America’s Privatized Repression

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Corey Robin has an important post on America’s privatized repression. He starts by describing how, after watching a panel on Occupy Wall Street in which she appeared, the freelancer who got arrested while she was covering the Brooklyn Bridge arrests lost her relationship with the NYT.

Two Fridays ago, I attended an excellent panel discussion on Occupy Wall Street sponsored by Jacobin magazine. It featured Doug Henwood and Jodi Dean—representing a more state-centered, socialist-style left—and Malcolm Harris and Natasha Lennard, representing a more anarchist-inflected left.

Lennard is a freelance writer who’s been covering the OWS story for the New York Times. After a video of the panel was brought to the Times‘s attention, the paper reviewed it as well as Lennard’s reporting and decided to take her off the OWS beat.  Despite the fact, according to a spokeswoman for the Times, that “we have reviewed the past stories to which she contributed and have not found any reasons for concern over that reporting.”

Even more troubling, Lennard may not be hired by the Times again at all. Says the spokeswoman: “This freelancer, Natasha Lennard, has not been involved in our coverage of Occupy Wall Street in recent days, and we have no plans to use her for future coverage.”

Robin goes on to note that this kind of repression–and not outright government repression–is really the core of social control in this country.

Such political motivated firings fit into a much broader pattern in American history that— in my first book Fear: The History of a Political Idea—I call “Fear, American Style.” While people on the left and the right often focus on state repression—coercion and intimidation that comes from and is wielded by the government (politically driven prosecution and punishment, police violence, and the like)—the fact is that a great deal of political repression happens in civil society, outside the state.  More specifically, in the workplace.

Think about McCarthyism. We all remember the McCarthy hearings in the Senate, the Rosenbergs, HUAC, and so on. All of these incidents involve the state. But guess how many people ever went to prison for their political beliefs during the McCarthy era? Less than 200 people. In the grand scheme of things, not a lot. Guess how many workers were investigated or subjected to surveillance for their beliefs?  One to two out of every five. And while we don’t have exact statistics on how many of those workers were fired, it was somewhere between 10 and 15 thousand.

There’s a reason so much of American repression is executed not by the state but by the private sector: the government is subject to constitutional and legal restraints, however imperfect and patchy they may be. But an employer is not.

Now Robin lays out this argument in the context of frustrations that anarchists and libertarians don’t get this.

In the last few months, I’ve had a fair number of arguments with both libertarians and anarchists about the state. What neither crew seems to get is what our most acute observers have long understood about the American scene: however much coercive power the state wields–and it’s considerable—it’s not, in the end, where and how many, perhaps even most, people in the United States have historically experienced the raw end of politically repressive power. Even force and violence: just think of black slaves and their descendants, confronting slaveholders, overseers, slave catchers, Klansmen, chain gangs, and more; or women confronting the violence of their husbands and supervisors; or workers confronting the Pinkertons and other private armies of capital.

It’s an important point, particularly as you distinguish between the Tea Party and Occupy Wall Street. The former, because it emphasizes the oppression of government power, will tend to increase oppression in this country as it ultimately helps the Koch brothers accrue more power. Which is undoubtedly why big corporations have funded it. Whereas the latter–to the extent that it focuses on banksters–points to the real source of power in this country.

But Robin’s point is important for another reason.

Private repression–as opposed to force, the actual physical violence Robin describes at the end–depends on integration into the system. Not only does it depend on the plausibility that someone can get a job in this economy–which, for some people, is not plausible. But it increasingly depends on integration in some dominant areas of the economy, banking with Bank of America, for example, as opposed to a local bank that has itself been screwed by the government’s determination to help the big banks at the expense of the local banks.

Because the concentrated centers of power in this country have gotten so removed from any accountability to the people they’re looting, it increases the possibility that people can opt out of the system that is key to enforcing their compliance.

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How the Fed Helped Qaddafi Keep His $200B in Loot

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I suggested yesterday that the West will be playing dumb about the extent to which Qaddafi looted the Libyan people becomes known.

