A link keeps cropping up in my Twitter and Facebook feed. It is titled ‘This Woman Just Explained Economics In A Nutshell. And It’s So True It Hurts’. It is getting shared shitloads of times.
It hurts all right, but not because it explains economics in a nutshell. In fact, it doesn’t explain economics at all. Also, the woman mentioned in the title doesn’t even explain anything.
The text is supposed to be a kind of allegory for the financial crisis. It uses a familiar narrative account: that the crisis was caused by sub-prime lending on the part of greedy mortgage lenders, to people who were never going to be able to pay off their loans because they did not have the means to do so..
But instead of sub-prime lenders and poor people it uses a woman called Mary who runs a pub, and unemployed alcoholics. It does not locate the origin of the crisis in the US, which is where this narrative normally starts, but in Ireland. Why a woman? Why a pub? Why alcoholics? Why Ireland?
I don’t know the answer to these questions but it’s worth thinking about the effect of narrating the crisis in these terms. The initial responsibility in this account is placed upon a woman. Now, when you imagine a woman in Ireland called Mary, the chances are you imagine a white woman. But women of colour in the US were disproportionate targets of sub-prime lending. Whilst everyone else in this nutshell explanation -the “young and dynamic vice-president” at the bank, the naive investors, the risk manager, the wine supplier etc all go nameless, Mary is named repeatedly. She is the linchpin of the tale. Why is this?
What about the unemployed alcoholics? A few things jump to mind here. First of all, the nutshell account contrasts the unemployed alcoholics with ’employed, middle-class non-drinkers who have never been in Mary’s bar’ who end up paying more taxes as a consequence of bank bailouts. So this is a tale of injustice, and the suggestion is that whereas punishment might have been justified both for bankers and unemployed alcoholics, there was certainly no justification for punishing those who kept their appetites in check and who worked hard.
Then there is the difference between shelter and alcohol. Shelter is commonly recognised as a fundamental human necessity, and, among the more enlightened parts of humanity, a right. Alcohol is not. Some months ago, an economist appeared on a news programme on the Irish public broadcaster, RTÉ. He said that water charges were necessary because you wouldn’t let people drink free beer. If you have children, I am sure that you, like me, regularly bathe your children in beer, and brush your teeth with it.
The idea that sub-prime borrowers were insatiable in their desire for credit obscures a couple of important facts. David McNally notes in Global Slump that fully ’60 percent of those who received subprime loans actually qualified for less onerous mortgages’. So, sub-prime lending cannot be explained through a simple transaction, whereby one person finds a profitable way of meeting the insatiable, pathological desire of someone else. In reality, the whole structure of subprime mortgage lending was intended to bilk people, mainly poor people, and disproportionately people of colour. In the nutshell narrative, however, the racial dimension is wished away, because we are now in Ireland. And the class dimension is wished away too, because whereas the ‘unemployed alcoholics’ belong to no class, the ’employed non-drinkers’ are middle-class. So this ‘explanation of economics’ is firmly within the neoliberal imaginary of crony capitalism, regulators asleep at the wheel, we all partied (we’re in Ireland, and everybody loves a party in Ireland, right?), and so on. But more than that, it actually echoes the remarks of CNBC reporter Rick Santelli, whose “it’s time for another tea party” rant is thought of as a catalyst for the Tea Party movement.
How about this, Mr. President and new administration. Why don’t you put up a website to have people vote on the internet as a referendum to see if we really want to subsidize the losers mortgages? Or would they like to at least buy buy cars, buy a house that is in foreclosure … give it to people who might have a chance to actually prosper down the road and reward people that can carry the water instead of drink the water?
Finally, none of this ‘explains economics’. In fact, despite its apparent disdain for expert opinion, it hides the role of economists, by having you believe they had nothing to do with creating the intellectual tools for financial deregulation and sub-prime mortgage products. And it tacitly suggests that whereas economics in 2015 is something unfathomably crazy and unjust, there was an economics of bygone days where ’employed, middle-class non-drinkers’ were the main object of concern, and we really need to get back to this, through proper regulation, through attending to the needs of the ‘squeezed middle’, and so on. To top it all, the idea that the funds for the bailout are obtained by taxes on the ’employed, middle-class non-drinkers’ obscures the fact that taxes are also levied on those who are unemployed -often in the form of regressive taxation that hit the poorest most, whether they fell prey to predatory lending or not- and says nothing about the withdrawal of public services -health care, education, transport, social supports- which have the same effect as taxation measures. Again, these hit the poorest most of all, but they also hit large sectors of the population habitually classified as ‘middle-class’ but working class in terms of lived reality. Thus the characterisation of the bailout reinforces the idea that there is no such thing as class, and also the idea that there is no such thing as social rights, or citizenship.
So, what initially appears like a populist samizdat against government and banking elites turns out to be a text that rallies support for neoliberal orthodoxy. Genius.