An interesting piece over at Democracy Now!- Thomas Geoghegan takes another perspective on the financial crisis we are in. Also David Brooks over at NYT with his take. I’ll summarize for you. I promise this has something to do with photography:
Brooks details the two narratives that have emerged; you either think that it was Greed, where government deregulation lead to an excessive expansion of the financial sector, or you believe in Stupidity, where overconfidence, too many MIT grads and a phony understanding of risk combined to produce a tsunami size correction. Or some combination of both.
Geoghegan has a caveat to the first narrative: usury. We have broken the basic law of finance that has existed since shekels were in circulation, the charging of excessive amounts of interest on loaned money. What is interesting about his analysis which I encourage you to listen to or read (it’s in Harpers) is that he connects the dots in a way that you can explain to your parents from the “Greatest Generation” about why things are so different today.
My parents are in their seventies and eighties, and remember the bulk of their lives spent before credit cards. Or should I say “saved” before credit cards. With the exception of their home, they bought everything with cash, like many people of their generation. They were wage earners, working most of their lives for one employer. Both were in powerful unions. They experienced a real wage growth from the 50’s through the early 70’s.
And what happened in the 70’s, the first oil shock, and subsequent recession, then the slow climb to Reaganomics is where the change begins. It was at that time that they got their first credit cards. In the beginning, it was nearly impossible to get them to use them. It basically went against everything they had been taught about financial prudence.
Geoghegan talks about how a few changes to the banking laws removed the caps on interest charged. Ever wonder why all the credit card companies are located in Delaware and the Dakotas? At first the states regulated interest, most had tough usury laws, and the limits were less than 10%. But some states had no limits, like Delaware and South Dakota, and banks began locating their credit card divisions there. Long story short-the credit card companies could charge whatever rates they wanted across state lines.
The joke in my family is that my dad spent more time on strike than at work. The contracts at his factory came up every four years, and every four years, they went out. There was not one contract that was not disputed over several decades of his employment. Even my mother was forced onto the picket line from her staid government job. What was going on? Was this really a labour-management struggle, or was their something larger going on?
Geohagan says that as more and more money began pouring into the financial sector, it started becoming the engine of the economy. We were borrowing money (from foreign lenders in the form of importing more from them than we exported) to buy goods made elsewhere, essentially choking off our own manufacturing by not investing in it, and simultaneously expecting greater and greater investment returns, which ultimately were only coming from Wall Street. So by not creating real jobs in America, by denying Union Cards as Geohagan says, and issuing Credit Cards, we turned the America economy into a debt creator, not a wealth creator.
This is what my parents were bumping up against, fortunately their working careers ended with the semblance of the traditional social-compact intact. I only hope their pension funds don’t get raided. The key point is you can create economic activity two ways, either by a healthy consumer class that has money to spend, and has some choice in employment, health care and benefits. Or you can create the investor class, which is a euphemism for the debt class. Deny people a living wage, deny people health care, deny them a dignified retirement, decent education etc. BUT offer the sop of unlimited easy credit to smooth it all over. And offer them the illusion of control over their own health care and retirement in the form of INVESTED savings in 401k’s and MSA’s. You have the tax code encouraging investment, trillions pouring into Mutual Funds.
The working world that I have occupied for the twenty years is nothing like my parents world. Photography is hardly a bellwether industry, but I believe you can see the narrative that Geohagen proposes operating in this industry. Just as we have moved away from producing “things” to producing “wealth” photography has seen media consolidate and reorganize to deliver investor returns at the expense of everything else. The content that is created exists only to drive share price because this is what an investor economy demands. Companies are not traded on fundamentals, they are only traded as speculative plays. If you have any questions about why you see the dreck you do on newstands and television, for the most part, the content is secondary to the return on investment. That is why, in this recession, the only strategy we have seen from media is slash and burn. There is no talk of innovating out of this problem. That would be to focus on the product. Used to be, the idea of business was you created something, a better mousetrap? and people beat your door down-how do I get one! But now we are focused on share price, which at this point, I’d have to say is not going to reflect anything but fear.
