It& #39;s a zombie economy. For 40 years, we& #39;ve eroded the wages of workers and transfered their share of profit and productivity to owners of capital. This is a problem, because people need money to buy things, and if they run out of money, they stop buying and profits vanish.

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Time and again, capitalism has kicked any reckoning over this down the road. First came the great liquidation: pension cashouts, raided savings, reverse mortgages. Then came consumer borrowing, a tidal wave of unrepayable debt.

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That& #39;s the zombie part: all the unpayable debt, which has been turned into bonds that enrich debt-holders. As Michael Hudson has told us again and again, debt that can& #39;t be paid, won& #39;t be paid. Our debt-based economy is the walking dead, a zombie.

3/
We can either stabilize the economy (by forgiving debts, so that producers can pay for necessities and go on producing); or we can stabilize finance (by coercing debtors into destroying their lives in order to keep up on payments):

#jubilee">https://pluralistic.net/2020/03/24/grandparents-optional-party/ #jubilee">https://pluralistic.net/2020/03/2...

4/
Think of the loan-shark& #39;s arm-breaker: he wants to collect on debt, so he threatens to break your arm. You steal your kid& #39;s college fund. You secretly mortgage the house. You sell your wedding-ring. You end up divorced and homeless. You still owe. So he breaks your arm.

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Now you& #39;re divorced, homeless, and you& #39;ve lost your ability to earn, and you& #39;ve got medical bills. He threatens to break your other arm. You start breaking into cars to steal the toll money in the ashtrays. You go to jail. Finally the arm-breaker and his boss are out of luck.

6/
Debts that can& #39;t be paid, won& #39;t be paid. But as loan-sharks know, fortunes can be collected by applying the right incentives.

Give debtors the choice of immediate ruin from nonpayment, and making a payment today and ruining their lives tomorrow, and they& #39;re pay.

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They& #39;ll pay...until they can& #39;t. Because debts that can& #39;t be paid, won& #39;t be paid.

The zombie economy is the subprime economy. "Subprime" came into collective consciousness thanks to the great financial crisis, where banks tricked poor homebuyers into predatory loans.

8/
The banks knew that the loans couldn& #39;t be repaid - they had "balloon" clauses that jacked up payments beyond the borrowers& #39; ability to repay a few years into the mortgage - but they also knew that threats of homelessness are powerful motivators.

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The inscrutable equations used to "guarantee" subprime bonds all shared an unspoken assumption: people who face homelessness will go to extraordinary lengths to pay their mortgages. Behind every subprime loan is an arm-breaker.

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The zombie economy shambles on. Obama& #39;s loan-shark bailout and the eviction crisis let the architects of subprime buy up whole towns& #39; worth of homes and turn them into hugely profitable slums: high-rent, low-quality deathtraps.

https://www.reuters.com/investigates/special-report/usa-housing-invitation/

11/">https://www.reuters.com/investiga...
Wall St landlords package rents from subprime rentals into bonds, backed by the loan-shark& #39;s guarantee: arm-breakers will evict the shit out of anyone who stops paying.

America-a land where eviction was once a rarity-now faces an eviction epidemic.

https://www.newyorker.com/magazine/2016/02/08/forced-out

12/">https://www.newyorker.com/magazine/...
The foreclosure crisis was only possible because Wall St and the courts collaborated to streamline the historically complicated and time-consuming process of taking away someone& #39;s home. Same goes for the eviction epidemic.

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It& #39;s a simple equation: the more loan-sharks spend on arm-breakers, the lower the expected profits.

Improvements to arm-breaking processes - cost-savings on traditional coercion or innovative new forms of terror - are powerful engines for unlocking new debt markets.

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When innovation calls, tech answers. Our devices are increasingly "smart," and inside every smart device is a potential arm-breaker. Digital arm-breakers have been around since the first DRM systems, but they really took off in 2008.

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That& #39;s when subprime car loans boomed. People who lost everything in the GFC still needed to get to work, and thanks to chronic US underinvestment in transit, that means owning a car. So loan-sharks and tech teamed up to deliver a new lost-cost, high-efficiency arm-breaker.

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They leveraged the nation& #39;s mature wireless network to install cellular killswitches in cars. You could extend an unrepayable loan to a desperate person, and use an unmutable second stereo system to bombard them with earsplitting overdue notices.

https://edition.cnn.com/2009/LIVING/wayoflife/04/17/aa.bills.shut.engine.down/index.html

17/">https://edition.cnn.com/2009/LIVI...
If they didn& #39;t pay, you could remotely cut off the ignition and send a precise location to your repo man.

Smart killswitches let you impose fine-grained control over debtors - say, enforcing a rule against driving over the county line.

https://dealbook.nytimes.com/2014/09/24/miss-a-payment-good-luck-moving-that-car/

18/">https://dealbook.nytimes.com/2014/09/2...
Within a decade, the bond-market for payments from subprime car drivers was edging up on $1T; not because borrowers didn& #39;t default, but because they defaulted later, and the car could be easily re-leased to another desperate person.

https://www.youtube.com/watch?v=4U2eDJnwz_s

19/">https://www.youtube.com/watch...
Rent-to-own subprime laptops were tepicenter of innovation in digital arm-breaking. Laptops shipped with spyware for covert operation of cameras and mic and access ot files.

That went beyond repoing a laptop! Lenders could make and share covert sex-tapes of their customers!

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To make a good digital arm-breaker, you need always-on network connectivity, a device that people really depend on, and a strong presumption that the device has core software that its owner is never allowed to remove.

