t going to just let everyone lose their homes, now, are they?”

As long as people refused to look at the real social and ﬁnancial
costs, the market could keep going up—buoyed in part by the bonuses
paid to investment bankers whose job it was to promote all this asset
inﬂation in the ﬁrst place. Heck, we were restoring a historic borough
to its former glory. All we had to do was avoid the uncomfortable truth
that we were busy converting what were being used as multifamily
dwellings by poor black and Hispanic people back into stately town
houses for use by rich white ones. And we had to overlook that this
frenzy of real- estate activity was operating on borrowed time and,
more signiﬁcantly, borrowed money.

In such a climate, calling attention to any of this was the real crime,
and the reason that the ﬁrst reaction of those participating in a specu-
lative bubble was to silence the messenger. It’s just business. The real-
ity was that we were pushing an increasingly hostile population from
their homes, colonizing their neighborhoods, and then justifying it all
with metrics such as increased business activity, reduced (reported)
crime rates, and—most important—higher real- estate prices. How
can one argue against making a neighborhood, well, better?

As my writer friend eloquently explained on his blog, the neigh-
borhood was now, by most measures, safer. It was once again possible
to sit on one’s stoop with the kids and eat frozen Italian ices on a
balmy summer night. One could walk through Prospect Park on any
Sunday afternoon and see a black family barbecuing here, a Puerto
Rican group there, and an Irish group over there. Compared with
most parts of the world, that’s pretty civil, no?

Romantic as it sounds, that’s not integration at all, but co-location.
Epcot- style détente. The Brooklyn being described here has almost
nothing to do with the one our grandparents might have inhabited. It
is rather an expensive and painstakingly re-created simulation of a
“brownstone Brooklyn” that never actually existed. If people once sat
on their stoops eating ices on summer nights it was because they had
no other choice—there was no air- conditioning and no TV. Everyone
could afford to sit around, so everyone did. And the fact that the
denizens of neighboring communities complete the illusion of multi-
culturalism by using the same park only means that these folks are
willing to barbecue next to each other—not witheach other. They all
still go home to different corners of the borough. My writer friend’s
kids go off the next morning to their private school, those other kids
to public. Not exactly neighbors.

Besides, the rows of brownstones in the Slope aren’t really made of
brown stone. They’ve been covered with a substance more akin to
stucco—a thick paint used to create the illusion of brown stones set
atop one another. A façade’s façade. As any brownstone owner soon
learns, the underlying cinder blocks can be hidden for only so long be-
fore a costly “renovation” must be undertaken to cover them up again.

Likewise, wealth, media, and metrics can insulate colonizers from the
reality of their situation for only so long. Eventually, parents who push
their toddlers around in thousand- dollar strollers, whose lifestyles
and values have been reinforced by a multibillion- dollar industry ded-
icated to hip child- rearing, get pelted with stones by kids from the
“projects.” (Rest assured—the person who reported this recurring
episode at a gentriﬁed Brooklyn playground met with his share of on-
line derision, as well.)

Like Californians surprised when a wildﬁre or coyote disrupts the
“natural” lifestyle they imagined they’d enjoy out in the country, we
“pioneer,” “colonize,” and “gentrify” at our peril, utterly oblivious to
the social costs of our expansion until one comes back to bite us in
the ass—or mug us on the stoop. And while it’s easy to blame the
larger institutions and social trends leading us into these traps, our
own choices and behaviors—however inﬂuenced—are ultimately re-
sponsible for whatever befalls us.

Park Slope, Brooklyn, is just a microcosm of the slippery slope
upon which so many of us are ﬁnding ourselves these days. We live
in a landscape tilted toward a set of behaviors and a way of making
choices that go against our own better judgment, as well as our collec-
tive self- interest. Instead of collaborating with each other to ensure
the best prospects for us all, we pursue short- term advantages over
seemingly ﬁxed resources through which we can compete more ef-
fectively against one another. In short, instead of acting like people,
we act like corporations. When faced with a local mugging, the com-
munity of Park Slope ﬁrst thought to protect its brand instead of its
people.

The ﬁnancial meltdown may not be punishment for our sins, but it
is at least in part the result of our widespread obsession with ﬁnancial
value over values of any other sort. We disconnected ourselves from
what matters to us, and grew dependent on a business scheme that
was never intended to serve us as people. But by adopting the ethos of
this speculative, abstract economic model as our own, we have dis-
abled the mechanisms through which we might address and correct
the collapse of the real economy operating alongside it.

Even now, as we attempt to dig ourselves out of a ﬁnancial mess
caused in large part by this very mentality and behavior, we turn to the
corporate sphere, its central banks, and shortsighted metrics to gauge
our progress back to health. It’s as if we believe we’ll ﬁnd the answer
in the stream of trades and futures on one of the cable- TV ﬁnance
channels instead of out in the physical world. Our real investment in
the fabric of our neighborhoods and our quality of life takes a backseat
to asking prices for houses like our own in the newspaper’s misnamed
“real estate” section. We look to the Dow Jones average as if it were
the one true vital sign of our society’s health, and the exchange rate
of our currency as a measure of our wealth as a nation or worth as a
people.

