We’ve all heard it, and many of us have grown up with it:
“The customer is always right!”
Today, with telecommunications corporations, banking and financial corporations, insurance companies, newspaper companies, and companies we don’t even understand gobbling each other up at a rate that makes Pac-Man look like a child’s game (oh, wait – Pac-Man is a child’s game!), the new mantra is:
Today’s CEO runs a vague, profit-driven organization that shields itself almost completely from that distasteful bottom tier of human beings once known as “customers.” That is why every corporation, from your bank to your phone company to even your doctor’s office, now uses an annoying phone tree that makes you press a lot of buttons and answer a lot of questions before being transferred to hold music for five or ten minutes.
When you finally do reach a person, you instantly wish you hadn’t.
If that person is in India, you may or may not be able to understand anything they say to you except perhaps their pretend, Americanized first name. Nevertheless, you should restrain your rage. If you’ve reached India, the person you are speaking to is working third shift under very unpleasant conditions and is empowered to do nothing for you except tell you restart your computer even if the problem is with your refrigerator. At some point, you will definitely hear the phrase:
“I am now going to [fill in this blank yourself], and this will fix your problem.”
If you’ve never dealt with an Indian CSR before, you may feel temporary glee, as in, eureka! This nice person is actually going to fix my problem!
This nice person is not going to fix your problem. Calm down for goodness’ sake! No, no, this person is trained to tell you your problem is fixed, then give you a confirmation number that is at least 18 digits long in case you have to call back. (Trust me, you will have to call back.) When you start all over with a new person 8,000 miles away who goes through all the same motions and gives you yet another 18 digit confirmation number, you will resolve to never, ever call again.
And that’s the whole point. Mission accomplished.
Call centers have become the sweatshops of the 21st century; whereas 19th and 20th century sweatshops actually produced a product, 21st century sweatshops produce nothing but frustration. Call centers are frustration factories. Call centers, in case you haven’t figured this out already on your own, are designed for two purposes only: 1) to shield corporate management from, ick, customers and thereby from experiencing directly any of the human consequences of their decisions and 2) to make you, the, ick, customer, go away.
It’s enough to make you want to summon the ghost of Ronald Reagan and ask him directly, “What, exactly, is trickling down here, Saint Ron? Because it’s running down my leg, and it doesn’t feel like rain.”
At a recent meeting at the large corporation where I work in a very small Dilbert-like cubicle, I was raising concerns about customer retention. I’d seen customers pull over $1.5 million out of our financial institution in the preceding week over policies designed to provide no help and no service to customers. We’ve lost billions in the first couple of quarters alone this year, so I thought (silly me) that this was a valid question.
The answer was quick, sharp, and a tad bit threatening:
“Look, from a management perspective, the customers we have just don’t matter. We want new money and that’s all we want. Get some new money out of them for us or get them off the phone. It’s not your job to worry about them. If you start solving even one of their problems, they all start to expect it, and what we are after is new money here, not talking with existing customers all day.”
I work in the “customer service” department, not sales. In the US of A. My, my.
But seriously, haven’t you suspected as much for a long, long time? I have. It was weirdly refreshing to hear someone in a position of moderate authority say it out loud so baldly. The truth! And in an election year, too! What a rare and special treat.
Credit card companies and banks, skittish about the credit crunch and facing more huge write-downs over the sub-prime debacle, are now looking for new ways to pad profit by doing even less for their customers than they were doing before. Most of these ways involve new fees, increased fees, hidden fees, and fees that are charged for spurious reasons.
But financial institutions are by no means alone in wanting to go straight for the wallet, bypassing customers entirely and “forgetting” to provide any service or product at all along the way. Cell phone companies routinely charge exorbitant contract cancellation fees to customers whose contracts have expired years and years ago, then turn their former customers over to collections when they refuse to pay. What do they have to lose if the longtime customer is leaving anyway? Sprint is a great example of this spurious practice. No wonder it is hemorrhaging money on its way down.
I think we’ve given laissez-faire capitalism, supply-side economics, or whatever you want to call it more than a fair chance to work for us for over the past couple of decades. Instead, just as a certain 19th century political theorist once theorized (hey, I’m not saying his name out loud! Are you nuts? Not while Gitmo is still in operation!), capitalism is now in the process of eating itself and its own alive as all the money floats to the top and the people at the bottom become bitter, angry, and finally, violent. Next comes complete social collapse. I’m not kidding. And I’m not alone in forecasting it, either.
