An Inmate's View Of Federal Prison

As I have written before, we live and function in an official economy which is run by a very small group of very rich people. Their goal is the continued growth of their profits; yet because of emerging constraints on the earth's natural resources, the rich can no longer grow their profits by unlimited industrial expansion. Increasingly, the only way for the rich to maintain or grow their profits is by robbing the poor.

One way of robbing the poor is by depriving them of their liberty and turning them into extremely cheap slave labor. I discussed this in an earlier post, The Replacement of Petroleum Slaves, which described how the state and Federal prison systems of the United States were being turned into a pool of slave labor with the potential to replace cheap foreign labor for industry in the event of a breakdown of globalism. In this present post, I will expand a bit on that theme, based on some confirming information I received relatively recently.

Several weeks ago I was introduced to a person who had been incarcerated in a Federal prison in the American Southwest around decade ago. I had heard something of his background before we met, and I also had an extensive body of knowledge regarding the prison-industrial complex in various American state prison systems. I wanted to see if my conclusions also applied to the Federal system, so we did an interview.

He told me that there is most definitely a “prison industry” at the Federal level, named UNICOR, also known as Federal Prison Industries. UNICOR is a “wholly owned government corporation created in 1934,” shortly after the creation of the Federal Bureau of Prisons. (Source: Federal Prison Industries, Inc. - Wikipedia) UNICOR produces goods and services from the labor of inmates of the United States Federal Bureau of Prisons. According to Federal law, UNICOR is ostensibly restricted to selling its products and services to Federal government agencies, and cannot sell to the commercial market. (More on that later.)

UNICOR produces many products, including clothing, textiles, electronics, and office furniture. My former inmate acquaintance mentioned that UNICOR's labor rates were cheaper than Chinese labor, and said that back when he was in prison, an inmate earned between 11 cents and 26 cents an hour. He also informed me that UNICOR is publicly traded – thus capable of being influenced by the profit motive.

This profit motive, and the opportunity to use the Federal prison system as an instrument of private profit, has had a predictable effect: Federal prisons try as hard as possible to find excuses to keep inmates imprisoned for as long as possible, since all able-bodied inmates who are not security risks are required to work in prison, either for UNICOR or to support prison operations. Also, according to this former inmate, many people sent to Federal prison are framed, including a highly disproportionate number of minorities. Those who are framed are easy for the other inmates to spot, because in conversation it soon becomes obvious that these people do not know how to commit a crime. Native Americans accused of crimes are predominantly judged under Federal law which is much harsher than state laws, and leads to much harsher sentences.

According to my interviewee, prisoners working for UNICOR are not provided with many of the worker safeguards common in private industry. He told me of times where he and other inmates had to dispose of or recycle old electric power transformers containing PCB's, without any protective clothing or safety measures. (By the way, this statement about inadequate worker safety is corroborated by other sources, such as “UNICOR Continues To Use Prisoners To Recycle Electronics,” The Real Cost Of Prisons Weblog, 20 April 2009; and “Prisoners and Workers Poisoned By Prison Recycling at UNICOR Are Suing,” The Real Cost Of Prisons Weblog, 11 August 2009.)

As for prison culture, my interviewee told me that gangs are largely in control at the various prison units, except for the maximum security units. However, the prison guards regularly try to instigate trouble between prison gangs. We discussed the impact of prison culture on the broader American culture. At this point, the interviewee was joined by his spouse, who talked about how with many people from minority neighborhoods being singled out for lockup, the culture and families in these neighborhoods were being ruined. Children in these neighborhoods were now being conditioned to grow up as criminals, due to corrupt and excessive application of police “enforcement” in the places where these children live.

This led to a discussion of ways in which minority culture could be repaired in the United States. My interviewee had two immediate suggestions: first, get rid of mandatory sentencing laws for non-violent crimes; and second, stop the American “war on drugs” as it is now being waged. The interviewee's spouse had suggestions for how concerned and caring volunteers could go into minority neighborhoods to provide exposure to opportunities for learning that would not otherwise be available.

For me, this interview was yet another confirmation of the deliberate breaking of poor neighborhoods and minority communities by the dominant holders of power and wealth in the U.S. It was also a confirmation of the corroding, corrupting nature and effect of growth capitalism. Truly, “the love of money is root of all the evils.” (1 Timothy 6:10) In research that I did following this interview, I found more information on UNICOR's status as a publicly traded company, as well as the efforts of state prison systems to imitate UNICOR. Here are some links:

• ““Private Prison Industry” Experiences Boom,” Leslie Berenstein, Copley News Service, 11 May 2008. This describes the public trading of UNICOR stock, among other things.

• “Dr Boyce: How Companies Make Money off Prisoners,” BLACKVOICES, 28 July 2009.

• “SLAVERY ON THE NEW PLANTATION - Hugo Pinell,” Kiilu Nyasha, December 2006.

• “UNICOR VI (GSB: DCDave's Column),” a page of footnotes accompanying a longer article on UNICOR. Note 6 is troubling, as it hints that UNICOR may be selling its goods to private parties in addition to the Federal Government, in violation of Federal law.

• “Beyond the Prison Industrial Complex: Class warfare from above,” Michael Parenti, Covert Action Quarterly, 29 August 2001. This article gives a slightly different view of the possible motives behind the recent expansion of the prison-industrial complex.

• “Workin' for the Man,” Nora Callahan, The November Coalition

One last note. We live in a time of severe economic distress, with falling tax revenues at the State and Federal levels, and states that are unable to balance their budgets. Yet you can just bet that next year, in states where the private prison industry or the prison-industrial complex has gained a foothold, there will be lobbyists pushing for an expansion of harsh mandatory sentencing laws for non-violent crimes – even though there's no longer any money to enforce such laws. I think of the mess these people have already made in California, or of the mess that people like Bill Sizemore and Kevin Mannix would like to make in Oregon.