This, in turn, only distracts us further from the real- world ideas
and activities through which we might actually re-create some value
ourselves. Instead of ﬁxing the problem, and reclaiming our ability to
generate wealth directly with one another, we seek to prop up institu-
tions whose very purpose remains to usurp this ability from us. We try
to repair our economy by bolstering the same institutions that sapped
it. In the very best years, corporatism worked by extracting value from
the periphery and redirecting it to the center—away from people and
toward corporate monopolies. Now, even though that wellspring of
prosperity has run dry, we continue to dig deeper into the ground for
resources to keep the errant system running.

So as our corporations crumble, taking our jobs with them, we bail
them out to preserve our prospects for employment—knowing full
well that their business models are unsustainable. As banks’ credit
schemes fail, we authorize our treasuries to print more money on their
behalf, at our own expense and that of our children. We then get to
borrow this money back from them, at interest. We know of no other
way. Having for too long outsourced our own savings and investing to
Wall Street, we are clueless about how to invest in the real world of
people and things. We identify with the plight of abstract corporations
more than that of ﬂesh-and-blood human beings. We engage with cor-
porations as role models and saviors, while we engage with our fellow
humans as competitors to be beaten or resources to be exploited.

Indeed, the now- stalled gentriﬁcation of Brooklyn had a good deal
in common with colonial exploitation. Of course, the whole thing was
done with more circumspection, with more tact. The borough’s gen-
triﬁers steered away from explicitly racist justiﬁcations for their ac-
tions, but nevertheless demonstrated the colonizer’s underlying
agenda: instead of “chartered corporations” pioneering and subjugat-
ing an uncharted region of the world, it was hipsters, entrepreneurs,
and real- estate speculators subjugating an undesirable neighborhood.

The local economy—at least as measured in gross product—boomed,
but the indigenous population simply became servants (grocery
cashiers and nannies) to the new residents.

And like the expansion of colonial empires, this pursuit of home
ownership was perpetuated by a pioneer spirit of progress and personal
freedom. The ideal of home ownership was the fruit of a public-
relations strategy crafted after World War II—corporate and govern-
ment leaders alike believed that home owners would have more of a
stake in an expanding economy and greater allegiance to free- market
values than renters. Functionally, though, it led to a self- perpetuating
cycle: The more that wealthier white people retreated to the enclaves
prepared for them, the poorer the areas they were leaving became, and
the more justiﬁed they felt in leaving. While the ﬁrst real wave of “white
ﬂight” was from the cities to the suburbs, the more recent, camouﬂaged
version has been from the suburbs back into the expensive cities.

Of course, these upper- middle- class migrants were themselves
the targets of the mortgage industry, whose clever lending instru-
ments mirror World Bank policies for their exploitative potential. The
World Bank’s loans come with “open markets” policies attached that
ultimately surrender indebted nations and their resources to the con-
trol of distant corporations. The mortgage banker, likewise, kindly
provides instruments that get a person into a home, then disappears
when the rates rise through the roof, having packaged and sold off the
borrower’s ballooning obligation to the highest bidder.

The beneﬁts to society are pure mythology. Whether it’s Brook-
lynites convinced they are promoting multiculturalism or corpora-
tions intent on extending the beneﬁts of the free market to all the
world’s souls, neither activity leads to broader participation in the
expansion of wealth—even when they’re working as they’re supposed
to. Contrary to most economists’ expectations, both local and global
speculation only exacerbate wealth divisions. Wealthy parents send
their kids to private schools and let the public ones decay, while
wealthy nations export their environmental waste to the Third World
or, better, simply keep their factories there to begin with—and keep
their image at home as green as AstroTurf.

People I respect—my own mentors and teachers—tell me that this
is just the way things are. This is the real world of adults—not so very
far removed, we must remember, from the days when a neighboring
tribe might just wipe you out—killing your men with clubs and taking
your women. Be thankful for the civility we’ve got, keep your head
down, and try not to think too much about it. These cycles are built
into the economy; eventually, the markets will recover and things will
get back to normal—and normal isn’t so bad, really, if you look around
the world at the way other people are living. And you shouldn’t even
feel so guilty about that—after all, Google is doing some good things
and Bill Gates is giving a lot of money to kids in Africa.

Somehow, though, for many of us, that’s not enough. We are fast
approaching a societal norm where we—as nations, organizations, and
individuals—engage in behaviors that are destructive to our own and
everyone else’s welfare. The only corporate violations worth punish-
ing anymore are those against the shareholders. The “criminal mind”
is now deﬁned as anyone who breaks laws for a reason other than
money. The status quo is selﬁshness, and the toxically wealthy are our
new heroes because only they seem capable of fully insulating them-
selves from the effects of their own actions.

Every day, we negotiate the slope to the best of our ability. Still, we
fail to measure up to the people we’d like to be, and succumb to the tilt
of the landscape.