Basically, a smartphone.

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Mobile carriers were early to this party. They collaborated with device manufacturers to create a "subsidized phone" market. They would "give" you a phone in exchange for a long-term, abusive contract, and then repo it by terminating service if you missed payments.

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This was only possible because the manufacturers helped, creating phones that could be locked to a single network, so you couldn& #39;t un-repo your phone by sliding in someone else& #39;s phone.

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They relied on the "anti-circumvention" laws that the music industry lobbied for in the late 90s (like Section 1201 of the DMCA) to make it a felony to unlock these phones. Arm-breaking is a lot easier if it& #39;s a felony to evade the arm-breaker.

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The smarter the phones got, the more subprime opportunities there were. Remember, there& #39;s a new market in every arm-breaking innovation and in every arm-breaking efficiency.

Which brings me to India.

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India has a huge subprime market. As one of the world& #39;s inequality capitals, whose national government runs on performative culture war bullshit and giveaways to the super-rich, it& #39;s a land ripe for subprime innovation.

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Phone manufacturers like @SamsungIndia are key to India& #39;s vast collateralized subprime smartphone market: first-time buyers get their phones on the installment plans at predatory interest rates so high that most will default

https://restofworld.org/2021/loans-that-hijack-your-phone-are-coming-to-india/

29/">https://restofworld.org/2021/loan...
Remember: subprime isn& #39;t about debts being repaid in full. It& #39;s about making borrowers so desperate that they ruin their lives to make payments before they default.

Samsung& #39;s uninstallable arm-breaker app allows lenders to brick a smartphone without help from a carrier.

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Writing for @restofworld, @NilChristopher describes an "escalating series of annoyances" culminating with a full lockout for failure to repay:

* audiovisual prompts in regional languages as reminders

* changing the wallpaper on their cellphones

31/
That escalates to coercion based on analysis of the users& #39; device activity:

* For "a prolific selfie-taker," notifications every time the camera is invoked

* frequently used messaging and social apps like Facebook or Instagram are progressively blocked

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One step at a time, the phone is made progressively less usable, until it is fully bricked.

It& #39;s a fully automated, self-configuring arm-breaker, one that substitutes a thug& #39;s unscientific ladder of mounting terror with bloodless, statistical science.

33/
This is probably a good point to mention the Shitty Technology Adoption Curve: any disciplinary technology is tried out on powerless people first, and gradually works its way up the privilege gradient to encompass the whole world.

#bossware">https://pluralistic.net/2021/02/24/gwb-rumsfeld-monsters/ #bossware

34/">https://pluralistic.net/2021/02/2...
Debt, after all, is consuming all of us except for the lucky few at the very top of the wealth distribution who have not faced wage stagnation and forced liquidations.

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And the shitty-tech adoption curve is putting arm-breaking tech into every kind of device, spreading with alarming speed from the bottom of the social order to its apex.

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Miss your Tesla payments and your car will lock itself, summon a repo man, back itself out of the parking lot, honk its horn, and unlock its doors for the repo man.

https://tiremeetsroad.com/2021/03/18/tesla-allegedly-remotely-unlocks-model-3-owners-car-uses-smart-summon-to-help-repo-agent/

38/">https://tiremeetsroad.com/2021/03/1...
As subprime climbs the shitty tech adoption curve, it gets a new name: "software as a service." In a #SaaS world, you cannot own the tools of your profession. Adobe Photoshop becomes Adobe Creative Cloud, and any designer who stops monthly payments becomes economic roadkill.

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What& #39;s more, software is the ghost in the shell, the animating spirit within physical devices. Remove software from a smart device and you don& #39;t have a dumb device, you have a brick.

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This lets the arm-breakers exert pressure over larger, more powerful entities...like Hoboken, NJ. Hoboken had a payment dispute with the software vendor for its robotic parking garage, so the vendor bricked the garage and took all the cars hostage.

https://www.wired.com/news/technology/0,71554-0.html

41/">https://www.wired.com/news/tech...
The strange mutations of arm-breaker tech bodes ill, especially in light of Chekhov& #39;s Law: "A phaser on the bulkhead in Act One will go off by Act Three."

42/
The universal spread of devices DESIGNED to be remotely repoed - bricked, downgraded, turned into surveillance tools - means that oppressive governments that coerce manufacturers will have the power to reach into our homes, cars and pockets to attack us.

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Same goes for unscrupulous insiders - like the subprime laptop jokers making nonconsensual sex-tapes with their customers& #39; webcams - and criminals who can pressure insiders into acting on their behalf.

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Nevertheless, subprime arm-breaking is bound to spread, and spread, and spread. Covid forced millions to liquidate everything, left them in precarious, sub-minimum-wage gig work, and there& #39;s the millions of evictions waiting for the moratorium to end.

45/
Debts that can& #39;t be paid, won& #39;t be paid. And yet, people must participate in the zombie economy: they& #39;re not going to dig a hole, climb in, and pull the dirt in on top of themselves. There is strong demand for credit on any terms. Any.

46/
Arm-breaker tech unlocks new markets by delaying defaults on unpayable debts. The zombie economy shambles on.

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If you& #39;d like an unrolled version of this thread to read or share, here& #39;s a link to it on http://pluralistic.net"> http://pluralistic.net , my surveillance-free, ad-free, tracker-free blog:

#digital-arm-breakers">https://pluralistic.net/2021/04/02/innovation-unlocks-markets/ #digital-arm-breakers

42/">https://pluralistic.net/2021/04/0...
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