The Spanish Prisoner

I recently lost my job at Barnes & Noble after working there part-time for four-and-a-half years. It’s always an odd feeling when you lose a job. It’s as though a part of yourself is suddenly gone.

My fondest memories of working at B&N were the feelings of camaraderie that I often had with my fellow employees. I also enjoyed dealing with the customers (most of them, anyway). Even when people were rude to me, I could often sense that this was the result of difficulties they were having in their lives. (Although I could never forgive people for talking on their cell phones at the same time I was ringing them up.)

Barnes & Noble interests me because it is a perfect example of the trend toward monopolization in capitalism. There used to be lots of small bookstore chains here in the US. (Does anyone remember Paperback Booksmith? They had stores all over the place when I was growing up. Whatever happened to them?) Now there is just Barnes & Noble and Borders (Coke and Pepsi). (B. Dalton is owned by B&N, and Waldenbooks is owned by Borders.) And Borders is rumored to be about to go under at any moment.

I got a sense of B&N’s predatory business practices long before I worked there. Years ago, I worked at the Strand Bookstore in Manhattan. (This was the weirdest place I have ever worked. I could tell lots of stories about it, but I will have to save them for another post.) This store is justly famous for its mind-boggling collection of second-hand, and often obscure, books. While I was there, B&N opened up a huge store a couple of blocks south of the Strand. A few months later, they opened up another huge store just a few blocks north of the Strand.

Gosh, what do you think they were trying to do?

Milton Friedman famously argued that capitalism is about “choice”. Yet capitalism actually narrows our choices. One day you can choose between Barnes & Noble, Borders and a bunch of independent bookstores. The next day you have Barnes & Noble and Borders. Then you have just Barnes & Noble. There’s choice for you!

I must admit that I’m pleased to find that the Strand is still in business, although I must say that when I worked there, they treated their employees very badly. (So much for the “small capitalism” argument.)

During the past year I noticed that B&N has been a lot harder on its employees. No doubt this has something to do with the economic downturn. When things are slow, bosses take it out of their workers’ skin. One day I came in to work, and I was told that a customer had called the store that morning and complained that the night before she had heard me “mumbling”. (I was never told what it was that I was supposedly “mumbling”.) So I was written up for “mumbling”. On another occasion, a manager angrily reprimanded me for washing my hands in the employee break room after clocking out. (I swear, I’m not making this up.)

I once found on the Internet a blog for Barnes & Noble employees. I was delighted. I assumed this was a place where employees would share grievances about the company and perhaps discuss ways they could possibly fight back. To my dismay, I found that, although there was some criticism of management, most of the gripes were about customers. Even worse, many of these complaints were trivial. For example, some bloggers seemed to take great offense that people would sometimes line up in the wrong spot for the cash registers. Well, what do you expect when the registers are surrounded by tables and spinners selling all sorts of knick-knacks? Even Davy Crockett would get lost in such a wilderness. I suppose this is another example of capitalist alienation. Instead of getting mad at your boss who’s screwing you over, you get mad at some poor guy who happens to be standing in the wrong place.

I recently read an article by Sharon Smith on the Socialist Worker website. It contained the following information:

A dozen former executives from mortgage lender Countrywide (which is also now owned by BoA), whose predatory lending practices played a key role in precipitating the sub-prime mortgage crisis, have launched a new corporate entity, the Private National Mortgage Acceptance Company–with a strategy to make exorbitant profits from individuals unable to keep up with their monthly mortgage payments.

Known as PennyMac, the company buys overdue mortgages at steep discounts from the federal government, which took them over from distressed banks. PennyMac then contacts the homeowners to negotiate new terms–and either pushes them into foreclosure or negotiates lower interest rates. It’s a win-win equation for PennyMac.

One of PennyMac’s leaders, Stanley L. Kurland, is a former president at Countrywide and an architect of the classic sub-prime mortgage formula–mortgages with low “teaser” interest rates that later rose sharply. During the six years before Kurland left Countrywide in late 2006, Countrywide’s portfolio increased from $62 billion to $463 billion. Kurland sold $200 million in stocks shortly before leaving Countrywide. Now he stands to make many millions more reaping profits from the same category of people whose lives he helped to destroy.

Federal banking officials nevertheless defend recruiting executives like Kurland to rebuild the financial system. As the New York Times explained: “[Federal officials] said that it was important to do business with experienced mortgage operators like Mr. Kurland, who know how to creatively renegotiate delinquent loans.”

It so happens that I once had a temp job working for Countrywide. (I didn’t last long, I’m proud to say.) I worked at an office they had in L.A. It was located at the foot of the beautiful Santa Suzannah mountains, where a small nuclear reactor melted down in 1959 (but that’s another story). I was hired along with about thirty other temps. We had to go through a week-long training course before we could start work. At one of the these training classes, a high-level executive came to talk to us. She told us quite frankly that Countrywide got all of its income from charging fees for late mortgage payments. (I will never forget the look of glee on this woman’s face as she explained this to us.) Perhaps I was in a state of denial, but it was only after I left this job that I began to put two and two together. If this was their sole source of income, then they had to be luring people into buying mortgages that they couldn’t really afford. People who have difficulty making their payments are likely to default sooner or later. What Countrywide was doing was unsustainable, just as a Ponzi scheme is unsustainable.

Countrywide was a purely parasitical organization. In my opinion, what they did was on the same level as what Bernie Madoff did. The only difference is that what Countrywide did was legal, while what Bernie Madoff did isn’t. Stanley L. Kurland deserves to be in prison just as much as Madoff does. Instead, the Obama administration is looking to him, and others like him, to help revive the economy.