Anthony Kammer
Several weeks ago, Bob Kuttner published an excellent 1-page piece called “Debtor’s Prison” (pdf) in the American Prospect. The distinction he offers now seems quite clearly to be one of the fundamental battle grounds in American politics—between rentier creditors and debtors. This is a line that’s deeply obscured in our political discourse but one that underlies virtually every economic debate. Reading this article and Paul Krugman’s follow-up offered one of those rare, paradigm-shifting moments where a number of seemingly disparate and complicated elements all fell together into one coherent picture.
The basic idea is that decades of U.S. financial deregulation and the government’s response to the financial crisis have systematically favored the claims of creditors and transferred the losses and downside of their risk to taxpayers, homeowners, and less sophisticated borrowers. To quote Krugman, “everything we’re seeing makes sense if you think of the right as representing the interests of rentiers, of creditors who have claims from the past — bonds, loans, cash — as opposed to people actually trying to make a living through producing stuff.” I also recommend Yves Smith’s post on the costs of rentier rule.