Jennifer has lived in the same town in central Minnesota her whole
life. This year, diagnosed with a form of lupus, she began purchasing
medication through Wal-Mart instead of through Marcus, her local
druggist—who also happens to be her neighbor. Prescription drugs
aren’t on her health plan, and this is just an economic necessity.

Why can’t the druggist cut his neighbor a break? He’s trying, but
he’s selling at a mere hair above cost as it is. He just took out a loan
against the business to make expenses and his increased rent. The
downtown area he’s located in has been slated for redevelopment, and
only corporate chain stores appear to have deep enough pockets to pay
for storefront leases. It sounded like a good idea when Marcus sup-
ported it at the public hearing—but the description in the pamphlet
prepared by the real- estate developer (complete with a section on
how to compete more effectively with “big box” stores like Wal- Mart)
hasn’t conformed to reality.

Marcus’s landlord doesn’t really have any choice in the matter.
He underwent costly renovations to conform to the new downtown
building code, and needs to pass those on to the businesses renting
from him. He took out a mortgage, too, which is slated to reset in just
a couple of months. If he doesn’t collect higher rents, he won’t make
payments.

Jennifer stopped going to PTA meetings because she’s embarrassed
to look Marcus in the face. As their friendship declines, so does her
guilt about helping put him out of business.

Across the country in New Jersey, Carla, a telephone associate for
one of the top three HMO plans in the United States, talks to people
like Jennifer every day. Carla is paid a salary as well as a monthly
bonus based on the number of claims she can “retire” without pay-
ment. Without resorting to fraud, Carla is supposed to discourage
false claims by making all claims harder to register, in general. That’s
how Carla’s supervisor explained it to her when she asked, point-
blank, if she was supposed to mislead customers. She feels bad about
it, but Carla is now the principal breadwinner in her family, her hus-
band having lost a lot of his contracting work to the stalled market
for new homes. And, in the end, she is preventing fraud. How does
Carla sleep at night, knowing that she has spent her day persuading
people to pay for services for which they are actually covered? After
seeing a commercial on TV, she switched from Ambien to Lunesta.

One of the guys working on that very ad campaign, an old
co-worker of mine, ended up specializing in health- care
advertising because nobody was hiring in the environmental area back
in the ’90s. Besides, he told me, only half kidding, “at least medical
advertising puts the consumer in charge of her own health care.” He’s
conﬂicted about pushing drugs on TV because he knows full well that
these ads encourage patients to pressure doctors to write prescriptions
that go against their better judgment. Still, Tom makes up for any
compromise of his values at work with a staunch advocacy of good
values at home. He recycles paper, glass, and metal, brought his kids
to see An Inconvenient Truth, and even uses a compost
heap in the backyard for household waste. Last year, though, he ﬁnally
broke down and bought an SUV. Why? “Everybody else on the highway
is driving them,” he explained. “It’s an automotive arms race.” If he
stayed in his Civic, he’d be putting them all at risk. “You see the way
those people drive? I’m scared for my family.” As penance, at least until
gas prices went up, he began purchasing a few “carbon offsets”—a way
of donating money to environmental companies in compensation for
one’s own excess carbon emissions.

In a similar balancing act, a self- described “holistic” parent in Man-
hattan spares her son the risks she associates with vaccinations for
childhood diseases. “We still don’t know what’s in them,” she says,
“and if everyone else is vaccinated he won’t catch these things, any-
way.” She understands that the vaccines required for incoming school
pupils are really meant to quell epidemics; they are more for the
health of the “herd” than for any individual child. She also believes
that mandatory vaccinations are more a result of pharmaceutical in-
dustry lobbying than any comprehensive medical studies. In order to
meet the “philosophical exemption” requirements demanded by the
state, she managed to extract a letter from her rabbi. Meanwhile, in an
unacknowledged quid pro quo, she installed a phone line in the rabbi’s
name in the basement of her town house; he uses the bill to falsify res-
idence records and send his sons to the well- rated public elementary
school in her high- rent district instead of the 90 percent minority
school in his own. At least he can say he’s kept them in “the public
system.”

Incapable of securing a legal or illegal zoning variance of this sort,
a college friend of mine, now a state school administrator in Brighton,
En gland, just made what he calls “the hardest decision of my life,” to
send his own kids to a private Catholic day school. He doesn’t even
particularly want his kids to be indoctrinated into Catholicism, but
it’s the only alternative to the eroding government school he can af-
ford. He knows his withdrawal from public education only removes
three more “good kids” and one potentially active parent from the
system, but doesn’t want his children to be “sacriﬁced on the altar” of
his good intentions.

So it’s not just a case of hip, hypergentriﬁed Brooklynites succumb-
ing to market psychology, but people of all social classes making
choices that go against their better judgment because they believe
it’s really the only sensible way to act under the circumstances. It’s as
if the world itself were tilted, pushing us toward self- interested,
short- term decisions, made more in the manner of corporate share-
holders than members of a society. The more decisions we make in
this way, the more we contribute to the very conditions leading to this
awfully sloped landscape. In a dehumanizing and self-denying cycle,
we make too many choices that—all things being equal—we’d prefer
not to make.

