Purple Magazine
— Purple 25YRS Anniv. issue #28 F/W 2017

Money volatility


Last April, I had to replace my 13-year-old daughter’s iPhone 4, which had died. I was told by a salesperson that iPhones have built-in obsolescence, meaning that Emma’s might have self-destructed. I was surprised and nervous about my iPhone 5, which is also what I bought for her.

A few weeks earlier at a dinner party, I was telling a pretty high-end art dealer about an artist I’d recommended to another high-level gallery owner, who quite liked the work. But, as I later learned, my friend’s works weren’t expensive enough for that level of operation. The dealer I was speaking to told me he’d organized a show that cost him €100,000 and sold well but didn’t return a profit. He needs to sell more works in the upper five-to-seven-figure range. An artist he represents, sitting next to him, overheard us and was disgusted by our talk of money.

I started to wonder if my daughter’s obsolete iPhone 4 and overpriced art were related.

The roots of this go back to the credit-card industry. In the 1970s, Delaware and South Dakota modified usury laws to allow credit-card companies to relocate to their states and charge cardholders higher interest rates. In the early 1980s, Savings and Loan institutions, which served the housing and domestic economy, were allowed to function as banks, removing interest-rate ceilings on deposits and putting them at greater risk for default when interest rates went up on loans. Many failed. Yet condominium and commercial real estate sales were on the rise, increasingly to homebuyers on limited budgets. Banks became trading institutions and transformed debt into a tradable asset. Many questionable mortgages were bundled together to increase margins. “Adjustable-rate” and “interest-only” mortgages offered low interest rates that were stable for a short term, making homes affordable, but increased with inflation, which most buyers weren’t aware of. Profit was the goal. Housing price inflation resulted in the burst bubble of 2008.

The service economy that dominated the West after World War II was designed to transform the military industrial complex (after 500 years of global fighting) into domestic industries. The culture and communications industries that evolved were transformed by electronics, which turned banking into 24-7 trading, which also created new varieties of mergers and conglomerates like Time-Warner, Bertelsmann, and Hachette. Now we have Google, Microsoft, Apple, Amazon, and startups. Each attracts mass-market consumers.

The problem is that we consumers are the service industry’s assets and investors (in phones, computers, software, and products). Yet the financial system has grown to the extent that Wall Street, hedge-fund managers, media conglomerates, and newly created billionaires have all but usurped political power and can decide the fates of service and communication industries as well as politics. Consumers feed growth and ensure profit, yet are treated like rubes playing the slot machines in Las Vegas (slot machines are programmed for profit). And instead of benefiting from the services they empower, consumers are offered trickle down while profits accrue for the 1%, who hoard tens of trillions of dollars in offshore accounts. This is insane.

Service industries like the postal service, communications, banking, electricity, and power were once government-controlled. Franklin Roosevelt and Joseph Stalin brought electricity and plumbing to the countryside. Hitler invented highways.
Telephones, radio, television, and news media changed the way the world communicated and, in the process, created billionaires who march in lockstep with financial markets and influence value. They get rich while the rest of us are rewarded with pornography, entertainment, and job loss. A few galleries and their extremely wealthy clients maintain the value of art. Smartphones will create new kinds of artists, like the grumbler at the table the night I was talking to the art dealer. But value is in a precarious state. The institutions that reign in profit have been deregulated and privatized. Money has disappeared into the secret accounts of oligarchs everywhere. People once had jobs. Now they freelance, accrue debt, and talk about a universal basic income.

Karl Popper maintained that societies should minimize suffering and maximize freedom. In The Open Society and Its Enemies, he suggested that people-run institutions could regulate services and finance while allowing freedom of investment and that those institutions should take a greater role in policy. MBAs use algorithms to maximize profit — that’s their job. Financial deregulation has increased suffering and decreased personal freedom via such manipulations. This isn’t a problem of algorithms or globalization, but of sharing versus the natural human instinct to increase and hoard. Service consumers are the true investors in those industries and should be treated as such, and not as the dupes of innate greed and market strategy. People-run, institutionalized togetherness could decrease pain and increase freedom. So let’s invest in a more open society, fire the oligarchs, redistribute the money in infrastructure and education, and work together to run institutions as well as they can be run, for the good of all consumers.

[Table of contents]

Purple 25YRS Anniv. issue #28 F/W 2017

Table of contents

purple NEWS

purple 25 YEARS 25 COVERS





purple BEAUTY


purple LOVE


purple NIGHT

purple STORY

purple SEX

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