Doug usefully points out that the strategy behind the campaign is flawed because of the fungibility and mobility of money. You can't ensure that your money will be put to good, local uses by picking a local bank; at any rate, the banks that the campaign's zip-code-based locator suggests are not necessarily good ones or insulated from big banks and global capital.
I did check my zip code in humble East Boston and found East Boston Savings Bank and some credit unions—maybe Doug's Brooklyn neighborhood is tonier than mine and has not only more banks, but slimier ones. I wouldn't want to face trying to be a PC financial consumer in New York City, even if I had any money to park.
Doug's crack about HuffPo is on the money, but it's even worse than he says. HuffPo thrives on the paid labor of interns, in the sense that the interns pay for the privilege of interning at HuffPo, as widely reported last spring.
Anyway, here's part of Doug's take; I strongly encourage everyone to subscribe to LBO and/or purchase the January issue go get the full article:
The latest populist spasm is Arianna Huffington's "Move Your Money" campaign, which would have those of us with money in large banks move it to small ones. This touches on another foundational populist fantasy: that virtue and size are inversely related. Her website, which thrives on the unpaid labor of hundreds of eager contributors, even provides a helpful list of convenient local banks if you enter your zip code.
What's wrong with this scheme? Several things. First, many small banks have more money than they can profitably invest locally. As Barbara Garson shows in her wonderful book, Money Makes the World Go Around, the portion of her book advance she deposited in tiny upstate New York bank was probably lent via the fed funds market to Chase, where it entered the global circuit of capital. This is not at all uncommon. Money is fungible, protean, and highly mobile even when it looks locally rooted. That very mutability is part of what makes money so valuable: it's the ideal form of general wealth that can instantly be turned into caviar, lodging, Swedish massage, or shares of Google.
Read the whole article.
Subscribe to LBO.
So what are we saying, the big banks have us by the short ones and there's nothing at all we can do about it? How inspirational. Maybe it's time to promote alternative institutions for depositors who want some of their money to stay in the community. There are community loan funds out there already.
ReplyDeleteI agree with the previous post. Every time I hear a criticism of the Move Your Money movement, it's always using some technical jargon and finance philosophical mumbo-jumbo to conclude "Moving your money doesn't matter, there's nothing you can do."
ReplyDeleteHi GLI--thanks for the comment. I am ambivalent on this. As you might guess from my first post, I don't see anything particularly wrong with the Move Your Money campaign, as long as people don't imagine that on its own it will bring about huge changes in the banking sector. (I remember that I used to rather passively and unreflectively believe in what I now call "PC consumerism," until I bought my first car, and found myself unconsciously wondering what the PC petroleum company was—and then immediately realizing how ridiculous that was. Effective political action against the oil companies for their many crimes—as against the banks for their many crimes—will have to come from other kinds of activism. Doug H.'s article doesn't really tell us much about what that activism would be, though (which is why, I'm guessing, GLI interprets Doug as saying "there's nothing you can do").
ReplyDeleteThere's one other merit to Doug's argument, though, which is that the MYM campaign might rely on misunderstandings about money and about the banking system, and the campaign itself might reinforce those misunderstandings, and thereby make it harder to take other, more effective action against the banks and the banking system (or other economic activism, if, as Doug seems to suggest, the financial sector shouldn't be the primary target of people's ire). That makes some sense to me. But again, it would be helpful if critics of an activist strategy could point to alternative strategies, and explain how the alternatives are grounded in a better understanding of the actual politics and economics of the situation. —CS