A Fight Among Cannibals

We live and function in an “official” economy which is run by a very small group of very rich people. Their goal is continued economic “growth”, yet what that really means is continued growth of their profits. In the days before the present limits on the resource base of the global industrial economy, this growth could be achieved by industrial expansion. But now that our natural resource base has become constrained, the growth of the profits of the rich increasingly comes only by the robbing of the poor.

A prime example of this is the big ongoing Congressional song-and-dance over health care “reform.” It should be fairly obvious that universal health care is not the same as universal health “insurance.” The Congress could have aimed for universal health care for all Americans, regardless of income. The money spent on bailing out the banks and Wall Street could easily have covered the cost of universal health care. The money spent on the Iraq war could easily have covered universal health care. Even under our present arrangement, there would have been lots of change left over. And the elimination of the private insurance “industry”, combined with Federal prohibitions on unjust medical price inflation by pharmaceutical companies and hospitals would have made our care just that much more affordable.

That sort of genuine reform was never seriously attempted by anyone in Congress or the Executive Branch. The medical industry was too strong, having grown to 1/8^th of the total U.S. economy, according to this source: Health Care Reform: Problems for Human Health. The best our leaders could come up with was a proposal for a Government-run insurance plan that would have competed with private insurance companies. Private insurers are at present hideously expensive, with rates that rose at an annual rate of up to 13 percent in 2002 and 2003, and are rising at a rate of five percent per year now. The private insurers were deathly afraid of the mere possibility of Government-backed insurance, let alone genuine health care reform, and worked hard to kill this option, in a Senate Finance Committee vote which took place last week.

The Senate Finance Committee has therefore settled on a “reform” plan that would force all Americans to buy private health insurance by 2013. This plan is a “compromise” worked out by Democrats in order to appeal to Republicans who were afraid of the “Government spending taxpayer money to support socialism!!!” However, under this plan, ordinary Americans would be forced to spend:

• up to 13 percent of yearly (pre-tax) income for a family of four making up to $88,000 a year;

• over $700 a month for a family of four making $66,000 a year;

• and a tax penalty of up to $1500 a year for those who refuse to buy health insurance and whose earnings are less than 300 percent of the poverty level, and $3800 a year for those who refuse to buy health insurance and whose earnings are greater than 300 percent of the poverty level. (Source: “Reform Bill Will Address GOP Fears,” Washington Post, 15 September 2009)

And our leaders call this “fixing health care”?!

I wonder now...so many families are now heavily indebted, having been tricked into buying overpriced houses and overpriced cars, having had to make ends meet with stagnant or declining real wages while the prices of basics like food, gasoline and utilities continue to rise. So many students have been drawn heavily into debt to attend colleges whose tuition continues to rise at a rate far outpacing general inflation. So many people are now either laid off or are on involuntary part-time schedules. So many small business owners have been given the business by this present “recession” that has put them out of business. The only green shoots one sees in the vicinity of many empty and boarded-up strip mall lease spaces are the shoots of weeds rising through the cracks in the pavement. And I do see a lot more people in raggedy clothes next to freeway off-ramps, holding up signs saying something like “Please give. Anything helps. God bless!”

Is the Government going to force these people to spend $700 a month on private health insurance? Is the Government going to hit these people with a $1500 or $3800 a year tax burden if they don't buy insurance? And what kind of insurance would they buy? The insurance lobby and their Republican sock puppets would propose making insurance “affordable” by offering plans with high deductibles in order to “keep costs down.” So that means that Americans are forced to give money to private insurers, and that they get almost nothing in return? If you buy one of these plans, does that mean that eighty or ninety percent of the cost of a doctor's visit is not covered by insurance? That's like getting into an airplane and being handed a parachute the size of a handkerchief. It won't slow you down much, will it?!

Now people like Glenn Beck and the Tea Party organizers claim to be fighting for the American taxpayer. Why are they not protesting this plan to force Americans to buy private health insurance? Why isn't Fox News protesting this? Why isn't Sarah Palin outraged over this? Are the Tea Partyers all “partied-out”? Or are they on the side of the enemy, after all? And why are both Democrats and Republicans helping the insurance “industry” to rape ordinary Americans?

For a rape it is, or to use another metaphor, it is a cannibal feast. Ordinary Americans have now been reduced to little more than a pile of body parts and limbs, some of which have already been picked clean. The cannibals comprise a small group, yet among them are competing interests. Each representative of these interests wants as big a share as possible of the pile of body parts and limbs, because each competing interest wants to grow as fat as possible.

So we have the private prison lobby, which wants to grow rich locking up as many Americans as possible. But wait – if they do that, that will hurt the growth prospects of the real estate “industry,” who will not have anyone to buy their excessive housing inventory. But if people buy houses, and their wages don't rise, they won't be able to afford consumer electronics and cheap Chinese-made goods, and this would hurt Wal-Mart and other big chain stores. Now the medical/insurance complex wants its share of the cannibal feast – “hey, let's extort $700 a month from every American family to fatten ourselves!” But that will mean that people don't have money anymore to go to Starbucks or to keep their cable TV subscriptions, or to buy new cars, or to buy stocks, etc.

What to do, what to do? How will the competing cannibals sort it all out? I don't know. Perhaps they will all get into a fight with each other, killing each other off and leaving the rest of us alone. I have to confess that I would enjoy seeing such an outcome. Lord, forgive me.