But what about how Qaddafi looted us–or, at least, the Fed?

As this article laid out, one of the means by which Qaddafi was looting was the Central Bank of Libya.

Moammar Kadafi secretly salted away more than $200 billion in bank accounts, real estate and corporate investments around the world before he was killed, about $30,000 for every Libyan citizen and double the amount that Western governments previously had suspected, according to senior Libyan officials.

The new estimates of the deposed dictator’s hidden cash, gold reserves and investments are “staggering,” one person who has studied detailed records of the asset search said Friday. “No one truly appreciated the scope of it.”

[snip]

Most of the money was under the name of government institutions such as the Central Bank of Libya, the Libyan Investment Authority, the Libyan Foreign Bank, the Libyan National Oil Corp. and the Libya African Investment Portfolio. But investigators said Kadafi and his family members could access any of the money if they chose to. [my emphasis]

Central Bank of Libya was a significant owner (and is now a 59% owner) in the Arab Banking Company, which got $35B of loans during the crisis.

Arab Banking Corp., the lender part- owned by the Central Bank of Libya, used a New York branch to get 73 loans from the U.S. Federal Reserve in the 18 months after Lehman Brothers Holdings Inc. collapsed.

The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion — while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday. In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Yet all the time the ABC was borrowing $2B chunks of money, Qaddafi was sitting on $200B, which he could have used to provide the bank liquidity.

Mind you, this kind of looting was no doubt going on–and is no doubt going on today, as big banks refuse haircuts in Europe and housing fraud settlements–more generally. Qaddafi is just the very ugly face of how the Fed lending allowed people and corporations who had been looting for some time were able to keep that loot.

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Obama’s “Get Out of Jail for Helping 1.36% Card” for Banksters

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Yesterday, I described how the Obama Administration was going to charge the banks just $8 billion for immunity from a whole new swath of crimes. Shahien Nasiripour has more details which make the deal look even shittier. First, the proposed deal does appear to provide states immunity not just from robo-signing and the lies banksters made at origination, but also for their securitization errors.

In return for getting the banks to agree to the refinancing scheme and give up higher interest income, the states would release the banks from civil claims related to loan originations, the stage at which many homeowners say they were duped by unscrupulous lenders.

Last month, state prosecutors proposed to effectively release the five big lenders from legal liability for allegedly wrongful securitisation practices related to the banks’ treatment of loan documents. Taken together, the release from liability over poor origination, securitisation, servicing and foreclosure practices could amount to an effective grant of immunity for the banks from civil claims, people familiar with the matter said.

And in exchange, the banks would pay 80% of their $25 billion penalty into a fund that the same people who botched HAMP would use to help just 1.36% of homeowners who are underwater on their homes.

About 150,000 borrowers could benefit from the refinancings, as the vast majority of US home loans are owned by investors and government-controlled mortgage giants Fannie Mae and Freddie Mac. By comparison, nearly 11m US borrowers are underwater, according to CoreLogic, a data provider. The average underwater homeowner owes $258,000 on his mortgage.

In other words, all the settlement would do is help those who crashed our economy stay in business. The vast majority of their victims–and the US economy–would continue to pay the price for their crimes.

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Ben Bernanke Prepares to Rob My Mom

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My mom’s pretty stubborn (I come by it naturally). So in spite of the fact that I have been warning her to move her primary banking out of Bank of America into a solvent bank for over a year, she has yet to do so.

Which is why I’m so troubled that Bank of America is about to use my mom’s savings to back its derivatives counterparties.

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Money’s fungible, right? That’s what the anti-choice people say, anyway. So what’s the big deal that BoA has taken Merrill Lynch’s exposure to the European mess and put that risk where mom keeps her retirement? Yves Smith explains. First, this will make it all-but-impossible to unwind Bank of America when it goes under without disrupting the personal accounts of people like my mom. Significantly, if those derivatives pay off (for example, if Greece defaults) or require more collateral (because BoA gets downgraded again), then counterparties would get their money before mom does.

