One of the most interesting and under-covered moments in the Swamp last week was Representative Alexandria Ocasio-Cortez’s reaction to Facebook’s new cryptocurrency, Libra (the digital coin is the subject of my Monday newspaper column this week).
During House Finance Committee hearings, she grilled David Marcus, the head of the Libra project, on whether the “massive corporations” developing and managing Libra (which include not only Facebook, but a number of others like Uber, Visa, etc) were “democratically elected”, and why Congress should allow a system in which people’s pay could be “controlled by a corporation instead of a sovereign government”, particularly one that has already been a platform for election meddling and privacy violations.
It was a query that came out of Marcus’ assertion that he wouldn’t mind his own salary being paid in Libra. But AOC — who is a master of visual as well as social media — showed both her economic and political chops by pointing out — with dramatic pauses — that in history, there has been a name for such privately controlled currency — scrip.
It’s an incredibly loaded term for company-issued coin, commonly used in the 19th century and even early 20th century, as a substitute for dollars in mining or logging towns that were essentially owned by a single corporation. Companies could amass even more power than they already had by paying workers in scrip, which would be the only kind of currency accepted in company run stores, or for services provided in one-company towns. This is one of the issues, by the way, that helped launch the last major wave of union organising in the US following the Great Depression.
Most countries, like the UK, banned such systems ages ago. But American companies have a bad and recent history with script. In 2008, the Mexican Supreme Court ruled that Walmart’s local subsidiary had to stop paying employees with vouchers only redeemable at Walmart stores. Likewise, Amazon has come under fire for creating a game in which employees with the highest number of orders are rewarded with Amazon vouchers.
The whole dicey practice was immortalised by singer Merle Travis. I can remember his song, which played not infrequently on country music stations in my hometown of Frankfort, Indiana (a railroad town) when I was a kid: “You load sixteen tons, and what do you get? Another day older and deeper in debt . . . Saint Peter don’t you call me ‘cause I can’t go, I owe my soul to the company store.” (And here, I’ll invite you, Ed, as well as all Swampians, to send in thoughts about which song lyrics they find most instructive about capitalism, finance and business — we’ll share the best ones in a future Note).
All of it just confirms my feeling that the role of the corporation in society will be one of the most defining topics of the 2020 elections. As far as the Libra hearings, I’d mark it AOC one, crypto-libertarians zero.
Jane Mayer rightfully revisits whether Al Franken’s downfall came too speedily, in The New Yorker.
I am just cracking open Yale professor Daniel Markovits’ new book, The Meritocracy Trap, about how the rise of a supposedly merit-driven upper class has actually increased inequality — not to mention made all of us exhausted and unhappy. I am betting this will be one of the Big Books of the autumn.
In the FT, Gideon Rachman’s powerful piece about populism and echoes from the 1930s is a must read. It put me in mind of a question that came up recently at a reading for a book about my friend Anya Schiffrin’s grandfather, the publisher Jacques Schiffrin, who had to flee the Nazis: “How do you know when to go?”
Edward Luce responds
Rana, I’m not sure that Monty Python was what you were looking for but their “Money Song” is mandatory: “There is nothing quite as wonderful as money! There is nothing like a newly minted pound! Everyone must hanker for the butchness of a banker, it’s accountancy that makes the world go round! You can keep your Marxist ways, for it’s only just a phase . . . ” and so on. I agonised between Abba and Dire Straits and opted for the latter, which is even more dated than Monty Python: “Now look at them yo-yo’s, That’s the way you do it, You play the guitar on the MTV, That ain’t workin’, that’s the way you do it, Money for nothin’ and your chicks for free.”
All these lines about money girded my view that we need a good central bank to regulate it (Libra will never substitute for fiat money). For Fed watchers I naturally turned to Elvis Presley’s “Love Me Tender”. “Love me tender, Love me true, All my dreams fulfil, For my darling I love you, and I always will.”