From: Bovine Remailer <haystack@cow.net>
Date: Wed, 4 Dec 1996 12:28:50 -0800 (PST)
To: cypherpunks@toad.com
Subject: No Subject
Message-ID: <9612042014.AA25633@cow.net>
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At 11:26 AM 12/4/1996, Matthew J. Miszewski wrote:
>>>I consider it my business also, when people are denied opportunity because
>>>of where they live.
>>
>>Why not simply disagree with me?  You do not believe that people may
>>lend their very own money, earned honestly, to anybody they please.
>
>Actually, I never said that.

You say it below.

>Anyone may.  I may hire only white people (even with the intent not
>to hire others).  I will also pay the consequences.  And if someone
>feels that they need to do this, the teachers of civil disobedience
>indeed state it is their duty to.
>
>Anyone may give their money to whomever they choose.  I was simply stating
>it was morally wrong.
>
>>If you are ashamed of that, change your mind.  If you are not ashamed,
>>proclaim it the world and justify it.
>
>I have never been ashamed of my opinions.  Its just that I never said they
>couldn't do it.  I justify my position as follows:
>
>It is costly to everyone in the state to have areas of under and
>unemployment, poverty and usually high-crime rates.
>
>It is unjust and costly to deny opportunity based upon residence.
>
>It is just and efficient to allow markets to indeed be free instead of
>falsely supporting a certain hegemony based upon residence.
>
>Free and full competition is the only way to achieve a free market.  This
>can only happen when access to capital is equal with regard to worthless
>indicators (race, sex, residence and aga's favorite, sexual orientation).

See, right above there.

If I earned my very own money honestly and I choose to lend it only to
Albanians, you believe that this would be inefficient and, therefore,
forbidden.  In other words, you do not believe that I should be able
to lend money to anybody I please.  You can call it "equal access to
capital" or "denial of opportunity", but the clearest and simplest
description is that you believe I should not be able to lend my money
to whomever I please.  Instead of pretending otherwise, just say "I
believe you should not be able to lend your own money which you earned
honestly to anybody you please.  I believe you should be allowed only
to lend money in these circumstances..."

Of course, non-discrimination is a vague term.  Let's say I lend money
only to people I know.  I only know Albanians.  Am I therefore a
racist in my lending practices?  That is unclear.

Am I racist in my choice of friends?  Perhaps we should make that
illegal.

>I have never suggested that provably bad credit risks should be given money.

What is irksome is that you are talking about Other People's Money and
not your own.  The perspective tends to change when it's your own
savings on the line.

>>>I may also hire whomever I wish, but I would have to pay the
>>>consequences if I happened to discriminate based on a protected class
>>>while doing so.  That is the society in which I live.  If I dont like
>>>it, I try to change it.  Our society is not libertarian.
>>
>>Current policy doesn't matter if we are discussing the wisdom or
>>justice of possible policies.
>
>It does if my argument is that this part of the system *is* just.  I
>realize you disagree, but I am sure you are not dismissing my argument
>out-of-hand.  If you disagree, as you say, then disagree.

Actually, I have trouble following your argument.  Please forgive me
for my limited intelligence.

If you are arguing that the current policy is just, that question is
not related to whether it is the current policy.  But, I suppose you
were just sort of observing on the side something like "oh, and by the
way, this is current policy."

>>It isn't clear to me whether you are discussing policy options or
>>whether one should violate laws one does not like.  When an action is
>>illegal, it is still permissible to discuss its legalization.
>
>I agree.  I am not arguing that we need to withdraw Title VII.  Aparently
>you are?

I do not know what is in Title VII.  Perhaps it would be better to ask
me about particular policies.

>>>There are times when government should intervene.  I believe it
>>>should be as infrequent as possible, but would not want to live in a
>>>society where disinfranchised people have no possible recourse.  Your
>>>choice would apparently be different.
>>
>>Perhaps.  In any event, it is important to understand precisely the
>>mechanisms through which people are disenfranchised, if that is in
>>fact what has happened.  It is also important to understand the
>>ramifications of phrases like "no possible recourse".  To borrow
>>money?  It is safe to say that most poor people should be saving money
>>rather than borrowing it.
>
>Why are you stepping around your opinion?  "...if that is in fact what has
>happened."  Just say it.  You do not believe poor people are
>disenfranchised.

In fact, I am open to the possibility that poor people really are
disenfranchised.  But, if I am to believe that I must hear an
explanation that makes sense to me.  If poor people are poor because
absolutely nobody will do business with them for completely irrational
reasons, that seems extremely unlikely.  Even if most rich people are
able to control their greed just to punish poor people of the wrong
race, which is already hard to believe, you actually have to claim
that they are all this way.

>I understand the ramifications of "no possible recourse".  How should
>poor people save money?

