AMERICA'S DEBT-DRENCHED FUTURE AND THE PATH TO PARISH SERFDOM

Many Russian peasants weren't much better off than the Russian serfs who came before them.

In September I wrote about the return of parish serfdom. At issue is how corporate giants, like Wal-Mart, depend on the state to pick up the general welfare tab for employees who don't make enough money to make ends meet, which incldues eating full meals or paying for personal health insurance.

So, yeah, we might have a welfare state that many people despise. And we might even enjoy pointing fingers at those who must apply for indivdual welfare benefits (I don't, but those who do know who you are). But the reality is that in many ways segments of corporate America are paving the way for the return of parish serfdom by paying miserly wages, and then expecting the state to pick up the tab for keeping their employees healthy and fed. This has allowed a small segment of society - like Wal-Mart's Walton family - to become multi-billionaires.

But wait. There's more.

There are deep rooted structural conditions that are working to bring parish serfdom back to our world. And it's all built around false choices tied to debt.

Looking at wealth inequality Charles Smith tells us that we are living in a neofeudal society that is ruled by the New Nobility of aristocratic financiers and bankers. Their goal is to extract wealth rather than to help you build it. The neofeudal financial system that's emerged is largely a product of three interconnected developments:


1. THE FALSE CHOICES OF DEBT:
As the Roman Empire crumbled people were presented with two false choices. Pay increasingly exorbitant taxes to Rome, or become a lowly serf toiling on the land of a feudal lord who offered protection (and demanded much).

Today we have similar false choices. In a world where wages have stagnated or fallen most of us have no choice but to take on debt if we want to survive, or have any hope of getting ahead. For example:

You have the choice of ignorance, or going into debt for an education (I paid $5 per semester at my local junior college when I first started college).  

Can't keep up because your job pays near minimum wage, or less? Then credit card debt servitude is your freedom granting option. 

Don't earn enough to save for a house (or even a down payment)? Then mortgage servitude is for you.  

The American Dream that we all idealize today was built around a middle-class in the post-war era that could afford to send their kids to public colleges because it was virtually free (by today's standards). Part of that dream was made possible by car and home loans that were funded and managed by local community banks, who worked with you when things got tight.

This kind of arrangement was too much for the New Nobility. They had no claim to your wealth producing life. Today, the New Nobility has a financial claim on your wealth through a financial structure built around debt, derivative products, and a shadow banking system that overshadows much of our mega-banking structure.


2. THE COMMODIFICATION OF DEBT:
If you have a mortgage, a student loan, credit card balance, car loan, etc. you are obligated to fund the rentier income of the New Nobility. Who are the New Nobility? They are the financial masters on Wall Street and the people running the nation's Too Big to Fail banks.

What makes debt peonage today possible is the commodification of assets and debt. Your debt (and assets) becomes commodified when your debt contract is bought, sold, and bet on in a seemingly never ending system of debt-filled pyramid schemes that have no connection to you, or your community (go ahead, try finding who has the note on your home or your second mortgage).

Today, most commercial loans are funded, sold, and traded by people you will never know, or meet. A chain of claims to your payments is the only connection you have to this system. Debt has become the new Philosopher's Stone, and is now courted and encouraged because of the financial products that can be created off of them.

Our political class only feeds this mess with calls for more deregulation.


3. THE NEOCOLONIAL "COMPANY STORE":
For Charles Smith the essence of neocolonialism is the company store that extends credit that can never be paid (which I write about in my book, p 39-42). The neocolonial company store today is our Too Big To Fail Banking structure.

The TBTF banking system has been doing especially well since wages have stagnated for the better part of 45 years. This has forced more and more people to borrow and go into debt.

When only the top 10 percent have seen their income and wealth expand over the past 40 years - while America's debt-serfs have become increasingly debt drenched - something is wrong in the land of Oz.

Total debt, as a percentage of GDP, that is held by people, states, and the federal government.

- Mark


For those of you wondering where the vast majority of income gains have gone over the past 30 years here's a chart. If you're chart-challenged know that over half of all income gains in our nation are going to the top 10 percent (again).

But wait, it gets worse. It's the top .01 percent who have been raking in the real money ...