Prison-tech company bribed jails to ban in-person visits
I'm on tour with my new, nationally bestselling novel The Bezzle! Catch me in BOSTON with Randall "XKCD" Munroe (Apr 11), then PROVIDENCE (Apr 12), and beyond!
Beware of geeks bearing gifts. When prison-tech companies started offering "free" tablets to America's vast army of prisoners, it set off alarm-bells for prison reform advocates – but not for the law-enforcement agencies that manage the great American carceral enterprise.
The pitch from these prison-tech companies was that they could cut the costs of locking people up while making jails and prisons safer. Hell, they'd even make life better for prisoners. And they'd do it for free!
These prison tablets would give every prisoner their own phone and their own video-conferencing terminal. They'd supply email, of course, and all the world's books, music, movies and games. Prisoners could maintain connections with the outside world, from family to continuing education. Sounds too good to be true, huh?
Here's the catch: all of these services are blisteringly expensive. Prisoners are accustomed to being gouged on phone calls – for years, prisons have done deals with private telcos that charge a fortune for prisoners' calls and split the take with prison administrators – but even by those standards, the calls you make on a tablet are still a ripoff.
Sure, there are some prisoners for whom money is no object – wealthy people who screwed up so bad they can't get bail and are stewing in a county lockup, along with the odd rich murderer or scammer serving a long bid. But most prisoners are poor. They start poor – the cops are more likely to arrest poor people than rich people, even for the same crime, and the poorer you are, the more likely you are to get convicted or be suckered into a plea bargain with a long sentence. State legislatures are easy to whip up into a froth about minimum sentences for shoplifters who steal $7 deodorant sticks, but they are wildly indifferent to the store owner's rampant wage-theft. Wage theft is by far the most costly form of property crime in America and it is almost entirely ignored:
So America's prisons are heaving with its poorest citizens, and they're certainly not getting any richer while they're inside. While many prisoners hold jobs – prisoners produce $2b/year in goods and $9b/year in services – the average prison wage is $0.52/hour:
(In six states, prisoners get nothing; North Carolina law bans paying prisoners more than $1/day, the 13th Amendment to the US Constitution explicitly permits slavery – forced labor without pay – for prisoners.)
Likewise, prisoners' families are poor. They start poor – being poor is a strong correlate of being an American prisoner – and then one of their breadwinners is put behind bars, taking their income with them. The family savings go to paying a lawyer.
Prison-tech is a bet that these poor people, locked up and paid $1/day or less; or their families, deprived of an earner and in debt to a lawyer; will somehow come up with cash to pay $13 for a 20-minute phone call, $3 for an MP3, or double the Kindle price for an ebook.
How do you convince a prisoner earning $0.52/hour to spend $13 on a phone-call?
Well, for Securus and Viapath (AKA Global Tellink) – a pair of private equity backed prison monopolists who have swallowed nearly all their competitors – the answer was simple: they bribed prison officials to get rid of the prison phones.
Not just the phones, either: a pair of Michigan suits brought by the Civil Rights Corps accuse sheriffs and the state Department of Corrections of ending in-person visits in exchange for kickbacks from the money that prisoners' families would pay once the only way to reach their loved ones was over the "free" tablets:
These two cases are just the tip of the iceberg; Civil Rights Corps says there are hundreds of jails and prisons where Securus and Viapath have struck similar corrupt bargains:
And it's not just visits and calls. Prison-tech companies have convinced jails and prisons to eliminate mail and parcels. Letters to prisoners are scanned and delivered their tablets, at a price. Prisoners – and their loved ones – have to buy virtual "postage stamps" and pay one stamp per "page" of email. Scanned letters (say, hand-drawn birthday cards from your kids) cost several stamps:
Prisons and jails have also been convinced to eliminate their libraries and continuing education programs, and to get rid of TVs and recreational equipment. That way, prisoners will pay vastly inflated prices for streaming videos and DRM-locked music.