It doesn’t have to be this way though. Regulation is not the dirty word some would have us believe that it is. At the very least, Congress needs to take a long hard look at credit companies, banks, and mortgage lenders and their slippery practices. It is so obvious it pains me to have to say it out loud. They got us into the sub-prime mess that is currently destroying entire cities (Cleveland, am I right?). We don’t have to just keep letting them do whatever they want to do because one dead president said it was a good idea.
Yes, Saint Ron’s ideas have created tons of new, low-paid jobs in call centers around the world. I’ll grant him that.
Want one of those jobs? I didn’t think so.
“I don’t think the euro has weaknesses,” said Jean-Claude Juncker, President of the Eurogroup and Prime Minister of Luxembourg. “I think the main problem and difficulty we have is to convince people that this was the right decision to be taken.”
Juncker’s comment from an interview during the Brussels Economic Forum 2008 demonstrates the unique problem faced by Europe’s single currency on its tenth birthday: despite its economic success, the euro can’t seem to find common ground with its citizens.
Considering Europe’s cultural and economic diversity, the agreement of a pan-European treaty, a central banking system and a single currency have been tall orders for the European Commission. Yet, against the odds and criticism, the Eurozone’s population now exceeds that of the U.S. Today, 320 million people in 15 member states are governed by the monetary policy of the European Central Bank in Frankfurt.
A Source of Stability
For some countries, the introduction of the euro has brought macroeconomic stability and invigorated their economies with foreign investment and pan-European access to skills and labor. Even countries awaiting accession or that have not yet introduced the euro are benefiting from the region’s change in economic activity.
According to the European Commission’s 10-year review of the economic and monetary union (EMU), benefits have included a stable 2% inflation rate, a deficit of only 0.6% of GDP resulting from strong fiscal policies, strong integration of financial markets and the creation of 16 million jobs.
Evidently, we cannot lay blame for the Eurozone’s shortcomings with the EMU. Rather, the problem lies in the very structure of the European Union. “As an international currency the euro is a major asset for all euro-area members and for the EU at large,” states the commission’s report. “However, the lack of a clear international strategy and the absence of a strong voice in international fora implies costs for the euro-area in an increasingly globalized world.”
This said, the euro continues to grow in strength and is now in a position to rival the weakened U.S. dollar as the global currency. Over a third of all foreign exchange transactions are now conducted in euros, and four years ago, euro-denominated international debt securities surpassed those of the dollar. During this time of uncertainty for the dollar, the euro has emerged as a stable option for the international finance community – already, a number of banks worldwide have converted significant proportions of their reserves into euros in an attempt to retain value.
What Lies Ahead
However, the real test for the euro’s resiliency is yet to come. A slowing global economy could spell disaster for this relatively new currency. Certainly, it has weathered recession in the past, but the sheer scale of the current crisis could pose a threat to the EMU’s future stability.
Of this, Juncker is acutely aware. “The Eurogroup has to make it clear to all the governments sitting around the table that we are living in a single currency area and thus in a single currency discipline,” he said. “The reality for a country member of the Eurozone is that they are no longer free to do what they want. We have to make sure that the single currency is shared with the greatest of discipline.”
Can the EMU really unite in time to face the current crisis? Time will tell.
Polls show a large number of Americans are not satisfied with the choice they’re faced with this November: Obama or McCain?
One reason is that the two major-party candidates show an equal level of disdain for basic economic principles. Obama decries “the idolatry of the free market” and McCain chastises “speculators” and says he wishes interest rates could be 0%. As Investor’s Business Daily put it gently in a recent front-page article, “neither stresses fiscal discipline.” So what’s an amateur economist to do?
In 1848, 10.13% of Americans voted for the Free Soil Party’s candidate for president even though they knew he would not win. These courageous citizens could not and would not vote for the pro-slavery Democrats or the pro-slavery Whigs. Seventeen years later, slavery was no more. This goes to show that the ideas a committed minority supports—such as abolition, Social Security or Goldwater conservatism—can win over time even if the candidates who initially champion the ideas lose.
So who among the independent and third-party candidates for president stands for the sound economics that America must turn to in order to avoid fiscal calamity in the years ahead? Here’s a look:
Ralph Nader (Independent)
Although he was the presidential nominee of the Green Party in 1996 and 2000, Ralph Nader ran as a true independent in 2004, and he’s doing so again this year.