Another part of Geohagen’s critique applies, when he talks about denying Union Cards and issuing credit cards. In photography it is an old saw that editorial rates have not increased since MC Hammer uttered the immortal words “Can’t Touch This”. Or whenever. And the banana thrown back at us was the law of supply and demand, plus a steady stream of people willing to work for nothing. It was our own fault. I have argued in the past that this not the true story, and Geohagen’s analysis gives me another arrow to fire into this straw man. Consider for example that if publishers really were focused on the product, if this were actually true then there would be an incentive to hire talented photographers, allowing for the occasional breakout success, but the bulk would have to come from people who really knew what they were doing and would know what it was worth. There would be little incentive to hire the freshest cheapest face out there willing to work for whatever was offered. Good photography and good writing is not free, or at least it didn’t use to be (…).
I think the reality is that publishers have increasingly focused on the bottom line to the exclusion of everything else. Every title in every category has to profitable, and profitable year over year. So where are those pressures coming from-Wall Street of course. And also think about the burden of an inefficient heath care system that the employers are paying out for to another racket, Health Insurers. And the matching 401k’s going out to Schwab. When we think of great magazines, we tend to think of titles long ago, with great writers and photographers covering stories that meant something, not merchandise. We should not wonder why no one reads anymore, the content available online is more varied, engaging, even if it is sometimes crudely illustrated or edited. But it is about SOMETHING. And writers and photographers actually have control over that content.
We can debate all we like about what is going to replace newspapers, magazines, etc. Or how we are going to pay for content online. But none of this matters if the basic economy is not focused on balancing the needs of workers with the needs of investors and corporations. So far the debate has basically been the rationalization of a crisis situation. Slowly there has been talk about how we got here. This is very important. I certainly don’t want to live in a country where the primary option is basically the nuclear option, go big or go home. The different sectors of the economy, manufacturing, eductation, science, health, resource, finance, media, and service have to offer jobs at meaningful wages with opportunities for success. Many of the old jobs will not return. We have been told that this was the consequence of globalization, but it is also the consequence of relying on finance to be the prime mover in the economy. Well, we all can’t have jobs on Wall Street. It’s just not that big a street. And we’re not going to sit in Starbucks and eTrade on our iPhones as a way to make a living. This is not an American Dream that I subscribe to. I think media is just going to have to suck it up and leave print for online, and charge for it. Publish special editions, or luxury titles. At prices that pay. If the content is good, people will buy. This will also have the side effect of “draining the swamp” as I like to call it, it will leave all the aggregators (barnacles) high and dry with nothing to parasite from. Unless they pay. This has to happen. There is no other way.
The last thing I want to mention is how speculation has bent the photo industry. It is another example of how finance has warped our world view. Going into a career in photography has always been risky, but the focus now on emerging talent, I would say the strong focus on new and emerging talent, is a speculative play. If you look at the culture overall, with the abundance of contests and judging and voting the focus is on an endless stream of contestants vying for attention. And we can all enjoy betting on our favourites, or indulge ourselves by becoming a contestant too. American life has always been about winning, but currently the system is highly optimized around making bets on the future you could say, speculating, looking for the next big thing. Presumably the next big thing will be the thing that rescues us from our problems. The emerging phenomenon in photography is no different. By focusing on the speculative you get to ignore the real effort in photography, which is making meaningful images again and again. There may be a one hit wonder in all of us since photography is so deceptively simple. In a speculative industry, enabled by the long tail of the internet, that may be enough to ruin many long careers. Careers that never get a chance to mature because the oxygen in the room has been sucked out by all the new emerging flames. This is why I worry about Google….
But that is an screed for another day.
This is one of the most cogent, interesting stream of thoughts I’ve read in a long time, particularly as it applies to photography and creating “stuff”. Thanks for this read and the things it makes me think about.
very intriguing and well written article here
It is not the usurers who have decreased real income for Americans since the seventies: the one and only cause of that is inflation. The usurers certainly don’t help, but the fact that REAL WAGES HAVE GONE DOWN, in an economy that is the most powerful and productive in the history of our species, is a scandal which can be laid at the feet of three men: Franklin Roosevelt, Lyndon Johnson, and Richard Nixon. Pretty much every member of Congress for the past seventy years or so also deserves a collaborator’s haircut, but those three did it.