The reason that commentators like Chris Whalen were relatively sanguine about Bank of America likely becoming insolvent as a result of eventual mortgage and other litigation losses is that it would be a holding company bankruptcy. The operating units, most importantly, the banks, would not be affected and could be spun out to a new entity or sold. Shareholders would be wiped out and holding company creditors (most important, bondholders) would take a hit by having their debt haircut and partly converted to equity.

This changes the picture completely. This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral. It’s well nigh impossible to have an orderly wind down in this scenario. You have a derivatives counterparty land grab and an abrupt insolvency. Lehman failed over a weekend after JP Morgan grabbed collateral. [Yves’ emphasis]

As Yves points out, this will quickly result in the depletion of FDIC’s deposit insurance to pay my mom back for the money the banksters snatched. She suggests that Congress will quickly vote to fund the Treasury so it can pay my mom–and millions of other Americans–to replace their insured funds.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors. No Congressman would dare vote against that. This move is Machiavellian, and just plain evil.

She’s probably right that even the most Do-Nothing Congress in American history will eventually fund Treasury. I’m just not convinced it’ll happen quickly, or without some really big hostages demanded, first.

Now, mom’s in pretty decent shape for a retiree–between some pensions and other retirement funds, she could wait out the Do-Nothing Congress. And heck, I’m even willing to lend mom a few bob, even if she is so stubborn.

But most Americans are living paycheck to paycheck, and millions of them depend on what they’ve got deposited in Bank of America. It seems to me that Ben Bernanke has just unilaterally decided to make those BoA depositers lend banksters their life savings until such time as the Do-Nothing Congress gets around to fixing what are, as we speak, foreseeable and unacceptable consequences of this move.

Update: Jeebus I had a lot of typos in this. I hope I’ve gotten them all.

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Obama Administration’s Price Tag for Bank Lying, Predation, and (Probably) Securitization Fail: $8 Billion

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Back when the foreclosure fraud settlement was purportedly only going to cover robo-signing abuses, the price tag was going to be $17 billion.

Now that the Obama Administration is desperately trying to craft a settlement deal to include origination problems, the price tag has grown to $25 billion.

Under the proposed terms of the settlement — which could total $25 billion — banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.

The deal could provide some relief to the battered U.S. housing market and clear up some uncertainty about banks’ legal exposure that has been a drag on their shares.

Banks have been holding out on a multi-billion-dollar settlement because they wanted broader legal immunity than state attorneys general were prepared to offer.

Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.

In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.

That means for all the additional things the banks would get immunity for–at the very least, the liars loans and the predatory lending, all the things they’re getting hammered for in reps and warrants suits, though the language might well immunize securitization failures–banks would pay just an additional $8 billion.

That, in spite of the fact that FHFA filed lawsuits against the banks that might be worth $40 billion, with $11.5 billion from Bank of America alone.

So basically Obama wants to fund HAMP 2.0 by letting banks out of at least 80% of what they stand to lose in court.

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MOTU Rules: Material Support for Terror Edition

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AmericaBlog’s Chris is right. We should not look at yesterday’s sentencing of Raj Rajaratnam as the first act of justice against the banksters who killed our economy.

As I’ve said many times before, if Rajaratnam is guilty, fine, find him guilty and send him to prison. But let’s not confuse this case with the much larger problem of Wall Street triggering the recession. Rajaratnam was a swindler and used insider information to profit by tens of millions of dollars. That’s a much different story than the trillions of dollars needlessly lost by Wall Street, yet we see no legal action related to those losses.