While considered to be an economic leftist, most of Nader’s fiscal platform calls for cuts in government spending. Nader differs with historical left-liberals like Franklin D. Roosevelt and Lyndon B. Johnson on issues such as “corporate welfare” and the “military industrial complex,” both of which Nader opposes.
Nader also favors a host of tax hikes which, according to the conventional view, would help alleviate the budget deficit. However, raising taxes on activities like stock trading could discourage the activity to an extent that tax revenues fall, even in the face of higher nominal tax rates. And there would be virtually no hope of a balanced budget under Nader’s “single-payer” nationalized healthcare plan.
Cynthia McKinney (Green Party)
A former congresswoman from Georgia, Cynthia McKinney is probably most famous for assaulting a Capitol police officer who allegedly racially profiled her. She joined the Green Party after being defeated in her congressional primary for the second time in four years.
McKinney’s positions on the issues are very similar to those of Nader, but her focus and tone are quite different. While Nader gives the impression of being a stern fiscal conservative on most economic issues, McKinney is an economics-be-damned liberal. She supports “single payer” health care, like Nader, as well as a much higher minimum wage, like Nader. She also talks about cutting back on waste and redirecting U.S. foreign policy in a less costly direction, but her emphasis is on big new spending programs. The funding source for McKinney’s utopian dreams: Make the big bad corporations pay their “fair share.” Clearly, McKinney fails to appreciate how little corporate profit would be generated under the high-tax, high-regulation regime she advocates.
Bob Barr (Libertarian Party)
Like Cynthia McKinney, Bob Barr represented Georgia in Congress. But the similarities end there.
While McKinney is a former Democrat, Barr led the effort to impeach Bill Clinton. Barr also championed the Patriot Act, the War in Iraq and the War on Drugs while in Congress—three distinctly unlibertarian causes—which is why the Libertarian Party targeted him for electoral defeat in 2002. Six years later, in a twist of irony, he became their most high-profile candidate for president since Ron Paul in 1988.
Barr has changed his positions on many issues to be in greater accordance with libertarian philosophy, but many party members still don’t entirely trust him. That’s why it took Barr six ballots to win the party’s nomination with just 51% of the vote, back in May.
Even on economic issues, Barr just isn’t “radical” enough for many Libertarians. For example, Barr is silent on the Federal Reserve System, which Libertarians and radical free-market economists universally loathe. But all things considered, Barr’s platform is unquestionably the most economically sound of the four candidates profiled.
Barr puts it plainly on his Web site: “Government spending at all levels is out of control.” He then correctly points out that the “earmark” debate between Obama and McCain is utterly pointless as earmarks account for a miniscule percentage of government spending. Barr is more than a little vague in his prescriptions for spending cuts and tax reform, but at least he recognizes that both are essential to America’s survival as a nation.
Chuck Baldwin (Constitution Party)
Last among the “major” minor-party candidates is Chuck Baldwin, presidential nominee of the socially and religiously conservative Constitution Party. Baldwin is to the far, far right of George W. Bush—so far right, in fact, that he may appear to circle around to the left on many issues. For example, Baldwin is 100% opposed to the War in Iraq and all foreign intervention.
On most domestic economic issues, Baldwin agrees with free-market Libertarians. However, his international economic philosophy is a deal-breaker for economists: Baldwin is outright hostile to free trade.
While a vote for Baldwin in November will be a vote to abolish the income tax and radically cut government spending, it’ll also be a vote for the kind of “isolationism” that intensified the Great Depression. The anti-free trade view has been so thoroughly refuted by economists of all stripes that anyone who supports it has surely dedicated very little time to the study of economics.
However, Baldwin may still be a semi-attractive candidate to free-market types due to the one glaring advantage he has over Bob Barr: Baldwin is an outspoken opponent of the Federal Reserve System. Thus, even though Chuck Baldwin does not line up with Ron Paul on every issue, he may be able to tap into the phenomenon that was Paul’s “Revolution.”
There are many choices available to voters this November—not just two. Economics is about choice. We don’t limit ourselves to just two TV stations or just two soft drinks. Neither should we limit ourselves to just two political parties.
There was once a time long ago when many economies ran on a barter system. There was no fiat money. There was no central banking system. There was no Federal Reserve to insure the validity of any currency. If you wanted a bag of rice you traded with what you grew or produced. As financial currencies came about, and now as electronic finances control the way we purchase and sell goods, barter systems are rare.