Just like anybody else does.  You watch every penny.  You don't eat
meat.  When you buy food, you buy inexpensive healthy food like
lentils instead of expensive unhealthy food like Coca-Cola and potato
chips.  You do not go to McDonald's.  You walk when you can instead of
taking the bus or you ride a (used) bicycle.  You don't smoke
cigarettes.  You do not buy alcohol.  You do not buy other
recreational drugs.  You buy your clothing used.  You economize on
your living arrangements, perhaps by having a large number of
roomates.  (Note that this is illegal in most cities.  That is a form
of disenfranchisment.)  You do not make long distance calls.  If you
can, you share a phone with other people. etc. etc. etc.

If you know poor people, you will know that few of them do these
things.

Also, you work hard to increase your earnings.  You show up at work on
time every time.  You develop a good work ethic.  You wear clean
professional clothing at work.  You treat your employer and coworkers
with respect.  etc. etc. etc.

Read "Your Money or Your Life" by Joe Dominguez and Vicki Robin.  It
outlines a workable program that all poor people - and quite a few
others - will be able to use to their benefit.

>>>I have not heard serious doubts for a while that redlining occurs.
>>
>>It seems likely that people draw lines around certain areas and decide
>>not to lend money there.  What is less clear is that this is
>>unreasonable.  There may be a few good credit risks in poor
>>neighborhoods.  But, it may just be too much trouble weeding through
>>the others to make it a paying business.
>
>I thought that it didnt matter where people came from as long as the risk
>was low in reality.  Banks weed through the people coming to them from the
>suburbs.  Is it harder for them to see past a red line?  More costly?  How?

If you are going through prospective leads and the number of qualified
people is, say, 10 in 1000, you will make a lot more money than going
through a pool of leads that only has 1 qualified person per 1000.

>>It may also be the case that people lending money are behaving
>>irrationally and drawing lines around neighborhoods for simple racial
>>reasons and for no others.  There is a word for this: opportunity.
>
>It also screws up the market.

But why isn't that good news?  If it's really market inefficiency, why
not exploit it?

>I am glad that you admit that racism is irrational.

A lot of human activity is irrational.

In the case of racism, it is difficult to even define what it is for
the purpose of writing a law under which people are to be prosecuted.
This undermines the rule of law in the United States and opens the way
to abuse and political corruption.  Probably that was the idea.

But, even if it were possible to define precisely what racism is, I
would still believe it should be legal.  There is no accounting for
taste and it is wrong to dictate it to other people when they are
causing no harm to others.

>That is the core as to why the problem doesnt go away.  It is an
>infinite loop.  Current interests wont go there.

Not one?  Absolutely no one?  That's pretty hard to believe.

>Generally, people who understand the problem are without access to
>capital.  They would like to go there.  They cant get capital.  When
>they approach current interests, they wont go there.

Maybe there's something funny about the deal.

>>Bank of America was built by a man who perceived and exploited one
>>such opportunity.  Italian shop keepers in California could not get
>>good banking services for, it turned out, irrational reasons.

>There are a few examples of people who actually realize this as a
>problem/opportunity.  Oddly enough, this point reinforces mine.
>Redlining did exist.  Bank of America realized it and made a lot of
>money.  But it still exists elsewhere.  Why dont business plans
>around the country spring up on venture capitalists desks with an
>approved stamp on them?

More to the point, why isn't Matthew J. Miszewski drooling in
anticipation of all the money he is going to make by recognizing this
glorious opportunity?  Giannini made a tremendous amount of money.

Even if you don't care about money, which is unlikely, think of all
the good you could do once you made that fortune!

>>They don't even have to put the money in for a long
>>time.  Once you've set up a package of mortgages, you can sell them
>>off on the CMO market which is liquid and, I believe, quite
>>colorblind.  The beauty of this scheme is that you can take your
>>profits right away and let other people take on the long term interest
>>rate risk, default risk, and management hassles.  This will make your
>>plan easier to sell to investors.
>
>I agree with you that it is a financially attractive proposition.  At the
>Center for Public Representation where I worked during Law School we
>approached investors.  The ROI was extremely attractive not to mention the
>added "goodwill" in a largely liberal community (I went to Law School in
>Madison, Wisconsin).  No one bit.  Hmm?

Hmmm?  Maybe it was lousy investment in spite of a good ROI number.
Nobody?  Not one person was willing to buy in?  Hardly an endorsement.

>>You might also look into the microlending market.  The idea is to lend
>>poor people small amounts of money (less than $10,000) to start
>>businesses and the like.  The default rates are claimed to be
>>surprisingly low.  I have my doubts, but it sounds as if you do not.
>>Good luck.
>
>Actually, I am very glad you brought it up because I was just going to.
>Microloans are successful not only in this country but in India and around
>the world as well.  The Grammeen Bank initiated its microloan program in
>India by loaning usually less than $100 to individuals.  They fixed up
>their residences or started extremely small businesses.  The default rate
>was less than 5%.  (BTW, the system also encouraged community by a system
>of cyclical neighborhood lending where neighbors took responsibility for
>neighbors).  
>
>Compare this now to people whom banks would generally consider a good risk.
>College Graduates.  Generally, these folks live outside of the red line.
>Good risks right?  What about those nasty student loan default rates?  The
>red lines dont make business sense.