Not only doesn’t Rajaratnam’s sentence represent a victory for the 99%, a former FBI Agent claims that he was largely convicted because of his material support for the Tamil Tigers. (h/t scribe)

Jay Kanetkar, who was [FBI Tamil Tiger infiltrator] Rudra’s main F.B.I. handler from 1999 until he left the bureau in June 2006, says that Rajaratnam’s alleged involvement with terrorism was a significant factor in why the F.B.I. and the Department of Justice went to such extraordinary lengths to nail him. “It was a conscious decision,” Kanetkar says, “to treat Raj the terrorist the way they treated Al Capone when they got him for tax evasion.”

[snip]

By 2005, Rudra’s penetration of the Tigers’ network was so deep that the F.B.I. had acquired a comprehensive picture of the group’s fund-raising capability. Raj Rajaratnam’s name came up frequently. “On the recordings, he was spoken of in a reverential way, with all the kudos he got as a financial whizz,” says Kanetkar. “At the same time, he wasn’t a commoner, which is why it was hard for Rudra to get close to him. He was reserved for the big stuff.” For example, in September 2005, two Tamil Tiger members were duped by the F.B.I. In an attempt to have the Tigers removed from the government terrorism list, they agreed to pay $1 million to two “corrupt State Department officials” (in reality, F.B.I. agents) whom Rudra had introduced them to. The Tamils went straight from that meeting to Rajaratnam’s house, apparently to arrange to get the money, according to Rudra and Kanetkar.

“Rudra told us that the L.T.T.E. had given Raj a very large sum of money for him to invest in the Galleon fund,” says Kanetkar. “It was clear that the Tigers did have that kind of money. They were raising $1 million every time they held a function, and also going door to door—extorting people to pay thousands of dollars for the next wave of operations.” Kanetkar and his counterterrorist colleagues had been aware of evidence that Rajaratnam was using illegal insider information since 2001, when wiretaps caught an executive from the Intel Corporation offering him insider tips. The F.B.I. saw the two endeavors—terrorism and insider trading—as connected, says Kanetkar: “Money from insider trading was going into his pocket, and money from his pocket was going to the L.T.T.E.”

In other words, if you believe David Rose, the reason FBI prosecuted Rajaratnam as opposed to all the other banksters who engage in insider trading is because the gains from his insider trading went to fund the Tamil Tigers.

But there’s even something funky with that story.

According to Rose’s story, the FBI was aware of Rajaratnam’s insider training starting in 2001, when they got him on tape getting a tip from an Intel. According to Rose, the FBI was collecting evidence tying Rajaratnam to the Tigers as early as November 2002 (and was reviewing money transfers going back to 2000). And while Rose doesn’t mention it, we know the government was already using SWIFT to track terrorist financing by that point. That doesn’t help you track insider trading, but it does mean any suspicion that rajnaratam was financing terrorism would make his money transfers fairly transparent.

And while I’m not surprised in the least that the Bush DOJ chose not to prosecute Rajaratnam for insider trading (indeed, the implication of the Rose story is that the Obama DOJ is still ignoring a lot of insider trading that doesn’t have a terrorism aspect), the entire story suggests that the FBI was tracking a prominent trader’s alleged financing of terrorism for 7 years and not only never pursued him for that, but didn’t indict him for it when they got around to indicting on insider trading, even though at that same point DOJ was sending non-bankster material supporters to jail for 65-year sentences.

Now, maybe the Rose story oversells Rajaratnam’s ties to the Tamils, or at least his awareness that they were terrorists. Clearly, the case against Rajaratnam, unlike (say) that against Chiquita’s top managers during the same time frame, was not so cut and dry. Perhaps DOJ believed they couldn’t convict Rajaratnam.

But the lesson seems not only to be that this is one very small conviction that doesn’t even begin to touch the much larger crimes, but that MOTUs get treated differently even for terrorism-related crimes than ordinary people.

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Why Is Thomas Perrelli Negotiating a Settlement If the Banksters Didn’t Commit Fraudulent Actions?

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In his press conference today, Obama said,

Well, first, on the issue of — on the issue of prosecutions on Wall Street, one of the biggest problems about the collapse of Lehman’s and the subsequent financial crisis and the whole subprime lending fiasco is that a lot of that stuff wasn’t necessarily illegal, it was just immoral or inappropriate or reckless.