But all things are not equal. These choices are not even occur-
ring in the real world. They are the false choices of an artiﬁcial
landscape—one in which our decision-making is as coerced as that of
a person getting mugged. Only we’ve forgotten that our choices are
being made under painstakingly manufactured duress. We think this
is just the way things are. The price of doing business.
Since when is life determined by that axiom?

Unquestionably but seemingly inexplicably, we have come to oper-
ate in a world where the market and its logic have insinuated them-
selves into every area of our lives. From erection to conception, school
admission to ﬁnding a spouse, there are products and professionals to
ﬁll in where family and community have failed us. Commercials en-
treat us to think and care for ourselves, but to do so by choosing a
corporation through which to exercise all this autonomy.
Sometimes it feels as if there’s just not enough air in the room—as
if there were a corporate agenda guiding all human activity. At a
moment’s notice, any dinner party can slide invisibly into a stock pro-
motion, a networking event, or an impromptu consultation—let me
pick your brain. Is this why I was invited in the ﬁrst place? Through
sponsored word- of-mouth known as “buzz marketing,” our personal
social interactions become the promotional opportunities through
which brands strive to be cults and religions strive to become brands.

It goes deeper than that second Starbucks opening on the same
town’s Main Street or the radio ads for McDonald’s playing through
what used to be emergency speakers in our public school buses. It’s
not a matter of how early Christmas ads start each year, how many
people get trampled at Black Friday sales, or even the news report
blaming the fate of the entire economy on consumers’ slow holiday
spending. It’s more a matter of not being able to tell the difference
between the ads and the content at all. It’s as if both were designed to
be that way. The line between ﬁction and reality, friend and marketer,
community and shopping center, has gotten blurred. Was that a news
report, reality TV, or a sponsored segment?

This fundamental blurring of real life with its commercial coun-
terpart is not a mere question of aesthetics, however much we may
dislike mini- malls and superstores. It’s more of a nagging sense that
something has gone awry—something even more fundamentally
wrong than the credit crisis and its aftermath—yet we’re too im-
mersed in its effects to do anything about it, or even to see it. We are
deep in the thrall of a system that no one really likes, no one remem-
bers asking for, yet no one can escape. It just is. And as it begins to col-
lapse around us, we work to prop it up by any means necessary, so
incapable are we of imagining an alternative. The minute it seems as if
we can put our ﬁnger on what’s happening to us or how it came to be
this way, the insight disappears, drowned out by the more immedi-
ately pressing demands by everyone and everything on our attention.

What did they just say? What does that mean for my retirement ac-
count? Wait—my phone is vibrating.

Can the hermetically sealed food court in which we now subsist
even be beheld from within? Perhaps not in its totality—but its devel-
opment can be chronicled, and its effects can be parsed and under-
stood. Just as we once evolved from subjects into citizens, we have
now devolved from citizens into consumers. Our communities have
been reduced to afﬁnity groups, and any vestige of civic engagement
or neighborly goodwill has been replaced by self- interested goals
manufactured for us by our corporations and their PR ﬁrms. We’ve
surrendered true participation for the myth of consumer choice or,
even more pathetically, that of shareholder rights.

That’s why it has become fashionable, cathartic, and to some extent
useful for the defenders of civil society to rail against the corporations
that seem to have conquered our civilization. As searing new books
and documentaries about the crimes of corporations show us, the cor-
poration is itself a sociopathic entity, created for the purpose of gen-
erating wealth and expanding its reach by any means necessary. A
corporation has no use for ethics, except for their potential impact on
public relations and brand image. In fact, as many on the side of the
environment, labor, and the Left like to point out, corporate managers
can be sued for taking any action, however ethical, if it compromises
their ultimate ﬁduciary responsibility to share price.

As corporations gain ever more control over our economy, govern-
ment, and culture, it is only natural for us to blame them for the help-
lessness we now feel over the direction of our personal and collective
destinies. But it is both too easy and utterly futile to point the ﬁnger of
blame at corporations or the robber barons at their helms—not even
those handcuffed CEOs gracing the cover of the business section. Not
even mortgage brokers, credit- card executives, or the Fed. This state
of affairs isn’t being entirely orchestrated from the top of a glass
building by an élite group of bankers and businessmen, however much
everyone would like to think so—themselves included. And while the
growth of corporations and a preponderance of corporate activity
have allowed them to permeate most every aspect of our awareness
and activity, these entities are not solely responsible for the predica-
ment in which we have found ourselves.

Rather, it is corporatism itself: a logic we have internalized into our
very being, a lens through which we view the world around us, and an
ethos with which we justify our behaviors. Making matters worse, we
accept its dominance over us as preexisting—as a given circumstance
of the human condition. It just is.

But it isn’t.

Corporatism didn’t evolve naturally. The landscape on which we
are living—the operating system on which we are now running our
social software—was invented by people, sold to us as a better way of
life, supported by myths, and ultimately allowed to develop into a self-
sustaining reality. It is a map that has replaced the territory.