I'm hearing that cash register ringing.  Go for it!

>>>When you are working to make sure all the bills are paid it is a bit
>>>difficult to also build an entirely new socio-economic structure.
>>
>>You don't have to build an entirely new socio-economic structure.  You
>>just have to find some good credit risks, some people with money to
>>lend, and put them together taking a cut for yourself, unless the
>>government has thrown up some obstacles to this.
>
>I wish it were this easy.  Economically depressed areas need new structures
>built.  The current structure adds to the cycle of poverty.  First,
>earnings are low.

Guess rents must be low too, otherwise why live there?  Rents are a
dominant expense for poor people.

>Second, costs are high (Warehouse foodstores dont locate there so
>corner stores become the means of feeding the family ($$$)).

That's easy.  Once a month get ten families together to go to the
nearest warehouse store in the suburbs and stock up on provisions.

Or, one poor family could buy a bunch of stuff every month and sell it
out of their house and save everybody the trip.

Discussions regarding "the cycle of poverty" are usually little more
than litanies of excuses.

>Again, business plans have been presented to no avail.  Even private
>foundation subsidized events were tried.  To no avail.

Gee, you would almost think there was something wrong with the
investment.

I challenge you to put your own money into this venture.  You don't
even have to quit your job to get into the microlending business until
you've built it up to the point where it can support you.

>>If you believe that there is a huge opportunity which the racist banks
>>(i.e., all of them) will not take advantage of, you had better explain
>>why there is nobody anywhere with any capital who wouldn't want to
>>make even more money off poor people.  Can it really be the case that
>>99+% of rich people will run fleeing from such a great opportunity?
>
>I once believed much like you.  I saw an "opportunity" the existance of
>which I could not explain.  It seemed irrational.  And it was.

What I don't understand is why you are not excited by this
opportunity.  You claim there is this gaping hole in the banking
business.  If that is true, whoever exploits it is going to be
unbelievably rich in addition to being a great human being.

My point is not that there is a great opportunity so "somebody
somewhere" will solve the racism problem.  My point is that you
yourself do not believe there is a great opportunity if it involves
money you really care about, i.e. your own.

>Racism is irrational.  As you seem aware (BTW, I applaud you on what
>seems to be an honest degree of care)...

Don't get your hopes up.  I've been poor and I've known many poor
people.  The unpleasant truth is that there are usually reasons why
people are poor.

>>Oh, and speaking of racism, where do wealthy African-Americans invest
>>their money?
>
>Huh?  What is your point?

You are claiming that there are ZERO investors who will invest in this
great opportunity because they are racists.  Contrary to popular
belief, most African-Americans are not poor or even gang members.
There are large numbers of middle class African-Americans and a
smaller number of quite successful African-American businesspeople.

If everybody rich is a racist, go to these people and propose that
they can make money pursuing a business opportunity which they are
uniquely qualified to identify and exploit.

If you are claiming that even African-American investors are
irrationally racist about lending to poor people, you should be
forewarned that I and many other people are going to find that a
little hard to believe.

>>>Everyone can now clamor that it just isnt true.  Banks have never
>>>discriminated.  Its all a big lie.  Whatever.
>>
>>Banks have practiced discrimination, and not just against black
>>people.  They have been able to get away with it.  How?  Because the
>>government has protected the banking guild from competition.
>>
>>If opening a bank were as easy as forming a corporation, you would not
>>see much discrimination, I assure you.  There is no reason why a bank
>>shouldn't be that easy to open.
>
>We agree.  But I feel that a legal elimination of redlining would decrease
>costs to the industry.

Wrong.  Redlining is devilishly difficult to define.  That hurts a
small bank more than any other because they have to figure out how to
comply with the law and defend themselves against the regulators
instead of just borrowing and lending money.  It raises the costs of
banking.  That means it is harder for people to borrow and lend money.
And that, if you care about efficiency, is inefficient.

>>Appeals to the very people who are exploiting you are not likely
>>to meet with success, are they?
>
>If they never did we would still have slavery and only white, adult, male,
>land-owners would vote.  While success is rare, it has prevailed when the
>cause is just.

I hate to admit it, but you do have a point here.

However, the way privacy will be permanently eroded is through laws
called "The Privacy Protection Act" which have clauses allowing the
government to do whatever it wants.  It is disconcerting to have the
government dictating what information you may or may not keep on your
computer or who you may give it to.

Red Rackham