In medicine, the barter system is dying off as well. Patients used to come to the office, and if they could not pay, they would offer their services such as landscaping, contractor services, or a good deal on whatever they sold. Sometimes patients would do this on top of their payment so the physician would treat them better and take that “extra” step to make sure they were OK. But now as we come to this modern day in medicine, we see patients mostly concerned with the amount of copayments. Front office personnel are more concerned with payments and insurance status. There is a veil between the physician and the patient when it comes to payments and negotiations.
It is really a shame because these days many doctors are turning away patients who do not have insurance or who have bad insurance. I can tell you that there is no greater feeling than to see a patient without direct financial compensation and then have him do a favor for you that is in his line of work. It’s a win-win for both parties, and better yet, it leapfrogs the entire financial system. One patient gets his medical care and one doctor gets something in return. Even if the values are not commensurate, it gets down to the true values of a barter system – people exchange their own products and goods because that is all they have to give.
Next time you visit your physician, perhaps this is something to consider. I know a lot of doctors that would happily work “pro bono” to get something they need.
Editor’s Note: The word “free” in the title is in quotes because, according to Robert Heinlein, “There Ain’t No Such Thing As A Free Lunch” (even in the non-scifi world).
Revolutionary Wealth: How It Will Be Created and How It Will Change Our Lives. By Alvin and Heidi Toffler. Knopf, 2006. 512 pages. $15.95.
In 1970, Alvin Toffler published Future Shock, an analysis of the accelerating waves of change moving through society. Toffler built on a number of movements already underway both social (the changes he discusses) and conceptual. His analyses of change fit well with other works theorizing change like Thomas Kuhn’s The Structure of Scientific Revolutions. Toffler helped create the profession of futurist and, after 30 years, remains one of our primary futurists.
That said, he strikes a decidedly different emotional tone in Revolutionary Wealth than he did in Future Shock where the term “future shock” itself refers to a baffled and overwhelmed state, close to alienation, that strikes people when they experience too much change too fast. In that early groundbreaking book, Toffler analyzed the changes, explained the accelerating rate of change and warned about the possible effects on humanity. In Revolutionary Wealth, the Tofflers again analyze and explain, but this time, while many individual challenges are identified, the tone is much sunnier. This really is a book about how immense and widespread wealth is moving through global society.
Revolutionary Wealth is an immensely ambitious book. It covers its topic from many different angles, and just about any reader will likely find something of value in its ten sections. These range from discussions of the changing nature of time to how knowledge should be evaluated. Each of these sections is divided into further sub-sections each of which is in turn marked by useful analogies, engaging narratives and schemas that can be applied usefully elsewhere. For example, section 19, “Filtering Truth,” includes a discussion of the “six filters” people use to sift information for credibility. The history and nature of each is explained along with brief illustrations of their relative value and validity (with the Tofflers ending by coming down squarely on the side of the scientific method).
Their embrace of science is part of their larger trumpet call of techno-economic triumph. The core of their claim is that the possibilities offered by information technology multiply the positive effects of all other efforts—that knowledge can be transferred more easily, problems tracked and responded to more promptly, solutions spread across the globe almost instantly and wealth first multiplied, then distributed, in an exhilarating and accelerating wave across the globe. Related technological advances, like mapping the genome (something made possible only through intense computing power), will attack other problems like world hunger through generated genetically modified plants that allow scientists to design crops rather than discover them through slow experimentation.
This integration of information technology is producing, the Tofflers claim, a marked change in the nature of wealth. Wealth had once been primarily tangible: land, gold, etc. It is becoming primarily intangible: knowledge, services, etc. This change is crucial because it becomes “non-rival.” Tangible goods are used up; if one person eats an apple, no one else can. However, intangible goods, like software files, can be used without consuming them. As more of our wealth moves into this category, it becomes “more inexhaustible.”
Heady stuff, and that’s just a bit of what the Tofflers tackle. Their discussion of prosumers (unpaid producers who make up an invisible part of the economy, like volunteers or the contributors to Wikipedia) casts light on just how much formal economics leaves out. Their discussion of the divergent rates of time—how different sections of society not only move at different speeds but also how those speeds are changing—is both intriguing and disturbing. The tensions and inevitable clashes between, say, business and technology surging ahead at one speed and lawmakers and public education system will only get worse.