Its basic laws were set in motion as far back as the Renaissance;
it was accelerated by the Industrial Age; and it was sold to us as a
better way of life by a determined generation of corporate leaders
who believed they had our best interests at heart and who ultimately
succeeded in their dream of controlling the masses from above.

We have succumbed to an ideology that has the same intellectual
underpinnings and assumptions about human nature as—dare we
say it—mid- twentieth-century fascism. Given how the word has been
misapplied to everyone from police ofﬁcers to communists, we might
best refrain from resorting to what has become a feature of cheap
polemic. But in this case it’s accurate, and that we’re forced to dance
around this “F word” today would certainly have pleased Goebbels
greatly.

The current situation resembles the managed capitalism of Mus-
solini’s Italy, in particular. It shares a common intellectual heritage
(in disappointed progressives who wanted to order society on a scien-
tiﬁc understanding of human nature), the same political alliance (the
collaboration of the state and the corporate sector), and some of the
same techniques for securing consent (through public relations and
propaganda). Above all, it shares with fascism the same deep suspi-
cion of free humans.

And, as with any absolutist narrative, calling attention to the inher-
ent injustice and destructiveness of the system is understood as an
attempt to undermine our collective welfare. The whistle-
blower is worse than just a spoilsport; he is an enemy of the people.

Unlike Europe’s fascist dictatorships, this state of affairs came
about rather bloodlessly—at least on the domestic front. Indeed, the
real lesson of the twentieth century is that the battle for total social
control would be waged and won not through war and overt repres-
sion, but through culture and commerce. Instead of depending on a
paternal dictator or nationalist ideology, today’s system of control de-
pends on a society fastidiously cultivated to see the corporation and its
logic as central to its welfare, value, and very identity.

That’s why it’s no longer Big Brother who should frighten us—
however much corporate lobbies still seek to vilify anything to do with
government beyond their own bailouts. Sure, democracy may be the
quaint artifact of an earlier era, but what has taken its place? Suspen-
sion of habeas corpus, surveillance of citizens, and the occasional re-
pression of voting notwithstanding, this mess is not the fault of a
particular administration or political party, but of a culture, economy,
and belief system that places market priorities above life itself. It’s not
the fault of a government or a corporation, the news media or the
entertainment industry, but the merging of all these entities into a
single, highly centralized authority with the ability to write laws, issue
money, and promote its expansion into our world.

Then, in a last cynical surrender to the logic of corporatism, we as-
sume the posture and behaviors of corporations in the hope of restor-
ing our lost agency and security. But the vehicles to which we gain
access in this way are always just retail facsimiles of the real ones. In-
stead of becoming true landowners we become mortgage holders.
Instead of guiding corporate activity we become shareholders. Instead
of directing the shape of public discourse we pay to blog. We can’t
compete against corporations on a playing ﬁeld that was created for
their beneﬁt alone.

This is the landscape of corporatism: a world not merely domi-
nated by corporations, but one inhabited by people who have internal-
ized corporate values as our own. And even now that corporations
appear to be waning in their power, they are dragging us down with
them; we seem utterly incapable of lifting ourselves out of their de-
pression.

We need to understand how this happened—how we came to live
for and through a business scheme. We must recount the story of how
life itself became corporatized, and ﬁgure out what—if anything—
we are to do about it.

While we will ﬁnd characters to blame for one thing or another,
most of corporatism’s architects have long since left the building—
and even they were usually acting with only their immediate, short-
term proﬁts in mind. Our object instead should be to understand the
process by which we were disconnected from the real world and why
we remain disconnected from it. This is our best hope of regaining
some relationship with terra ﬁrma again. Like recovering cult victims,
we have less to gain from blaming our seducers than from under-
standing our own participation in building and maintaining a corpo-
ratist society. Only then can we begin dismantling and replacing it
with something more livable and sustainable.

No Money Down

Rushkoff on the rigged credit system

Originally published in Arthur Magazine No. 31, Oct 2008
by Douglas Rushkoff

I poked my head up from writing my book a couple of months ago to engage with Arthur readers about the subject I was working on: the credit crunch and what to do about it [see “Riding Out the Credit Crisis” in Arthur No. 29/May 2008]. I got more email about that piece than anything I have written since a column threatening to defect from the Mac community back in the Quadra days.

Many readers thought I was hinting at something under the surface—a conspiracy, of sorts, to take money from the poor and give it to the rich. It sounded to many like I was describing an economic system actually designed—planned—to redistribute income in the worst possible ways.

I guess I’d have to agree with that premise. Only it’s not a secret conspiracy. It’s an overt one, and playing out in full view of anyone who has time (time is money, after all) to observe it.

The mortgage and credit crisis wasn’t merely predictable; it was predicted. And not by a market bear or conspiracy theorist, but by the people and institutions responsible. The record number of foreclosures, credit defaults, and, now, institutional collapses is not the result of the churn of random market forces, but rather a series of highly lobbied changes to law, highly promoted ideologies of wealth and home ownership, and monetary policies highly biased toward corporate greed.