The icing on the cake? If the prison changes providers, all that data is wiped out – a prisoner serving decades of time will lose their music library, their kids' letters, the books they love. They can get some of that back – by working for $1/day – but the personal stuff? It's just gone.
Readers of my novels know all this. A prison-tech scam just like the one described in the Civil Rights Corps suits is at the center of my latest novel The Bezzle:
Prison-tech has haunted me for years. At first, it was just the normal horror anyone with a shred of empathy would feel for prisoners and their families, captive customers for sadistic "businesses" that have figured out how to get the poorest, most desperate people in the country to make them billions. In the novel, I call prison-tech "a machine":
a million-armed robot whose every limb was tipped with a needle that sank itself into a different place on prisoners and their families and drew out a few more cc’s of blood.
But over time, that furious empathy gave way to dread. Prisoners are at the bottom of the shitty technology adoption curve. They endure the technological torments that haven't yet been sanded down on their bodies, normalized enough to impose them on people with a little more privilege and agency. I'm a long way up the curve from prisoners, but while the shitty technology curve may grind slow, it grinds fine:
The future isn't here, it's just not evenly distributed. Prisoners are the ultimate early adopters of the technology that the richest, most powerful, most sadistic people in the country's corporate board-rooms would like to force us all to use.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
How to shatter the class solidarity of the ruling class
I'm touring my new, nationally bestselling novel The Bezzle! Catch me WEDNESDAY (Apr 11) at UCLA, then Chicago (Apr 17), Torino (Apr 21) Marin County (Apr 27), Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!
Audre Lorde counsels us that "The Master's Tools Will Never Dismantle the Master's House," while MLK said "the law cannot make a man love me, but it can restrain him from lynching me." Somewhere between replacing the system and using the system lies a pragmatic – if easily derailed – course.
Lorde is telling us that a rotten system can't be redeemed by using its own chosen reform mechanisms. King's telling us that unless we live, we can't fight – so anything within the system that makes it easier for your comrades to fight on can hasten the end of the system.
Take the problems of journalism. One old model of journalism funding involved wealthy newspaper families profiting handsomely by selling local appliance store owners the right to reach the townspeople who wanted to read sports-scores. These families expressed their patrician love of their town by peeling off some of those profits to pay reporters to sit through municipal council meetings or even travel overseas and get shot at.
In retrospect, this wasn't ever going to be a stable arrangement. It relied on both the inconstant generosity of newspaper barons and the absence of a superior way to show washing-machine ads to people who might want to buy washing machines. Neither of these were good long-term bets. Not only were newspaper barons easily distracted from their sense of patrician duty (especially when their own power was called into question), but there were lots of better ways to connect buyers and sellers lurking in potentia.
All of this was grossly exacerbated by tech monopolies. Tech barons aren't smarter or more evil than newspaper barons, but they have better tools, and so now they take 51 cents out of every ad dollar and 30 cents out of ever subscriber dollar and they refuse to deliver the news to users who explicitly requested it, unless the news company pays them a bribe to "boost" their posts:
The news is important, and people sign up to make, digest, and discuss the news for many non-economic reasons, which means that the news continues to struggle along, despite all the economic impediments and the vulture capitalists and tech monopolists who fight one another for which one will get to take the biggest bite out of the press. We've got outstanding nonprofit news outlets like Propublica, journalist-owned outlets like 404 Media, and crowdfunded reporters like Molly White (and winner-take-all outlets like the New York Times).
But as Hamilton Nolan points out, "that pot of money…is only large enough to produce a small fraction of the journalism that was being produced in past generations":
For Nolan, "public funding of journalism is the only way to fix this…If we accept that journalism is not just a business or a form of entertainment but a public good, then funding it with public money makes perfect sense":
Having grown up in Canada – under the CBC – and then lived for a quarter of my life in the UK – under the BBC – I am very enthusiastic about Nolan's solution. There are obvious problems with publicly funded journalism, like the politicization of news coverage:
But the worst version of those problems is still better than the best version of the private-equity-funded model of news production.