Meanwhile, if you want to see an example of genuine citizen rage and not some store-bought Tea Party astroturf purchased by rich lobbyists, here's a link to a YouTube video of a woman delivering a few words to Bank of America. I must warn you that her language is not family-friendly. Yet I say “Amen” to her message. Here's the link: http://www.youtube.com/watch?v=jGC1mCS4OVo

Whole Foods, John Mackey and Single-Payer Health Care

John Mackey, CEO of Whole Foods, recently wrote an essay for the Wall Street Journal in which he argued against any real health-care reform of the sort that would lift the burden of expensive health care off the backs of the working class. Instead, he argued for easing competition restrictions on health insurers as well as making it harder for victims of malpractice to sue their health care providers. (Source: http://opinionator.blogs.nytimes.com/2009/08/17/whole-foods-fight/) This is an interesting statement coming from the CEO of an upscale, “health-oriented” grocery chain that tries hard to pretend to be “progressive.”

Some might take such Mackey's deed as an awful event, but increasingly, I see it as a blessing in disguise. For too long, those who oppose our corporatist state and its masters have seemed to lack a proper target for their opposition. John Mackey has just provided such a target. By this I mean that responding to corporatism by targeting lawmakers is ineffective, since they only listen to people with money. On the other hand, targeting the people with the money is likely to get much swifter and more decisive results.

Many people have responded to Mr. Mackey by calling for a boycott of Whole Foods stores. I agree entirely. I think Whole Foods should be boycotted until one of three things happen: either Whole Foods removes John Mackey, or Whole Foods publishes a statement supporting health care reform including single-payer health care, or Whole Foods goes out of business. I would also suggest something further.

There are several Whole Foods stores in the Portland metro area, including one store on Burnside, on the east side of the river, next to the Laurelhurst Theater. If a number of picketers showed up on a Saturday or Sunday, and I was passing by, I'd be most happy to take pictures, do interviews and write a “citizen journalism” post for this blog. All I'd ask is that the picketers maintain a good testimony of politeness and abide by the law, and that they have a plan for outing and staying clear of any agents provocateurs who might try to discredit them. In this, it might be helpful to study the G20 protests in London that took place earlier this year. If there is any sort of protest or picketing, I'd also encourage other bloggers and citizen journalists to cover such events.

Jonas Brothers and Chinese Heavy Machinery

There's a recent article at Bloomberg regarding Chinese concerns over the U.S. budget deficit (“U.S. Assures 'Concerned' China It Will Shrink Deficit,” http://www.bloomberg.com/apps/news?pid=20601087&sid=as7NE_Rygqpk). The article describes a recent round of Strategic And Economic Dialogue (SED) talks hosted in Washington, and how the Chinese officials present voiced concerns about the extent of U.S. government borrowing and money printing, as well as the stability of the U.S. currency itself. This is understandable, as China holds over $800 billion in U.S. Treasury debt.

What is interesting is the “concerns” the United States has brought to the table. Under President Bush, a large part of these concerns had to do with trying to pressure the Chinese to open their financial markets to investment (and control?) by international firms (think Goldman Sachs or AIG, for instance). Under Obama, the tone has changed and the emphasis has become different. It seems that the U.S. realizes that it no longer has any leverage to insist on greater access by foreign firms to Chinese financial markets. Yet now the U.S. is calling on China to shift toward relying on domestic demand for economic growth rather than exports. According to the Bloomberg article, U.S. Trade Representative Ron Kirk said, “They have to build more of a domestic spending society... [If they do,] software, movies and the creative arts will be a great market for the United States.”

This is really funny. The financial and military arrangements which have allowed the First World and the U.S. in particular to expropriate the rest of the world's wealth are now unraveling. China has so far resisted much of the pressure brought to bear by the U.S. to allow its financial markets to be raped by the likes of Goldman Sachs (although the Chinese are rightly concerned that the large amount of U.S. debt they hold might become worthless). Yet the leaders of the U.S. are still enamored of the idea of trying to get something for nothing. Our trade deficit is now huge, we no longer manufacture much of what we use, and we are running out of financiers of additional debt by which we might buy things from other nations.

So we are now calling on China to stimulate their domestic demand for some of the few things we have left to sell to the world – “software, movies and the creative arts.” Shall we thus give out Jonas Brothers' song downloads or copies of People Magazine in exchange for Chinese tractors, heavy machinery and hand tools? Or how about Hannah Montana or America's Got Talent DVD's in exchange for Chinese furniture?

Escaping The Thanatoeconomic System

“For if they do these things in the green tree, what will be done in the dry?”

- Luke 23:31, World English Bible

Thanatos: death (Greek).

Let me begin with some insightful comments made by blogger Stormchild on my recent post, “Airlines And Moral Systems Failure.” That post dealt with the financial squeeze now being experienced by the major airlines due to Peak Oil and economic collapse, and my belief that airlines are now resorting to cost-cutting measures that are beyond the bounds of reasonableness, measures that put the flying public at risk.

Stormchild observed that, “...we live in an economic system that rests, ultimately, on human sacrifice, and almost none of us realize either this fact or its implications.” She also observed that, “In order to function, our system actually requires a permanent underclass, AND needs a certain number of people to be deprived of their livelihoods at regular intervals. [Consider the obscene fact that a company's stock price goes up when it indulges in mass firings.] This same system places little or no value on preserving human lives; business schools in this country will actually teach you how to determine when liability exceeds profitability – a.k.a., how many people you can afford to kill before it gets too expensive.”