It all started to make sense to me when I attended Learning Annex’s Wealth Expo earlier this year—a seminar where teachers of The Secret, the hosts of Flip This House, George Foreman, Tony Robbins and former Fed Chairman Alan Greenspan [pictured above in banner from Learning Annex website] purportedly taught the thousands in attendance how to take advantage of the current foreclosure boom.

Using language borrowed from today’s more money-centric New Age spiritualists, as well as the get-rich-quick books of the early 1900s “New Thought Movement” on which these pyramid schemes are based (such as Elizabeth Towne’s The Science of Getting Rich or Napoleon Hill’s Think and Grow Rich), they encouraged their mostly black audience to get on the ladder to success by purchasing educational DVDs and wealth-building “systems.”

These courses all promised to teach the properly motivated American how to find homeowners down on their luck and approaching foreclosure, as well as how to buy those homes from under them and resell them at a great profit. What made the spectacle doubly outrageous were not the dancing girls or indoor fireworks; it was the fact that most of the participants were themselves desperate former homeowners, whose illnesses, divorces, fires, and floods had put them in to foreclosure, too. Get it? They were paying to learn how to feed on people just like themselves.

While most of the speakers and seminar leaders might be expected to show up at a Learning Center pyramid scheme convention, what the hell was Alan Greenspan doing there? First off, he was trying to make some money. He had a new book out, and this was a good way to pitch it to a few thousand potential buyers at once. On a deeper level, though, we can only assume he was there to pump some much-needed air into the collapsing real estate balloon. These poor folks might just be dumb enough to try to borrow some money to purchase foreclosed properties from banks and other lenders that had themselves made disastrous investments during Greenspan’s tenure. His presence lent credibility to the current, lowbrow version of the same scam over which he presided as Fed Chair.

The whole show was a fitting metaphor for the credit crunch, a misnamed sabotage of the credit system by institutions with the problem of too much, not too little, money to put to work. As I explained in my last column, banks and credit institutions simply had more money on hand than they had people who were qualified to borrow it. So they changed the law to create more demand for the money they had in oversupply.

The banking industry lobbied to reduce the remaining regulations on its lending practices. They won a repeal of the Glass-Steagall Act, a law enacted just after the depression as a way to prevent regular savings banks from doing risky things with depositors’ money. A “Chinese Wall” was put in place between banks and investment brokerages, preventing conflicts of interest and limiting financial institutions’ power over both the lending and borrowing sides of the same transactions. With the repeal of the Act in 1999, banks were now free use their capital to lend money to unworthy borrowers, package those loans, and then underwrite the sale of those loans to other institutions—such as pension funds.

Meanwhile, the credit industry spent over $100 million lobbying to change bankruptcy laws. Although a corporation in bankruptcy still has its debts erased, the regulations surrounding personal bankruptcy were changed so that personal debts stay on the books forever. The logic they used to argue for the change was that debtors are smart, gaming the system to buy beyond their means and then declaring bankruptcy at the last minute.

But the very same creditors knew that just the opposite was true—as evidenced by their sales tactics and marketing campaigns. They turned to a social science known as behavioral finance—the study of the way people consistently act against their own best financial interests, as well as how to exploit these psychological weaknesses when peddling questionable securities and products.

These are proven behaviors with industry-accepted names like “money illusion bias,” “loss aversion theory,” “irrationality bias,” and “time discounting.” People do not borrow opportunistically, but irrationally. As if looking at objects in the distance, they see future payments as smaller than ones in the present—even if they are actually larger. They are more reluctant to lose a small amount of money than gain a larger one—no matter the probability of either in a particular transaction. They do not consider the possibility of any unexpected negative event occurring between the day they purchase something and the day they will ultimately have to pay for it.

Credit card and mortgage promotions are worded to take advantage of these inaccurate perceptions and irrational behaviors. “Zero percent” introductory fees effectively camouflage regular interest rates up to 20 or 30 percent. Lowering minimum payment requirements from the standard 5 percent to 2 or 3 percent of the outstanding balance looks attractive to borrowers. The corresponding increase in interest charges and additional years to pay off the debt will end up costing them more than triple the original balance. It is irrational for them to make purchases and borrow money under these terms, or to prefer them to the original ones. But they do. We do. This behavior is not limited to the trailer park renters of the rural south, but extends to the highly educated, highly leveraged co-op owners of the Northeast.

Combine this with George Bush’s campaign to convince Americans that home ownership is a virtue—itself a revival of a strategy intended to assuage the resentment of veterans returning from World War II—and you end up with a population willing to do almost anything to “get into” a house, and a mortgage lending industry ready to provide the instruments capable of doing it. Once the mortgage rates shifted and homeowners began to default, the people who created the mess were largely safe. Bankers and high-salaried directors received their bonuses for a job well done, and the only people who lost money were the hapless shareholders—people like you and me—who might own some supposedly low-risk bank stocks. And, of course, all the people who were holding mortgages bigger than the total value of their homes.