[snip]

So you know, without commenting on particular prosecutions — obviously, that’s not my job; that’s the attorney general’s job – you know, I think part of people’s frustrations — part of my frustration was a lot of practices that should not have been allowed weren’t necessarily against the law, but they had a huge destructive impact. And that’s why it was important for us to put in place financial rules that protect the American people from reckless decision-making and irresponsible behavior.

[snip]

The president can’t go around saying prosecute somebody. But as a general principle, if somebody is engaged in fraudulent actions, they need to be prosecuted. If they’ve violated laws on the books, they need to be prosecuted. And that’s the attorney general’s job. And I know that Attorney General Holder, U.S. attorneys all across the country — they take that job very seriously. [my emphasis]

His comments are funny for a number of reasons. Apparently, the President can’t go around saying “prosecute somebody,” but he can go around saying, “assassinate somebody.”

More curiously, though, he insists that if someone has engaged in “fraudulent actions, they need to be prosecuted.”

FHFA has sued 18 banks, a number of them for fraud, most of them in federal court. As part of those suits, it has sued a number of named individuals. DOJ, however, seems to have no interest in all those entities accused of fraud.

More troubling still, mortgage servicers have, in sworn depositions, admitted to fraud of a variety of types.

And yet Associate Attorney General Thomas Perrelli is busy trying to craft a settlement–not a prosecution–with those who engaged in this fraud. (And in the wake of CA’s withdrawal from the settlement talks, the banks are crowing that DOJ is still going to sign such a deal.)

The Administration needs to be asked not just why no big banksters have been prosecuted, but also why in the face of massive fraudulent actions, DOJ is choosing to settle, rather than prosecute.

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SuperCongress Transparency: Dave Camp Staffer Lies to Avoid Talking to Citizens

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After the Take Back the American Dream conference yesterday, we had a rally for Jobs and then lobbied SuperCongress to make sure their plans supported jobs, not just cuts.

As Nicole Sandler notes, the staffers in Jeb Hensarling and Fred Upton’s office politely listened to what we had to say.

Not so Dave Camp’s office. After locking the door of their office for about ten minutes, a staffer then walked out, apparently to get rid of us. After telling us clearly that Camp’s Legislative Director, whom we had asked to speak to, was in the Capitol, he ultimately handed me his card.

It read, “Rob Guido, Legislative Director.”

 

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Why Blame the Failure of the 50-State Settlement Solely on Tom Miller?

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Yesterday, CA Attorney General Kamala Harris announced she was withdrawing from the 50-state foreclosure fraud settlement.

California Atty. Gen. Kamala Harris will no longer take part in a national foreclosure probe of some of the nation’s biggest banks, which are accused of pervasive misconduct in dealing with troubled homeowners.

Harris removed herself from talks by a coalition of state attorneys general and federal agencies investigating abusive foreclosure practices because the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered, a person familiar with the matter said.

The big banks were also demanding to be granted overly broad immunity from legal claims that could potentially derail further investigations into Wall Street’s role in the mortgage meltdown, the person said.

With CA–the largest state and the one with the greatest foreclosure exposure–this effectively kills the settlement. See DDay for more on why Harris made this decision and what it means going forward.

But Harris’ letter announcing her decision makes something else (which had become increasingly obvious in recent weeks) clear.

Harris gives US Associate Attorney General Thomas Perrelli, not IA Attorney General Tom Miller, top billing on her letter.

This failure has become Perrelli’s baby as much as it is Miller’s.

When they held their last ditch attempt to save this meeting last week, they met in DC, not in IA or some other central location. And the settlement reportedly discussed at that meeting was heavily skewed towards giving the same people who fucked up HAMP another shot at trying to solve the housing situation.