These observations are quite accurate. The fact that our present official globalist economy functions in this way speaks volumes about the motivations of the masters of this economy. Our large-scale, energy- and capital-intensive industrial economy is a predatory machine run by predatory masters, and those of us who are not rich enough or well-placed enough to be its masters are its prey. That means that the majority of people on earth are prey. Over the duration of this economy, the conditions imposed on us who are prey have oscillated between moderately decent and horrible, against a backdrop of industrial and economic expansion due to the acquisition of ever larger quantities of natural resources and labor which served as feedstocks for this economy.

Now this economy and its masters are under stress as its resource base declines, and as its base of capital also shrinks. This should be of great concern to us who are the world's prey, because of the well-known tendencies and behaviors exhibited by predators under stress. The recorded history of such tendencies and behaviors give us a clue as to what we can expect from our present globalist, corporatist system and its masters as that system experiences increasing stress.

I have written about the need to foster resilient neighborhoods as preparation for a post-Peak world of economic collapse. My writing has been partly a blind, groping, feeling exploration for solutions to the immediate, present threats that I see in neighborhoods, communities and cities in the U.S. In thinking about these things, I have also read many of the writings of other thinkers, people whom I believe to be far more knowledgeable than me regarding Peak Oil, climate change, and their likely societal effects.

But I have noticed a tendency among many of these writers to think only of the scientific or technical implications of the effects of resource constraints and climate change on our social arrangements. So there are endless discussions about how post-Peak oil production declines will affect finance, global shipping and land-based transportation, or about the importance of mass transit and localized food production, or about personal preparedness along the lines of organic gardening and relocating to ideal “lifeboat” locales. Those who discuss “resilient communities” have tended to approach the subject by laying out high-level theories of optimum social organization, organization whose effectiveness is often bolstered by technological advances (see Global Guerrillas: THE RESILIENT COMMUNITY, for instance). The sense of many such writings is that resilient communities are a futurist vision that's always just around the corner.

These theories have value, and I would not discourage them. Yet they do have a blind spot. Pardon me for saying so, but many of these discussions and theorizings sound so very “upper middle-class white.” Therefore, they ignore the present relation between our predatory global economy and the large numbers of people who are its prey. This is a dangerous omission. Consider the dictionary definition of resilience: “an ability to recover from or adjust easily to misfortune or change.” In order to have this ability, one must have a stable resource base from which to draw in order to deal with the stresses of misfortune and change. Those who are deprived of that resource base are not resilient, but brittle and prone to break down. Consider a well-fed, athletic, well-rested teenager who is suddenly thrown into an ice-cold pool. The experience is undoubtedly a shock to him, yet once he swims to the side and gets out, he easily recovers from it. The same is not true of someone who is seriously ill, malnourished and sleep-deprived.

Being treated as prey robs people of the reserves of strength they need in order to be resilient, for all their resources are either consumed in coping with their predators or are taken from them by their predators. Here are some recent examples of our masters treating us as prey:

• The U.S. Congress has been trying to pass broad “food safety” laws in response to public concerns over tainted food and food recalls. The problem is that these laws don't correct the bad practices of the large agribusinesses that produce tainted food, but rather, the laws impose such a huge regulatory burden that they drive small, sustainable farmers out of business. Thus they force us to rely on the big agribusinesses instead. Just last week, the House of Representatives passed such a bill – H.R. 2749.

• U.S. mortgage lenders are, by and large, not cooperating with the recently enacted $75 billion Federal program to prevent foreclosures. This is because lenders who foreclose are able to collect lucrative “junk” fees on delinquent loans. Such fees include late fees, title search fees, legal filings, and appraisal fees. (Sources: Homeowners ask government in lawsuit: Where's the foreclosure relief?, and Profit motive may trump plan to modify mortgages.) Heaven help you if you get in trouble on your mortgage, because the banks sure won't – they get more money from making you homeless.

• Amid California's recent budget crisis, the Governor was proposing a budget that would protect the outlay of State funds to the private prison industry – even though there were many headlines about the need to slash social services. At present, there are three corporations operating private prison chains in the not-so-Golden State. (Sources: Schwarzenegger Talks Private Prisons and Budget Cuts | Youth Radio, and http://reason.org/blog/show/solving-the-ca-budget-governat, from Reason Magazine which should perhaps be named Un-reason Magazine for praising such an evil arrangement.) Meanwhile, “Governator” Schwarzenegger seems uninterested in genuinely rehabilitative ways of dealing with California's prison population, as these might be bad for somebody's business.

• The City of Los Angeles has been criminalizing homelessness under the direction of its police chief, William Bratton and his “Safer City” initiative. Under this initiative, it is illegal to sit, sleep or store personal belongings on sidewalks and other public spaces. Also, if you look shabby and are caught jaywalking or loitering, the police come after you, whereas the police don't seem to notice the same offenses when done by people who don't “look” homeless. Los Angeles is just one example of the broad criminalization of homelessness in America. (Sources: Los Angeles accused of criminalizing homelessness, LA is "Meanest City" for Homeless: Study, and A Dream Denied: The Criminalization of Homelessness in U.S. Cities.)

I believe that these examples illustrate how our present economic masters will increasingly treat us as their opportunities for further enrichment through economic growth disappear. Even while it was expanding, the official economy always had catabolic tendencies – i.e., there were always some members of that economy who were consumed by it rather than being allowed to function as members of that economy. But as our economy continues to contract, its catabolic tendency will be amplified, and may well become its main characteristic. As more and more people slide from middle-class status to poverty, these people will increasingly discover what it means to be preyed upon, as they are consumed in order to satisfy those who are still rich.