But Nolan notes the emergence of a new form of hedge fund news, one that is awfully promising, and also terribly fraught: Hunterbrook Media, an investigative news outlet owned by short-sellers who pay journalists to research and publish damning reports on companies they hold a short position on:
https://hntrbrk.com/
For those of you who are blissfully distant from the machinations of the financial markets, "short selling" is a wager that a company's stock price will go down. A gambler who takes a short position on a company's stock can make a lot of money if the company stumbles or fails altogether (but if the company does well, the short can suffer literally unlimited losses).
Shorts have historically paid analysts to dig into companies and uncover the sins hidden on their balance-sheets, but as Matt Levine points out, journalists work for a fraction of the price of analysts and are at least as good at uncovering dirt as MBAs are:
What's more, shorts who discover dirt on a company still need to convince journalists to publicize their findings and trigger the sell-off that makes their short position pay off. Shorts who own a muckraking journalistic operation can skip this step: they are the journalists.
There's a way in which this is sheer genius. Well-funded shorts who don't care about the news per se can still be motivated into funding freely available, high-quality investigative journalism about corporate malfeasance (notoriously, one of the least attractive forms of journalism for advertisers). They can pay journalists top dollar – even bid against each other for the most talented journalists – and supply them with all the tools they need to ply their trade. A short won't ever try the kind of bullshit the owners of Vice pulled, paying themselves millions while their journalists lose access to Lexisnexis or the PACER database:
The shorts whose journalists are best equipped stand to make the most money. What's not to like?
Well, the issue here is whether the ruling class's sense of solidarity is stronger than its greed. The wealthy have historically oscillated between real solidarity (think of the ultrawealthy lobbying to support bipartisan votes for tax cuts and bailouts) and "war of all against all" (as when wealthy colonizers dragged their countries into WWI after the supply of countries to steal ran out).
After all, the reason companies engage in the scams that shorts reveal is that they are profitable. "Behind every great fortune is a great crime," and that's just great. You don't win the game when you get into heaven, you win it when you get into the Forbes Rich List.
Take monopolies: investors like the upside of backing an upstart company that gobbles up some staid industry's margins – Amazon vs publishing, say, or Uber vs taxis. But while there's a lot of upside in that move, there's also a lot of risk: most companies that set out to "disrupt" an industry sink, taking their investors' capital down with them.
Contrast that with monopolies: backing a company that merges with its rivals and buys every small company that might someday grow large is a sure thing. Shriven of "wasteful competition," a company can lower quality, raise prices, capture its regulators, screw its workers and suppliers and laugh all the way to Davos. A big enough company can ignore the complaints of those workers, customers and regulators. They're not just too big to fail. They're not just too big to jail. They're too big to care:
Would-be monopolists are stuck in a high-stakes Prisoner's Dilemma. If they cooperate, they can screw over everyone else and get unimaginably rich. But if one party defects, they can raid the monopolist's margins, short its stock, and snitch to its regulators.
It's true that there's a clear incentive for hedge-fund managers to fund investigative journalism into other hedge-fund managers' portfolio companies. But it would be even more profitable for both of those hedgies to join forces and collude to screw the rest of us over. So long as they mistrust each other, we might see some benefit from that adversarial relationship. But the point of the 0.1% is that there aren't very many of them. The Aspen Institute can rent a hall that will hold an appreciable fraction of that crowd. They buy their private jets and bespoke suits and powdered rhino horn from the same exclusive sellers. Their kids go to the same elite schools. They know each other, and they have every opportunity to get drunk together at a charity ball or a society wedding and cook up a plan to join forces.
This is the problem at the core of "mechanism design" grounded in "rational self-interest." If you try to create a system where people do the right thing because they're selfish assholes, you normalize being a selfish asshole. Eventually, the selfish assholes form a cozy little League of Selfish Assholes and turn on the rest of us.
Appeals to morality don't work on unethical people, but appeals to immorality crowds out ethics. Take the ancient split between "free software" (software that is designed to maximize the freedom of the people who use it) and "open source software" (identical to free software, but promoted as a better way to make robust code through transparency and peer review).