About 80 per cent of the settlement figure, earmarked for the federal government, could be used to fund another round of debt and payment reductions for struggling US homeowners, people with knowledge of the Illinois document said. That would be split between principal reductions on first-lien mortgages and junior liens; payment forbearance for unemployed borrowers; and short sales, blight remediation and transition assistance for homeowners to move into rentals.

The remainder, about $4bn-$4.4bn in cash, could be designated for the states, which then would divide the proceeds to fund a variety of programmes, including assistance to borrowers. About half that amount could be used to pay up to $2,000 to an estimated 1.1m aggrieved borrowers who allege they were harmed by improper practices. [my emphasis]

So when Harris wrote…

California is hurting. We have the most homes and most home borrowers in default. During the period we have been negotiating, more than 560,000 additional homes in California have fallen into the foreclosure process. When we began this process 11 months ago, five of the ten cities hardest hit nationally by foreclosures were in California. Today, eight of those ten hardest-hit cities are here. And, recently, at the same time that we have been negotiating in good faith, foreclosures in California have surged again.

[snip]

Last week, I went to Washington, D.C. in hopes of moving our discussions forward. But it became clear to me that California was being asked for a broader release of claims than we can accept and to excuse conduct that has not been adequately investigated. In return for this broad release of claims, the relief contemplated would allow far too few California homeowners to stay in their homes.

What she was saying, politely but nevertheless saying, is that giving a state like CA that has been devastated by foreclosures perhaps $500 million to deal with the aftermath, and in the process let the banks off the legal hook for abuses beyond just robo-signing just won’t fly.

The Obama Administration may have been offering Harris less than $1,000 per each new homeowner who has fallen into default (to say nothing of all the previous foreclosures), whereas in a state settlement, NV Attorney General Catherine Cortez Masto was able to get about $57,000 per affected homeowner in a Morgan Stanley settlement.

That tells you two things. First, the Obama Administration still doesn’t understand the extent of the damage the banksters they are trying to protect have done. They don’t understand the scale of the challenges facing states and towns and homeowners affected by the banks’ crimes. And second, the “Department of Justice” was ready to sign away justice for scraps with which to fund another ineffectual Treasury-run program without, first, having forced the banks to face the full consequences of what will happen if they don’t offer principal write-downs.

In other words, if you didn’t already know it, DOJ was (and presumably still is) actively looking for ways not just to ignore the banksters’ crimes, but to help them avoid the non-legal consequences of those crimes, too. Which sort of explains the vitriol directed at Eric Schneiderman of late. Two prosecutors, after all, can conduct a national investigation of the banksters’ crimes, DOJ, and the NY Attorney General. And by refusing to go along with the criminally stupid deal Perrelli was negotiating, Schneiderman has made it a lot harder for for DOJ to sponsor yet more injustice.

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I Was that Trust-Fund Kid Working as a Supermarket Checker

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I take that back. I wasn’t really a trust fund kid. But my grandfather was an Ag Scientist who shared the royalties from an erosion control plant he developed with his grandkids, so I did get a modest quarterly “weed money” check while I was a teenager, which was sort of like a trust fund. And as is likely for people with a PhD scientist in the family, I was affluent, a great student. And, when I was 14, a supermarket checker.

Which is why I find this pompous Peter Frase discussion, responding to these posts (and seconding Yglesias), about the relative value of grocery self-checkout lines so annoying. And since Frase says the supermarket checker I once was doesn’t exist–“You don’t see a lot of trust-fund kids or lottery winners working as supermarket checkers.”–I feel obliged to weigh in, not with all the PhD babble I’m credentialed to throw around, but with some real details.

This whole debate started when Atrios suggested supermarkets had implemented self-checkouts to eliminate jobs.

It isn’t possible for me to know, but I’ve long been puzzled by the widespread adoption of self-service checkouts in supermarkets and other places. It didn’t seem to me that the additional capital costs would really be offset by labor cost reductions. They still require at least one hovering employee to deal with problems and card people for alcohol purchases. In addition, people aren’t very fast at using the machines so you need a higher number of machines/user to speed people through the line. We may not see “supermarket cashier” as a super high skilled position, but the fact remains that doing it well, as with most things, does in fact require skill. A good cashier is fast and accurate, checking people out more quickly and more efficiently.