If these things are so, then figuring out how to build resilient communities must take into account what sort of people are the prospective members of that community. Are they poor? Are they people of color? Are they both? If so, then they must not only contend with the general exigencies of post-Peak Oil, climate change and general economic collapse, but they must also be able to devise effective protection from their predators. (By the way, most of us are going to get a lot poorer.)

This is something that I don't hear many resource and sustainability activists talking about. I don't think, for instance, that the Transition Towns movement has thought about this. But this is what concerns me. How does someone keep from having his house repossessed? How do people of color protect themselves from police racial profiling and selective arrest? Where can homeless people go to find a place of stability where they can regroup? If you get thrown in jail – even for a stupid reason – how do you find a job afterward? Some of the abandoned houses I showed in my last post are in my neighborhood. How do we fix problems like this? How can poor people rebuild social safety nets that are now being dismantled by the rich? How can we stop getting jacked?

These are questions I've tried to answer in my posts on neighborhood resilience. I'm a little frustrated right now, because I haven't come up with satisfactory answers. Maybe I'm just not clever enough. But why are there so few other “collapse-aware” thinkers who are trying to tackle these things? We need answers, and right now.

The Abandoned House Syndrome

Recently, the following houses caught my eye:

House #1, Lake Oswego, OR. This house has been abandoned for several months.

House #2, Lake Oswego, OR. This house has been abandoned for a year. The bank that owns it attempted an auction, but it failed.

House #3, East Portland. See the lockbox on the front door, as well as the trash and weeds in the front yard.

House #4, East Portland, OR. Note the broken rear window. It looks like someone kicked it in.

House #5, East Portland, OR. This house has been abandoned for a year. The City had recently put a ticket on the house for weeds and "public nuisance." When I took the picture, however, someone from a property management company was mowing the lawn. This house was the subject of another failed auction.

Four of these houses are in various stages of tracing out the same trajectory of history. They were all offered for sale by homeowners who found themselves in trouble of one kind or another and who could no longer pay their mortgages. None of the owners was able to sell at the desired asking price. All these homes fell into foreclosure and became bank-owned. All are now abandoned.

House #3 does indeed have a lockbox on the front door, indicating that it may have been purchased by a new owner who simply hasn't arrived yet. But in that case, where is the realtor's sign with a big “SOLD” sticker on it? Also, notice the signs of abandonment here as well – the trash in the unkempt front yard, for instance.

I didn't go intentionally searching for houses like these; rather, I noticed them as I was going about my daily business. However, I am sure that searchers could find many houses like these by now, not only in Portland and Lake Oswego, but in many other cities.

These houses illustrate a few interesting trends. First, at the very beginning of the present economic collapse, there were some writers on the subject of collapse and preparation who suggested that it might be possible for homeowners in trouble to negotiate more lenient loan payment terms with their lenders, because it was assumed that banks really don't want to own homes. But while it may or may not be true that banks don't look forward to owning homes, it has definitely proven to be true that banks are quite willing to take homes away from people who are unable to pay their home loans under terms originally negotiated.

Why are banks taking houses? Because the assets counted on the balance sheets of most banks consist of interest-bearing loans made to supposedly credit-worthy borrowers. When those loans became worthless due to the default of the debtors, the only other assets banks could carry on their balance sheets were the items of collateral used to secure the original loans. Such collateral included the houses of people who could no longer make their house payments.

Why are the banks holding these houses for such a long time? Because a huge gulf has arisen between the prices that banks and other holders of real estate would like to charge for their assets versus the actual price that most people can afford. Yet these houses and other real estate are still being carried on the banks' books at the price that they would have commanded near the height of the recent real estate bubble, when prices were high. For banks to sell foreclosed and repossessed properties at a price that would actually work in our present market, the banks would have to admit that their so-called assets had lost a huge percentage of their notional value. This would shrink the balance sheets of banks to such an extent that many more of them would fail.

The recent government bailouts of the banking system should have allowed more banks to remain solvent even as these banks either negotiated more merciful loan payment plans with homeowners or as the banks sold repossessed homes for a more reasonable price. Yet the bailout money was not used by the banks to enable mercy and fair play. Rather, it was used to increase shareholder dividends and CEO bonuses. Now, therefore, the banks hold “auctions” in which they try to sell foreclosed properties for inflated prices. When no one is willing to submit a satisfactory bid, these houses are taken off the market in the hope that one day, market conditions will magically improve, at which point another auction or sale will be attempted. Some banks, desperate to raise homebuyer demand by limiting supply, are now paying demolition crews to bulldoze abandoned homes, including recently built or nearly built McMansions. (Sources: http://www.cnbc.com/id/30580830; http://blog.mlive.com/flint-city-beat/2009/07/kildee_a_smaller_flint_equals.html; and this - http://www.jsonline.com/watchdog/watchdogreports/50548282.html for a slightly different twist.)

Meanwhile, the weeds and moss grow, the trash piles up, the paint peels, the banks must pay a property management company to look in on their properties and clean up the places, and the occasional window gets kicked in...

The Return of the NINJA (or at least his cousin)

Beware – the NINJA is back! Or at least, his cousin. No, I'm not talking about some Oriental warrior dressed in dark, baggy clothes, some disciple of ancient methods of killing people barehanded, taught by some “college of violent knowledge.” Nor am I talking about the return of some indie, Asian-themed horror movie.

But I'm sure you will all remember the NINJA as I begin to describe him. He is the No Income, No Job, No Assets adjustable-rate, subprime loan foisted off on many working-class families by predatory lenders in the troubled years before our present economic collapse. He was seemingly run out of town in 2008 through the reluctant posturing of Federal lawmakers pushed by a wave of public outrage. But he now seems to be sneaking back upon us, albeit in a somewhat mangled form. Or maybe that's his one-armed cousin I see.