The fiction is that the money just “vanished.” Financial newspapers and cable TV business channels say that the value of holdings has been “erased” by market downturns, but it hasn’t been erased at all. It’s on the negative side of one balance sheet, and the positive side of someone else’s. While Goldman Sachs was underwriting mortgage-backed securities of dubious value, it was simultaneously selling them short. Take the example of John Paulson, a trader who earned himself $4 billion and his funds another $15 billion in one year by betting against the housing market. For help predicting the extent of the downturn, Paulson hired none other than Alan Greenspan as an advisor to his hedge fund. The Fed Chairman who encouraged the housing bubble even after it began to crash is now cashing in on the very devastation his policies created. The money did not disappear at all. It merely changed hands. People’s homes were just a medium for the redistribution of wealth.

That’s because the biggest industry in America—maybe the only real industry left—is credit itself: money is lent into existence by the central bank, and then lent again to regional banks, savings and loans, and eventually to you and me. Each bank along the way takes its cut; the final borrower is the only one who has to figure out how to pay it back, with interest, by the close of the contract.

The problem is, in order to pay back three or four dollars on every one dollar borrowed, someone else has to lose. Our monetary system is itself a shell game, with losers built into the very rules. The more the credit industry dominates our economy, the more losers there will inevitably be.

As anyone in any business at all well understands—even the editor of this magazine, I’m sure—one has to borrow money to do almost anything real in this society. Anything that requires a resource, a supply, an office, a piece of ground, transportation, also requires a bit of capital. That capital has to be borrowed. And if it’s not coming from a friend or from mom or dad, it’s being borrowed from an institution that borrowed from another institution that borrowed it, and so on, and so on.

Participation in business or, in most of our cases, land or home ownership, means helping put those wheels of the credit industry in motion. And the more we push, the more momentum they gain, and the more influence they have over an increasingly large portion of our experience. Reality becomes defined by credit sectors, and our time is consumed more each day with wondering how we’re going to pay back what we’ve borrowed.

Every once in a while, though, we break the rules and get to see the possibility for another kind of economy. Whether it’s an alternative currency, an open source software solution, or the simple good faith gifts we make to one another for creating value in each other’s lives. It’s the way Arthur readers bailed out the magazine a few months ago, within a few hours of when creditors would have turned off the lights in the editor’s apartment bedroom (which doubles as the Arthur office). Or the way Robert Anton Wilson’s fans came to his rescue via Paypal to let the ailing writer die at home in his bed rather than a free city hospital (thus saving the taxpayers a whole lot more money than we raised and spent).

Without getting spiritual or mushy, we can agree that there are self-perpetuating cycles of greed and generosity in which we can participate. The more we commit to one or the other, the more of the world conforms to its rules.

Breaking Up Is Hard to Do

How Market Segmentation Could Erode A Mobile Culture
By Douglas Rushkoff, Wed Dec 08 08:30:00 GMT 2004

“I know I’m wasting half my advertising dollars — I just don’t know which half.”

Most credit the advertising industry’s greatest paradox to John Wannamaker, king of American retail in the early 1900s. It was a simpler age of course, yet that statement summarizes today’s dilemma of advertising in a landscape of clutter. How do you reach a potential customer, and how do you know he’ll be listening to you when you do?

The problems facing marketers in the age of mass media are many. Just when it seemed there were enough TVs to broadcast a single message to the world, the television universe fragmented into a sea of cable channels and Web sites. Even when viewers could be identified, marketers had no way of knowing if viewers were zapping away from commercials with the remote, or skipping over them entirely with digital video recorders like TiVo or ReplayTV.

Techniques ranging from branded entertainment to guerrilla marketing have emerged to reach an increasingly well-protected audience. But the one that makes marketers feel most secure — the one that seems to be based in the pure cold reason of numbers — is market segmentation. Segmentation was first developed by the direct-mail industry as a way of saving postage and increasing response rates.

The first of these research firms amounted to little more than giant library card catalogs, with little files on each household in their region. The object of the game at that time was simply to minimize the costs of wasted postage and printing by sending mailings only to the households that stood a good chance of responding. At the time, there wasn’t enough direct mail advertising for it even to get the name “junk mail” yet. With the advent of computers, the industry took off, and direct mailings grew exponentially. Now, the object of the game was to hit households with messages that could penetrate the clutter and avoid the dustbin.

Companies like Acxiom and Claritas competed to collect consumer, census and any other data on every household in America, and sometimes beyond. By striking deals with some of the merchants they were serving, these two firms grew to behemoth proportions, taking in as much data from their clients as they were providing. In fact, all but two of the 9/11 hijackers were listed in Acxiom’s tremendous databases. Understandably, marketers in this confusing age — one made even more confusing by the highly mobile habits of mobile phone users — have gravitated to the certainty of number crunching and consumer modeling. Acxiom, for one, has broken down its millions of files into about 70 specific “types” of consumers.

These profiles include information ranging from what TV shows the target consumers watch or which books they read to how many doors are on their cars and whether they like dogs or cats. The research firms then use statistical modeling to infer other sets of facts from the ones they have. In the 2004 U.S. presidential campaign, for example, it was discovered that undecided voters in Ohio were much more likely to have call-waiting on their phones, and cats instead of dogs. Why? No one really knows. All that matters is that this statistical truth gave campaign managers the ability to target certain households, and not waste their time, energy and money on others.