Revolutionary Wealth is far from perfect. There are several core weaknesses. First, entire sections of this analysis is not particularly new and, in fact, has been made in more focused fashion by others. Second, Revolutionary Wealth is not integrated. An advantage of focusing now on time, now on wealth, now on politics, etc. is it allows one to focus; a disadvantage is that in the real world, all of this slams into one another, and the Tofflers really needed to discuss more explicitly how the myriad factors interact. Third, the optimism is refreshing, but at times it seems to come at the expense of really grappling with, to echo another book’s title, limits to growth. The Tofflers acknowledge dangers like pollution and the energy crisis, but their overwhelming faith in advancing scientific knowledge make these into simple challenges to be met rather than crises that might end the race.
That said, Revolutionary Wealth is a fun ride. It takes the reader into corners of economics that most haven’t visited, and it throws out new and/or useful ideas every few pages.
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The U.S. Constitution does not give Congress the power to regulate smoking or use of tobacco. However, Congress can use the Commerce Clause to regulate smoking or enact a nationwide ban on smoking in public places including restaurants and bars. It has not opted to do so. Consequently, smoke-free laws are a result of state and local occupational safety and health laws.
When smoke-free laws were introduced, critics were quick to point out that it would have a negative effect on many local economies. Many predicted that bars and restaurants would be the most affected by smoke-free laws.
Supporters argue that strong smoke-free laws are important. There is overwhelming scientific evidence that secondhand tobacco smoke is a direct cause of lung cancer, heart disease, and lung and bronchial infections. Smoke-free laws would help protect restaurant and bar employees and patrons from the harms of secondhand smoke. It would also provide people who quit smoking with public environments free from any pressure or temptation to smoke.
New York City implemented the law prohibiting smoking in all of the city’s restaurants and bars on March 30, 2003. The March 2004 report by the New York City Department of Health and Mental Hygiene, Department of Small Business Services, and Economic Development Corporation clearly indicated that since the law went into effect, business receipts for restaurants and bars have increased, employment has risen, virtually all establishments are complying with the law, and the number of new liquor licenses issued has increased. All this indicated that bars and restaurants in New York City are prospering. The business tax receipts for restaurants and bars increased 8.7% from April 1, 2003, to January 31, 2004, compared to the same period in 2002-2003. Between March 2003 to December 2003, employment in New York City restaurants and bars increased by 10,600 jobs. The 2004 Zagat New York City Restaurant Survey revealed that 23% of the nearly 30,000 respondents ate out more often because of the new smoke free laws. Only four percent said they were eating out less.
Commonwealth of Massachusetts’ comprehensive statewide smoke-free law became effective on July 5, 2004. A study conducted by the Harvard School of Public Health revealed that the law did not negatively affect statewide meals and alcoholic beverage excise tax collections.
Delaware passed its smoke-free law in November 2002. A year later, the data from the state’s Alcohol Beverage Control Commission showed that the number of restaurant, tavern, and taproom licenses and employment in the state’s food service and drinking establishments increased in the year since the law took effect.
Though One of Ours won a Pulitzer Prize for Willa Cather when it first came out, it is not the best known of her works. Instead, Cather is known for works like O Pioneers! and My Antonia. It’s easy to see why Cather might have won a Pulitzer for One of Ours, but also why it might be forgotten. Published in 1922, One of Ours was a novel about World War I that tried to blend patriot idealism with realist treatments of violence, all the while evoking personal relationships in ways that are half realistic, half modern and alienated. The “one of ours” of the title is Claude Wheeler, who the novel follows from adolescence, to college and back home to the Nebraska farm again, through a brief disappointing marriage, and on to an untimely death in World War I.
While male writers like Hemingway attacked Cather’s treatment of the war, she’s vividly descriptive in many instances, and these would have brought the war home in sharp, bombshell flashes to her American readers. In fact, at times the mix of domestic elements, artistic and same sex longings, and damage done by the war is almost surreal. (Take a peek at the scenes of the amputee helping in the garden, or the corpse gas bubbling up from the swimming hole and you’ll see what I mean.) Despite this, some writers simply thought her too distant from the war to represent it well.
These days, though, there are other reasons why the novel’s faded. Most of these are simple: Cather’s power often comes from her vivid, intricate memories of her childhood on the Great Plains. She loved these people, these towns, this land, and it comes through. Strikingly, her portrait of these different locations and situations, one of the things that changes is her understanding of their economic structures.