Observe the letter below:

I recently got this letter in the mail. I am sure it was sent to everyone in my neighborhood. (By the way, I live in a working-class neighborhood.)

At the top, you can see a statement in bold capital letters: “FHA BENEFITS UPDATE STIMULUS 2009.” Below are the words, “Passed by Congress and signed into law by the President.” The purpose of these words is to fool their readers into thinking that this letter is part of some Federal program. Next come the words, “HUD-approved Flagship Financial Group has been directed to:

1. Get FHA homeowners instant relief yadda yadda...

2. Yadda yadda...

This is a continuation of their opening ploy. “Flagship Financial Group has been directed...” By whom? By themselves and their own lust for your dollars? Certainly not by the Government!

Their “program” is available to anyone who has an FHA loan, with “No Appraisal, No Income Verification, No Credit Score Qualification, and No Out-Of-Pocket Costs,” according to the letter. This is not quite a NINJA loan, since it is meant for people with FHA loans who presumably are living in “starter” homes. Maybe we could call this a “NINJ” loan. The letter further advertises “4.375% Fixed Rates!” Although I don't owe any money on my house, I called their 1-800 number to ask about this 4.375% rate – just as a “private detective” exercise. When I asked whether this was a 30-year rate, the agent replied that due to present market conditions, they couldn't offer 30-year loans with this rate. However, they were willing to offer “hybrid” loans with this 4.375% rate for the first five years, then an adjustable rate afterward.

The agent's use of the word “hybrid” was quite creative (almost as creative as the use I heard this past week for the term “locally owned,” as I described in this post: "Localism" And Truthfulness). To me this sounds the same as the dishonest adjustable-rate mortgages with tempting introductory “teaser rates” pushed onto working-class families in the earlier part of this decade.

What all of this tells me is that in our present time of manifest economic distress, there are scam artists out there who are continuing to fleece ordinary people by playing on the crisis and on the coping strategies employed by these ordinary people. It is important to remember the basic coping strategies for these times, the strategies of frugality, which consist of paying down debts, becoming self-sufficient and living within one's means. Remember also that if something looks too good to be true, it usually is – and trying out things that are too good to be true may cost you everything you own.

One other thing this letter shows is how effective our lawmakers have been in reining in the excesses of the financial “industry” – which is to say, that they haven't done anything at all.

"Localism" And Truthfulness

I'm in Southern California this week for a job assignment. I drove down on Sunday. Yes, that's right – I drove instead of flying. Having witnessed the death of several airlines during the last oil price super-spike, I figured that the surviving airlines may be going beyond such well-known cost-cutting measures as charging extra for all luggage and cutting back on in-flight snacks. They may also be cutting back on maintenance and mechanics' salaries. Accuse me of being overly suspicious if you like. I don't want to find out the hard way that my suspicions are right.

Anyway, I was driving through some town – I don't remember if it was Grant's Pass or Ashland – when I saw a very curious sight. It was a billboard advertising a TV station, a local NBC affiliate. Among other things, the billboard proudly portrayed this station as “locally-owned,” with a strong “community connection.” I thought it strange that the “locally-owned” label was being applied to a TV station that's part of a national media corporation's broadcasting network.

But that wasn't all. A bit farther on, in Redding or thereabouts, I was listening to a classic rock station as its DJ was giving the station identification announcement, which enthusiastically stated that this station was “locally programmed.” Again, I was struck by the oddness of this announcement, especially since this station sounded very much like other oldies stations I've heard on trips between Portland and So. Cal., and it was playing the very same “oldies greatest hits countdown” I had heard on another oldies station a minute or two beforehand. This was followed a while later by a commercial for a Chevy dealership which boasted that it was “locally owned and family operated.”

These instances show how deeply and swiftly the “localism” meme is penetrating the American consciousness. Many ideas that would have been considered unacceptably countercultural even a few years ago are now going mainstream, as more and more Americans are looking for alternatives to our breaking “official” systems. Unfortunately, the masters of those existing official systems often try to co-opt the alternatives. Frequently, this co-opting takes the form of re-branding and re-packaging the official systems to make them look like the alternative.

This, of course, is known in plain English as lying. I think I heard and saw a few lies on Sunday. It is now well known that building and supporting local economies is one of the keys to building resilient communities that are able to survive the exigencies of Peak Oil, climate change and economic collapse. One key to supporting local economies is for local residents to buy from local businesses. But I always thought a “local business” was defined thus:

• 100 percent local ownership (no “owners” or “part-owners” who are far away)

• 100 percent local control (as in management and oversight)

• Characterized by a revenue stream which flows from local residents to the local business and back again, with the vast majority of that revenue stream staying in the local community.

Based on this definition, I don't see how the businesses whose ads I saw and heard could try to sell themselves as “locally owned.” Maybe the phrase “locally owned” is now under attack, just as big agribusiness is trying to hijack the term “locally grown” (see http://earthfirst.com/is-food-still-%E2%80%98local%E2%80%99-if-it%E2%80%99s-grown-by-a-nationwide-brand/, for instance), and as big agribusiness destroyed the term “organic” (with Federal government help) in its bid to eliminate an alternative that threatened the factory farm.