Details on what Roosevelt, Johnson and Nixon did specifically?
The way I understand it, inflation is part of monetary policy. It is an increase in the money supply. It can have the effect of making things more expensive, but it doesn’t always.
The bankstas in concert with the government, some would say inseparable, have used monetary policy to swell (inflate) the economy and siphon it off at the top. don’t think you can separate usury from monetary policy.
Roosevelt took us off the gold standard and started printing money and making the government the first solution instead of the last resort. Lyndon Johnson took the GSE’s quasi-private, started actively spending the Social Security revenue flow, and instituted the modern welfare/warfare state. Richard Nixon closed the gold window and removed the last limit on currency production (as well as his equally evil wage and price control attempts, which actually go to the plus side of his ledger because it showed people that even in a fiat regime these are horrible, horrible, HORRIBLE ideas. Even an evil megalomaniac can always serve as a valuable bad example.)
Woodrow Wilson probably goes on there somewhere for being complicit in handing the money supply of the United States over to a private entity, but it wasn’t principally his idea.
Inflation, to a classically trained economist, is an increase in the money supply. Inflation does not lead to price inflation – an increase in non-adjusted prices – if the amount of inflation equates to the amount of increase in the economy’s output. However, no government in history, with the exception of that of His Majesty Norton I, has ever so restricted inflation. From a practical standpoint inflation always results in price increases measured in terms of purchasing power for a constant basket of goods and services. The increasing efficiency of the economy somewhat offsets this, but even with official ridiculous government statistics one can see that despite the most massive increase in economic output in the history of our species the USD has depreciated in real purchasing power by over 90% in the last century or so. Somebody’s cooking the books: there is no other explanation.
I agree that corrupt people do corrupt things and therefore where you have inflation you will have usury, but they are mostly just correlated, not cause-related. Probably the most direct link is that when people with capital know that the government is inflating the money supply, they will charge high rates for the use of that capital both to make a profit and to account for the fact that its value is decreasing. If inflation is at 5%, I must lend my capital for MORE than 5%, even if I’d otherwise be satisfied with that much or less, or I am really losing purchasing power.
M
Is Ayn Rand in the house?
I don’t have a problem with the fiat system of money, I think money is just a token of human activity. The gold is us.
I think the decline in purchasing power of the USD has something to do with global trade increases over the last century. We have enjoyed the benefits of being the currency by which all others are measured, and now that is starting to come to an end. But the oligarchs will not let go easily. I agree that the government has cooked the books for the benefit of a few.
We can attribute the cause differently only if we believe that government and business are separate entities. I don’t particularly see any difference when you look at it as a concentration of power. Both bear the responsibility of presiding over a series of increasing speculative bubbles.
As for welfare, social security, etc, I don’t want to live in a world without a social safety net. Implementation is the real debate for me.
As for this blog post I’d be happy to hear what people think of the correlation I am making to the photo world.
I’m no Randist: about half my statements above are ones she’d approve, and the other half ones she’d despise. That being said, I see I’ve been categorized as a crank, and discussions are rarely useful after such takes place. Call it the General Case of Godwin’s Law. Have fun.
M
apologies-only poking fun. thanks very much for your commentary.
Here’s an animation that covers some history, etc. of one of the ways we got were we are: http://tinyurl.com/dakjcv
Interesting read, Robert. Key for me is “By focusing on the speculative you get to ignore the real effort in photography, which is making meaningful images again and again.”
Certainly when it all comes down someone will pay for and value this (diffficult) creative work. But it’s not at all clear right now how that will work out. We’re in for a rough road for a while I am convinced.
I was thinking my next post should be about the perennial stars in editorial photography: those who manage year in year out to keep making great work. It’s not easy.
The photo industry is in the process of separating the wheat from the chaff. There is clearly a market for the chaff and it is compensated as such. But is anyone still willing to pay for the wheat?
Nice post Robert.
Nice. I believe that great content should be paid.