Josh King, Avvo’s general counsel, watched as OccupySeattle, the north-left coast version of OccupyWallStreet, parked itself across the street from his office. He wasn’t thrilled.
“Occupy Seattle”, a thinly-attended offshoot of Occupy Wall Street, has been going on across the street from my office this last week. What do the “occupiers” want? If you view this rant narrated by Keith Olbermann (shredding whatever scraps of integrity he might have left), they want America to know that corporations are evil.Josh goes on to offer some very reasonable problems with the “demands,” not the least of which is that the mash of anger toward corporate America covers every failed “lefty trope” I think (I might be wrong) that Josh appreciates the activism, that people are thinking, speaking, protesting and fighting back. That they aren’t sitting on the couch eating Cheetos bemoaning the lousy world is a great thing.
Don’t get me wrong – I like a good protest. Lock yourself to the gates of nuclear plant, protest the war, demand equal rights, whatever. But here are the problems I have with this protest:
His problem is that many of their complaints are, well, misguided. Some embrace neo-anarchism, as if it solves anything. Few seem to realize that big corporations produce stuff, employ people, and exist to turn a profit for their investors, who are people. These aren’t bugs, but features.
That doesn’t mean that anything a corporation does is good, or that they are to be put on a pedestal. Protests in the 60s were met with the “silent Majority’s” mantra, “America, love it or leave it.” It was stupid. So is the false dichotomy of corporations, perfect or evil. We need them. We need to keep them in check when they get out of control.
In the New York Times, Joe Nocera writes about how banks are gouging people, and why.
Me, I’m going with the gouging angle. The revenue that Bank of America, and many other banks, is seeking to replace with its new fees is lucre that a more honorable profession would never have touched in the first place. Indeed, 30 years ago, banks themselves would have turned their backs on it. Of course, back then, banks viewed customers as people to be helped, not marks to be taken advantage of.
It was, to be sure, a different world then, with regulated interest rates, the Glass-Steagall Act preventing banks from getting into lucrative trading and a sleepy business model that valued a steady dividend over a highflying stock price. As interest rates were deregulated, Glass-Steagall abolished and investors demanding that bank stocks perform like Internet stocks, that ethos changed. Banks began looking in some dark corners for new revenue; this is when hidden fees began to creep into credit-card agreements, for instance.
We need banks. Banks are a wonderful thing, as Jimmy Stewart explained. But while we still call them banks, that wonderful “sleepy” business ended years ago, replaced by financial institutions. What Nocera is saying is that banks don’t want to be banks anymore, as banks don’t make the big bucks that financial institutions make.
Banks gouge because they couldn’t care less if you use them as banks. And they gouge and gouge and gouge, and couldn’t care less if you go elsewhere, as if there was a bank that didn’t gouge. If they can’t gouge you, they aren’t interested in doing the bank thing. There’s nothing in it for them.
But we need banks. It’s not like we can go back to using cash (that’s the paper and coin stuff your parents keep in their pockets and wallet, for you digital natives). The government has made cash illegal and proof that you are aiding the terrorists. You don’t want to get put on a cash watch list, do you?
There are many things we need in modern society that don’t provide as big a payback as our need would would seem to justify. We desperately need someone to remove the garbage we create, yet aren’t prepared to pay garbagemen their due in proportion to our need for their services. And we aren’t prepared to pay Bank of America $5 for the pleasure of using a debit card to access our money. And BoA doesn’t care.
One suspects that these new fees will only generate more anger, for they will make plain what has long been hidden: that, fundamentally, retail banking makes its money by gouging the have-nots. Post-financial crisis, the essence of big banking has not changed. It’s just become more obvious.
If you put aside some of the sillier nuts and bolts demands of the Occupy wherever, and focus instead on the core of the anger and frustration, it’s pretty hard to disagree with the protesters. Indeed, it’s hard not to respect their views, grudgingly or not. The balance of power has gotten out of whack, it seems, and the gouging is out of control.
Some will argue that market forces will eventually smack down the gougers and crush the excessively greedy. Market forces, of course, is another word for people, us, consumers unwilling to take what they’re dishing out. These protestors are market forces. All of us are market forces. Josh is a market force, as am I. Alone, we may not have an impact, but when enough of us say no, it adds up. Kinda like a million here, a million there, pretty soon you’re talking about real money market force.
Like Josh, not all the demands strike me as something I can get behind. In fact, many of them aren’t my issue at all, and I don’t support them. But I do support activism, and some of the demands are right on the money.
It’s no surprise that this mash of anger and frustration is going to bring up a laundry list of horribles, and overstate the evil of corporate American without recognition of our need for a viable economic existence. But we have to take the good with the bad. I won’t pay anybody for a debit card. Heck, I won’t even pay anybody for a credit card. And if somebody rips me off, I’m not going silently into the night. But I’m fond of some modern conveniences and realize that they wouldn’t exist without corporations big enough to develop, produce and distribute them. And I’m fond of the people who work for them and earn a living so that they can enjoy them too.
As the balance of power is out of whack, it needs to be reined in. We are the market forces capable of doing so. But it’s about giving corporations a damn good smack to remind them who pays the money that creates the revenues that pay the salaries and dividends. And we need to remember that we need them too, even if not as much as they think we do.
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Scott, thanks for the comments. I think there’s a discussion to be had about returning to some variant of Glass-Steagall, but I haven’t seen anything remotely that nuanced or direct in the protests.
And frankly, even when it comes to banks there’s a massive failure of accountability by protesters. While the big banks gouge, it’s not difficult to find options that don’t. Community banks, credit unions, even giant institutions like ING offer banking without the gouging. Yet people still line up outside of BA and Chase because they’d sooner get divorced than kill a few hours changing banks.
Just as we get the government we deserve, so too do we get the corporations we deserve. If they’re too greedy, we don’t have to patronize them, use them, buy their products or allow ourselves to get jerked around by them. As Nancy Reagan advise, just say no.
The new fees are thanks to non-bank special interests like Best Buy, who didn’t want to pay a fee every time they swiped a customer’s debit card.
Hyperbolic terms like “gouging” don’t cover up Joe’s ignorance quite enough.
That may be accurate, at least to some extent, or not. But that banks have chosen to accede to the demands of Best Buy (seriously, BB carries that much clout, as if it could maintain its business without accepting debit cards, the cost of which is already built into its prices?) over its customers is hardly an excuse.
Not buying.
If by accede you mean obey federal law.
Let’s clarify a bit (with me standing somewhat corrected, now that I know what you’re talking about). The new law limits the charges banks can impose on merchants who take debit cards. That does not mean that banks, having that revenue stream limited, are required to make it up on the backs of consumers, which is where Todd’s article goes awry.
The proposition that banks are not guaranteed a profit at every turn is true. That they impose fees wherever possible because they can, and customers gripe but do nothing about it, is also true. Banks are gouging consumers. Consumers don’t have to take it. They can walk away, and they should. If they don’t, then they are enabling the gouging, in which case they have no cause to complain.