For a wireless industry confronting unique competitive challenges and with a consumer base as fickle and disloyal as any, it’s only natural for marketing departments to exploit any tool at their disposal to reach potential consumers. And while direct mail advertising may be a good way to reach those few elderly or impoverished consumers who still don’t have a phone, I fear that the application of market segmentation techniques in the wireless universe could have a detrimental effect.

While segmentation might be effective in predicting a great deal about consumers, it may ultimately contradict the very ethos of wireless culture, for the wireless industry is different from any other. Market segmentation may be great for companies trying to figure out which customers should receive free samples of their soap in the mail; but using consumer data to target, say, SMS messages at likely consumers could be a disastrous move for the entire industry.

It goes beyond turning the mobile phone into an advertising platform, a strategy that most of us already realize will have to be handled carefully, if employed at all, since mobile users — unlike Internet surfers — are less likely to accept commercial interruptions when they’re paying by the minute.

But market segmentation, in particular, conveys an understanding of human behavior and predictability that challenges the underlying premise of the wireless revolution. Because of the spontaneity it allows, consumers have embraced wirelessness. A mobile phone permits people not simply to be late for an appointment, but to change arrangements, make sudden plans and encourage impromptu events. Some bit of the spirit of a flash mob trickles into every wireless interaction.

Market segmentation, on the other hand, depends on the predictability of consumer behavior. A targeted message also carries with it a subtler message that the recipient can be counted on to act in certain ways. Segmented marketing is intended, after all, to exploit what a marketer knows about a consumer in order to make her more like that. A person who has clicked on a few banner ads about dieting, or purchased a book on carbohydrates, is an ideal target for an onslaught of diet product ads. The consumer experiences segmentation and targeted messaging as having been “found out” and is then pushed further towards a static identity. Worse, segmentation is potentially divisive and alienating, since it defines users by what they want, rather than what they can do or contribute. Under the market researcher’s scalpel, society is sliced into evermore-precise consumer tribes. Mac users vs. Microsoft users. Ford drivers vs. Chevy drivers.

This works for traditional products, like sneakers or cars, because they serve as real, physical badges. Objects like these can serve as signifiers for a fixed or tribal identity. Wireless devices, however, are portals. Instead of promoting fixed identities, they are systems through which people can develop and manifest ever-changing selves. Wirelessness is about the expansion and plasticity of self-definition, and participating in culture on new levels. To turn mobile users into clearly delineated sets of target markets defeats the potential of this interactive, collective technology.

The information provided by market segmentation specialists can still be useful, but for the opposite reasons: instead of separating them further, these are groups we can connect. This is the connections business after all. Each segment is just a starting place, not an end in itself, as it is in so many other industries.

One of the only places where segmentation might apply in the wireless industry would be to the devices themselves. Certain handhelds can be targeted to certain people. But even then, the beauty of wireless devices is that they can be customized and changed based on the changing allegiances of the wireless user. A Hello Kitty faceplate one day, an American Flag the next. People who select and change their own ringtones every week shouldn’t be segmented into a fixed sense of self. (They’ll buy less ringtones!) It’s this very fluidity of self-image they’re paying you to support. A wireless device is not just another product, it is a symbol of infinite possibility.

Another area that seems, on the surface, particularly well-suited to the target marketer would be rate plans and service packages. And while, at first glance, offering a games package to a kid and a business package to a wealthy adult seems like a good idea, a company communicating selectively like this does so at a price. The consumer quickly realizes that she has been identified in terms of her usage patterns, age, wealth and whatever else the provider might know about her.

As a result, each keystroke, each game download, each refresh of a WAP site is, from then on, weighted with the additional consideration that these actions are being monitored, and that future offers will be based on them. Even if this effect is so subtle as to be subconscious, the categorization of consumers into evermore rigid personal profiles works against the underlying sensibility that wireless users have the freedom to define and redefine themselves with every new moment of interaction.

Even the early Internet benefited tremendously from users’ ability to recast themselves into new characters. Chat rooms were filled with individuals trying on new ages, sexes and temperaments. Where the Internet did this on the level of fantasy or avatar, wireless devices allow this to happen in a way that is much more connected to one’s real life experience. The North American mobile community UPOC, for example, allows young people to belong to any number of different or overlapping affinity groups. Hopping onto the Buffy the Vampire Slayer list shouldn’t necessarily peg an individual as a Buffy fan, as targeted ads based on this information might suggest.

The more users sense that their actions in the wireless space are tracked and then acted upon, the less they will look to it as a way of trying on provisional identities, engaging in spontaneous experiences and testing new activities. It’s as if everything will appear on their permanent record.

Indeed, basing a 21st-century marketing strategy on a technology originally developed to save on postage stamps just isn’t the most thoughtful or productive way of engaging with this new marketplace. It could reduce wireless participation from a mode of self-expression to a reflection of some pre-fab, computer-generated consumer profile and, in the process, change the mobile phone from a portal into a mirror.