But I'm open to correction – I freely admit that I may be wrong in my assessment. Would someone therefore please tell me how a TV station affiliated with a national media company can be “locally owned?” Does the revenue generated by such a station stay entirely within the community in which the station is located? How is a radio station owned by some giant network like Clear Channel “locally programmed,” especially when you can hear its very same playlist replicated on other stations owned by the same network? Does “local programming” mean the times once or twice an hour when the DJ asks people to phone in their song requests and someone calls saying “Yo, dude, could you play some Billy Joel?” Is a dealer of autos made by one of the Big Three automakers (not so big now) really “locally owned” in the fullest sense of the word?

* * *

I'm planning to go out to lunch with some co-workers tomorrow. It will be a good opportunity to catch up on personal news. But I will also ask about the culture of So. Cal., and will try to see if there have been any healthy changes. I may write about my findings in another blog post.

Breaking Neighborhoods For Fun And Profit

(Warning: this post is long.) The masters of the official economy are threatened by self-sufficient, resilient neighborhoods and communities, as these communities don't make a good “growth market” for the products produced by the official economy. People who own their own land and homes outright, who don't have to pay a mortgage, who grow their own food, who provide for their own needs, who live frugally – such people threaten the profit motive of the big growth capitalists. These growth capitalists cannot easily take advantage of people as long as people are self-reliant.

In order therefore to insure “growth,” corporatists must break self-sufficient, resilient neighborhoods and communities. It is only when such social units are broken and the means of self-reliance are taken away that corporatists can make a prey out of the people who comprise such neighborhoods and communities. It is only when fully-paid houses and profitable locally-owned business are wiped out that large developers and big-box stores can continue their expansion. By breaking perfectly good things these corporatists can sell more newly-manufactured things to replace the things that were broken, and they sell the new things at greatly inflated prices.

One of the tools of this breakage is the abuse of eminent domain. “Eminent domain” is defined in Wikipedia as “...the inherent power of the state to seize a citizen's private property, expropriate property, or seize a citizen's rights in property with due monetary compensation, but without the owner's consent.” This power has always existed in the United States, being part of the common law inherited from England. However, the U.S. Constitution's Fifth Amendment restricts the Federal government's taking of land to that which is taken for expressly public use.

While the Federal government has always been limited in the purposes for which it could seize or restrict land use, the states were under no such limitation until the ratification of the Fourteenth Amendment. In 1896, the Supreme Court held that the eminent domain provisions of the Fifth Amendment were incorporated into the Due Process Clause of the Fourteenth Amendment, and were now binding on the states. That meant that the states were prohibited from seizing anyone's property unless that seizure was for a clearly public use, such as a public road or dock or harbor.

That is the concept of eminent domain that most Americans have in their minds today, and it was taught to us from grade-school civics classes and onward. Yet most Americans don't know that this definition is seriously out of date, and has been since before many of us were born. As early as 1954, as cities across the nation struggled to “reduce blight” within their environs, the Supreme Court ruled that the District of Columbia could seize “blighted” properties within designated “slum” areas and transfer these properties to private developers for the purpose of “urban renewal.” This set a precedent for other cities, which engaged in wholesale condemnation and seizure of properties within areas of designated urban blight. These areas were inhabited disproportionately by poor and minority residents, who were displaced and severely disrupted by the seizure of their homes, and who were unable to afford the new dwellings and amenities constructed in these zones as part of “urban renewal.”

This Supreme Court decision allowed cities to redefine taking private property for public use as “taking private property for the public good.” This became the justification for cities seizing homes and other real estate and transferring these properties to other private parties because of some perceived “public benefit” arising from the transfer. This decision kicked off a wave of such seizures, most of which occurred in poor, minority communities targeted for “gentrification” and “urban renewal” by city planners. Homes were seized and razed to make way for expensive condos and upscale shops, among other things. In the state of Kansas, 150 homes were condemned to make way for a racetrack. In Michigan in 1981, the state Supreme Court allowed the demolition of over 1000 homes and 600 businesses in the city of Poletown to make room for a new General Motors plant, in order to serve the “public purpose” of providing jobs and economic growth. The property rights group Institute for Justice found 10,000 cases from 1998 to 2002 of local governments in 41 states using or threatening to use eminent domain to transfer homes and properties from one private owner to another.

One key thing that happened from 1954 onward was that as poor and minority neighborhoods were broken up and redeveloped, cities and powerful business franchises began to seize ever more mainstream houses and neighborhoods – including homes that were increasingly owned by non-minority, educated middle class residents. Many of these people had the financial means to fight the seizure of their property or the declaration of their property or neighborhoods as “blighted.” And fight they did. One notable fight (which unfortunately was lost) was Kelo versus City Of New London, a case between a group of neighborhood residents (including resident Suzanne Kelo, after whom the case was named) and the City of New London, Connecticut, which used eminent domain to seize the homes of these residents in order to transfer the underlying land to a developer for a dollar a year. The Connecticut Supreme Court ruled that if an economic project creates new jobs, increases tax and other city revenues, and revitalizes a “depressed” (even if not blighted) urban area, then it qualifies as a public use. When the Kelo neighborhood residents appealed to the U.S. Supreme Court, it ruled 5-4 against them. (Interestingly, this decision was supported by all four of the justices appointed by President Clinton, who supposedly “felt our pain” and was supposed to be for the little guy.)

The Kelo ruling caused quite a backlash and outcry in the U.S., and several states passed laws or ratified changes in their constitution to forbid the use of eminent domain to transfer property from one private party to another. However, eminent domain abuse is still alive and is doing quite well even today. A particular case that comes to mind is the City of Fullerton, California.