Cather’s descriptions of her Nebraska roots show an economic understanding of the farmer’s world that runs so deep as to be intuitive. Rather than being some pure and Romantic retreat from the world, these farmers calculate at all times. They aren’t cold, and they are by no means purely rational; Claude Wheeler’s family is, without being seen through rose-colored glasses, often loving, especially the women. However, they know what the hired men cost, what it costs to go to school, to town, etc. One of Claude’s father’s first responses to news of the war is an awareness of what this will do to farm prices. He takes the different markets into account, and even, in his way, measures how the distance from the war (and the war’s staging areas in the U.S.) will affect markets, determining where they should ship their crops.
While economics are woven in with other factors—urban backgrounds versus farm, faith vs. reason, economics are always present when Cather’s discussing the Midwest. By contrast, later in the novel, her understanding of economic realities go in and out like a weak radio signal. When Claude’s traveling to Europe, there are vivid sketches of black market dealings among the military, but when he’s actually with his company and marching, Cather’s economic understanding essentially evaporates. She understands that war causes hardship, but there’s no intuitive feel of how this shapes people to match her understanding of the farm economy. In a way, this is what her critics are responding to. It’s a failure to understand specialized economic pressures, as much as a failure to capture violence, that makes the book’s ending unsatisfactory.
The bursting of the housing bubble has not only hurt middle-class and semi-affluent Americans (who thought they were more affluent than they were!), but also the rich and famous. Everyone has heard about Ed McMahon’s troubles – his wife sharing how she’s been so degraded that she now shops at (gasp!) Target of all places – but he’s not the only one. Here are some other celebrities who got over their heads amid the Federal Reserve’s latest flood of monetary liquidity:
Sports fans remember crazy Latrell, who was banned from the NBA for one full year after choking his coach in practice. Later, he infamously said he “had to feed his family” when rebuffing a multi-million dollar contract that apparently wasn’t rich enough to do so.
Sprewell’s last season in the NBA was 2004-05, when he averaged over 30 minutes a game for the Minnesota Timberloves, scoring 12.8 points and grabbing 3.2 rebounds – not all-star numbers, but certainly worthy of a spot in almost any NBA starting lineup. But Sprewell’s attitude kept him from signing a contract for less than he felt could “feed his family,” and two full seasons later, he’s yet to lace up his sneakers for an NBA squad again.
No matter, really. After all, Sprewell earned over $96 million over the course of his 13 years in the NBA – it’s not like he could be hard up for money, right?
This past May, Sprewell’s River Hills, Wisconsin home went into foreclosure. The home’s value was assessed at a mere $668,000 – a nice house to be sure, but pretty pedestrian for a millionaire nearly 100 times over like Sprewell.
Sprewell isn’t the only professional jock to go the route of MC Hammer, albeit in delayed fashion. Evander Holyfield – who infamously said after defeating Mike Tyson that it proved his (Holyfield’s) religion was the true religion; and who piously moralized while fathering a nation of children out of wedlock – will have his $10 million home auctioned off later this month.
Jose Canseco shouldn’t be too hard up for money with the success of his truth-telling steroids expose, Juiced. But he is walking away from his $2.5 million Encino, California home, saying it just doesn’t make sense to keep making payments on it as its value has plummeted since the burst of the bubble. This could be an entirely rational decision.
Michael Jackson has moved to Bahrain and left his infamous Neverland Ranch behind. He apparently also stopped making payments on the mortgage, as it was days away from being auctioned off when a real-estate investment firm purchased the loan. Presumably, “Wacko Jacko” is making good on the payments again, at least for now.
Aretha Franklin, on the other hand, did lose her home in suburban Detroit. The Queen of Soul apparently felt it beneath her highness to pay property taxes, and thus her home was sold in order to satisfy the government’s lien. While I am sympathetic to people taking principled stands against coercive taxation, Ms. Franklin repeatedly said she would pay the back taxes, and in the end, lost her $700,000 home over less than $20,000 in back taxes.
The housing bubble and its subsequent burst were caused by the Federal Reserve’s fiat-money central banking. On the one hand, people such as McMahon, Sprewell, and Franklin should be held responsible for the bad financial decisions they’ve made — just as the heads of all of the middle- and lower-income families have been. But on the other hand, whether it’s Michael Jackson or my parents (who lost their home of nearly 30 years), it must be recognized that the Federal Reserve System obfuscates and sends false signals to market participants. When politicians talk about “helping” the people under the distress of a housing market turned upside down, they cannot be taken seriously unless they first recognize the entity that causes booms and busts: The Federal Reserve.