So I’m not totally surprised that they’re pulling back a bit, though I’m sure the next scheme promising a reduction in personnel will be embraced as soon as it comes along… [my emphasis]

At which point, as the debate wore on, his central point–backed by the article he linked–was increasingly ignored: checkout machines end up not being the great deal for supermarkets they once thought they’d be.

So let me say this.

I was a damn good supermarket checker. I took great pride in what a good supermarket checker I was. It involved knowing all the codes for vegetables cold, knowing where the buttons for large items were. It involved being physically fit–with a lot of standing and bending and twisting–as well as the ability to get in a zone where you’re consistently scanning an item in one movement without breaking the rhythm of that movement, passing the item from one hand to another, left hand right hand left hand right hand. Since I was quick and consistently got the busiest registers, being a damn good supermarket checker also involved chumming up to the bagboys to make sure I always had someone bagging to keep up with my checkout pace (and, frankly, I was a pretty crummy bagger, which tended to piss off the rich ladies we served in that store when I did do their bagging). And in spite of the fact that machines are supposed to do the math for you, you do end up having to do math when the rich ladies throw weird amounts of money at you.

So I come to these self-checkout machines with a bit of expertise on how they compare to a trained supermarket checker. I was curious to use them when they first came out–I admit I wanted to see whether I still had that old touch. And now, I buy so little in big grocery stores that I’ve consistently got just a few items when I do check out in a store with self-checkout lanes, so I use the machines to avoid the long lines of people with very full carts.

Even as someone who once was a damn good supermarket checker, the machines are much less efficient. Partly, that’s because I don’t know all the codes now, and I tend to buy odd fruits and vegetables–things like key limes and nopales–that aren’t loaded into the machine properly. Partly, that’s because those self-checkout machines aren’t built to allow you to get into that Tayloresque rhythm. Partly, that’s because you’ve got a suboptimal bagging set-up (and, no, I’m still not a very good bagger, but luckily I’ve just got myself to blame now).

The point being, at least from my somewhat informed position, Atrios’ guess is correct. Those machines aren’t very efficient. And while I wasn’t unionized as a grocery checker (so my labor was really really cheap), I would imagine even union supermarket checker wages are less than these inefficient machines, to say nothing of consumer satisfaction.

Which is another way of seconding Atrios’ supposition that these machines, in spite of the fact that they replaced workers with machines, were not productivity improvements.

But that point–that replacing a worker with a machine does not always result in productivity gains–appears to have been entirely lost in the debate. djw ignored it when he accepted the terms of the debate as a choice between menial jobs or greater productivity through machines. Yglesias ignored it when he blathered about whether productivity growth was good or bad for workers. Frase ignored it when he called others conservative for exulting in the disappearance of machines that didn’t improve productivity.

So let me make the issue clear: We are talking about whether we should have machines (which lead to lower customer satisfaction) for machines sake or whether we should, in cases where people end up being more efficient and better for business than the machines, employ the people.

Choosing the first option–as Frase and Yglesias seem to do–is stupid for their cherished productivity and stupid for workers. (Note, the productivity battle they’re fighting is likely an earlier one, on whether to shift to scanning machines in the first place.)

Now, the simple return to employing real people instead of self-service machines will not make these great jobs. I didn’t have to keep up that standing and bending and twisting for a lifetime, and unlike my workmates who faced a lifetime of this work, I didn’t opt to sleep with the sexually harassing boss to get better work conditions. And even the bosses in that grocery store worked night jobs, mostly as cops, to survive on the low wages.

But rather than taking an example where machines turned out not to equate to productivity gains as an opportunity to establish new lefty litmus tests on whether machines are good or bad, the lesson here ought to be that not all claims that fewer workers equal more productivity turn out to be true.

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