In the early part of this decade, the neighborhoods near the Fullerton train station were mainly comprised of small older homes typically inhabited by renters. Most of the residents were Hispanic and working-class. But around 2003, that area was targeted for redevelopment as part of the City Council's plan to turn the downtown area into an entertainment/upscale living magnet. Most of the old homes were torn down and replaced by very expensive “townhomes” and loft condo's. Many of the older downtown antique and specialty businesses were replaced by bars and nightclubs. (In fact, I believe the City managed to cram over 40 bars into the space of a few city blocks! Talk about taking a hit to the Solari index!)

I saw the transition as it took place, because there was a time when I had to catch the Metrolink train in Fullerton to get to work. I read of the toll the transition was taking on the non-alcohol-serving downtown businesses and nearby neighborhoods who had to endure the antics of drunken visitors on weekends. I saw increasing numbers of homeless people “from every kindred, tongue and tribe” hanging out at the Starbucks on Harbor Boulevard in hopes of receiving some help from charitable passers-by. I must admit with shame that at the time, I never connected the dots between Fullerton's “redevelopment” and some of the things I was seeing, nor did I question how the City had managed to get hold of the redeveloped land.

Now it seems that this bit of redevelopment was not enough for the City. According to the Fullerton Observer, the City Council was scheduled to vote on the 5^th of May on whether to expand the City's redevelopment area by 1,165 acres, thus placing nearly 25 percent of the entire city under its redevelopment agency and its expanded powers to use eminent domain, divert property taxes and subsidize development. (I wonder how the vote went.) Included in this area are properties which do not meet strict definitions of “blight,” as well as several well-known and highly successful niche small businesses like Bob Marriott's Fly Fishing Store. (I almost stopped in there several times when I was living in So. Cal.) By the way, it seems that the City's redevelopment agency is now coming up with some creative definitions of “blight.”

Eminent domain and the threat of redevelopment are used to displace people whose homes are paid for, whose homes are older and thus not subject to high property taxes, and who are in some cases accused of “overcrowding,” as stated by Fullerton Mayor Don Bankhead. Eminent domain and the threat of redevelopment are some of the methods of choice for cities which seek to grow their tax revenues. It is not surprising that the incidence of eminent domain abuse rose with the recent real estate and construction bubbles in the American economy.

But the abuse of eminent domain is a direct threat to the building of households, neighborhoods and communities that are resilient in the face of the social shocks now arising from Peak Oil, climate change and economic collapse. For the building of such resilience and of alternative safety nets depends on having a stable and guaranteed place to live. The threat of foreclosure and the worry of indebtedness are already enough of a destabilizing force without the threat of some municipality taking property from its citizens in order to increase its tax revenues or satisfy some big business. The problem of eminent domain abuse must therefore be forcefully addressed by residents of neighborhoods and communities that seek to become resilient. Otherwise, why create a permaculture garden in your backyard or form a neighborhood barter network if you and your neighbors are at constant risk of being thrown out of your homes? Why take in displaced relatives if doing so will expose your home to seizure on account of “overcrowding”?

One last note: Some members of the “libertarian” camp have jumped on the “Down With Eminent Domain!” bandwagon. But they have a devious agenda: they seek to define “eminent domain abuse” as the placing of any restriction on land use by any government agency. According to this definition, restrictions on land use arising from environmental protection concerns would be classed as “eminent domain abuse.” I thoroughly disagree with such a definition. In my opinion, it is bogus and childish. I firmly believe that to the extent that people legitimately own property at all, they must realize that they “own” it only as a trust and stewardship, and that their use of their land affects others even when those others don't live on the same land. Therefore I thought Oregon's Measure 37 was a huge mistake, as it allowed a bunch of greedy landowners and developers an opportunity to try to turn Oregon into another Southern California – strip malls, freeways and housing tracts from one end to the other. I was glad when Measure 49 passed. (In fact, I voted for it.) I also support environmentally responsible restrictions on land use.

Sources:

• “Public Power, Private Gain: The Abuse Of Eminent Domain,” Dana Berliner, Capitalism Magazine, 14 February 2005, http://www.capmag.com/article.asp?ID=4420

• “My Turn | Fight Property Abuse,” David T. Beito, Tuscaloosa News, 26 April 2009, http://www.tuscaloosanews.com/article/20090426/NEWS/904259948

• “Report: Eminent-Domain Abuse Widespread,” Jon Dougherty, WorldNetDaily, 22 April 2003, http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=32172

• “NOW – Politics and Economy: Eminent Domain,” PBS, 24 June 2005, http://www.pbs.org/now/politics/domain.html

• “Eminent Domain Being Abused?”, 60 Minutes, 4 July 2004, http://www.cbsnews.com/stories/2003/09/26/60minutes/main575343.shtml

• “Kelo V. City Of New London,” Wikipedia, http://en.wikipedia.org/wiki/Kelo_v._City_of_New_London#History

• “Victimizing The Vulnerable – The Demographics of Eminent Domain Abuse,” Dick M. Carpenter II, Ph.D and John K. Ross, Institute for Justice, June 2007, http://www.ij.org/index.php?option=com_content&task=view&id=1621&Itemid=249

• “Opening The Floodgates: Eminent Domain Abuse in a Post-Kelo World,” Dana Berliner, June 2006, http://www.castlecoalition.org/index.php?option=com_content&task=view&id=189&Itemid=113

• “Myths and Realities of Eminent Domain Abuse,” Castle Coalition, June 2006, www.castlecoalition.org/pdf/publications/CC_Myths_Reality%20Final.pdf

• “Blight Or Corporate Welfare In Redevelopment Area Expansion?”, Fullerton Observer, Mid-April 2009, http://www.fullertonobserver.com/

• 1 Kings 21:1-24, World English Bible (a public domain translation), http://ebible.org/web/