Home > Economy, Law, Politics > American Exceptionalism, Indentured Servitude

American Exceptionalism, Indentured Servitude

November 5, 2010 Leave a comment Go to comments

Pieter Bruegel the Elder, The Harvesters, 1565 -- The Metropolitan Museum of Art

Marco Rubio, the newly elected, 39-year-old Florida senator, is receiving a lot of attention as a potential candidate for national office in 2012. See, for instance, this column from tomorrow’s Globe and Mail asking if he’s the Republican Obama. And he may also be the Republican Party’s most forceful voice of American exceptionalism, as exemplified by these remarks in his acceptance speech Tuesday night: “America is the single greatest nation in all of human history. A place without equal in the history of all mankind” because “almost every other place in the world…what you were going to be when you grow up was determined for you.”

Peter Beinart discussed this quote in a blog post at the Daily Beast two days ago, his comments serving as the starting point for a post by Daniel Larison that I’d like to quote from.

Republicans have made a defense of “American exceptionalism” the thing that is supposed to distinguish them from Obama, and in order to make that claim they have defined American exceptionalism to mean an absurd overconfidence in the political and economic uniqueness and supremacy of America. To take pride in economic opportunity available here, they feel that they must deny that it exists elsewhere. Lacking answers for, or even awareness of, the growing social and economic stratification in their own country, they project it to “almost every other place in the world.” Rubio’s CPAC speech in February marked him as one of the strongest advocates of this notion, which he repeated again in his victory speech last night. It didn’t matter to Rubio then that the U.S. actually lags behind a great many industrialized nations in terms of social mobility, and it still doesn’t matter. . . .

The sort of American exceptionalism that has become the defining feature of Republican rhetoric over at least the last two years seems to require “boasting of the largeness” of America at every turn. This is not healthy admiration for one’s country, but an idolatry that prevents its devotees from seeing things as they are. Last night greatly empowered that idolatry.

As for seeing things as they are, let’s turn to an interview two weeks ago with Joseph Stiglitz, the transcript of which is worth reading in full. (Hat tip: emptywheel.) Stiglitz, the Nobel Prize winning Columbia economist, gives an example late in the interview of how “the legal system has gotten very much out of whack, and which contributed to the financial crisis.” You must read this passage:

In 2005, we passed a bankruptcy reform. It was a reform pushed by the banks. It was designed to allow them to make bad loans to people to who didn’t understand what was going on, and then basically choke them. Squeeze them dry. And we should have called it, “the new indentured servitude law.” Because that’s what it did.

Let me just tell you how bad it is. I don’t think Americans understand how bad it is. It becomes really very difficult for individuals to discharge their debt. The basic principle in the past in America was people should have the right for a fresh start. People make mistakes. Especially when they’re preyed upon. And so you should be able to start afresh again. Get a clean slate. Pay what you can and start again. Now if you do it over and over again that’s a different thing. But at least when there are these lenders preying on you should be able to get a fresh start.

But they [the banks] said, “No, no, you can’t discharge your debt,” or you can’t discharge it very easily. They have a right, now, to take 25% of your before-tax income. Now imagine what that means. Let’s assume that you wound up, as it’s not that hard to do, with a debt equal to 100% of your income. You’re making $40,000, and your debt is $40,000. You have to turn over to the credit card company, to the bank, $10,000 of your before-tax income every year. But, the banks can now charge you 30% interest.

So what does that mean? At the end of the year, you’ve paid the bank $10,000, a quarter of your income. But what you owe the bank has gone from $40,000 to an even larger number because they’re charging you 30%. So you’re debt is larger. So the next year you have to give a quarter of your income again to the bank. And the year after. Until you die.

This is indentured servitude. And we criticize other countries for having indentured servitude of this kind, bonded labor. But in America we instituted this in 2005 with almost no discussion of the consequences. But what it did was encourage the banks to engage in even worse lending practices.

Hey, Marco, can you see this?

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Categories: Economy, Law, Politics
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