Over the years, open source – an appeal to your own selfish need for better code – triumphed over free software, and its appeal to the ethics of a world of "software freedom." But it turns out that while the difference between "open" and "free" was once mere semantics, it's fully possible to decouple the two. Today, we have lots of "open source": you can see the code that Google, Microsoft, Apple and Facebook uses, and even contribute your labor to it for free. But you can't actually decide how the software you write works, because it all takes a loop through Google, Microsoft, Apple or Facebook's servers, and only those trillion-dollar tech monopolists have the software freedom to determine how those servers work:
That's ruling class solidarity. The Big Tech firms have hidden a myriad of sins beneath their bafflegab and balance-sheets. These (as yet) undiscovered scams constitute a "bezzle," which JK Galbraith defined as "the magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it."
The purpose of Hunterbrook is to discover and destroy bezzles, hastening the moment of realization that the wealth we all feel in a world of seemingly orderly technology is really an illusion. Hunterbrook certainly has its pick of bezzles to choose from, because we are living in a Golden Age of the Bezzle.
Which is why I titled my new novel The Bezzle. It's a tale of high-tech finance scams, starring my two-fisted forensic accountant Marty Hench, and in this volume, Hench is called upon to unwind a predatory prison-tech scam that victimizes the most vulnerable people in America – our army of prisoners – and their families:
The scheme I fictionalize in The Bezzle is very real. Prison-tech monopolists like Securus and Viapath bribe prison officials to abolish calls, in-person visits, mail and parcels, then they supply prisoners with "free" tablets where they pay hugely inflated rates to receive mail, speak to their families, and access ebooks, distance education and other electronic media:
But a group of activists have cornered these high-tech predators, run them to ground and driven them to the brink of extinction, and they've done it using "the master's tools" – with appeals to regulators and the finance sector itself.
Writing for The Appeal, Dana Floberg and Morgan Duckett describe the campaign they waged with Worth Rises to bankrupt the prison-tech sector:
Here's the headline figure: Securus is $1.8 billion in debt, and it has eight months to find a financier or it will go bust. What's more, all the creditors it might reasonably approach have rejected its overtures, and its bonds have been downrated to junk status. It's a dead duck.
Even better is how this happened. Securus's debt problems started with its acquisition, a leveraged buyout by Platinum Equity, who borrowed heavily against the firm and then looted it with bogus "management fees" that meant that the debt continued to grow, despite Securus's $700m in annual revenue from America's prisoners. Platinum was just the last in a long line of PE companies that loaded up Securus with debt and merged it with its competitors, who were also mortgaged to make profits for other private equity funds.
For years, Securus and Platinum were able to service their debt and roll it over when it came due. But after Worth Rises got NYC to pass a law making jail calls free, creditors started to back away from Securus. It's one thing for Securus to charge $18 for a local call from a prison when it's splitting the money with the city jail system. But when that $18 needs to be paid by the city, they're going to demand much lower prices. To make things worse for Securus, prison reformers got similar laws passed in San Francisco and in Connecticut.
Securus tried to outrun its problems by gobbling up one of its major rivals, Icsolutions, but Worth Rises and its coalition convinced regulators at the FCC to block the merger. Securus abandoned the deal:
https://worthrises.org/blogpost/securusmerger
Then, Worth Rises targeted Platinum Equity, going after the pension funds and other investors whose capital Platinum used to keep Securus going. The massive negative press campaign led to eight-figure disinvestments:
Now, Securus's debt became "distressed," trading at $0.47 on the dollar. A brief, covid-fueled reprieve gave Securus a temporary lifeline, as prisoners' families were barred from in-person visits and had to pay Securus's rates to talk to their incarcerated loved ones. But after lockdown, Securus's troubles picked up right where they left off.
They targeted Platinum's founder, Tom Gores, who papered over his bloody fortune by styling himself as a philanthropist and sports-team owner. After a campaign by Worth Rises and Color of Change, Gores was kicked off the Los Angeles County Museum of Art board. When Gores tried to flip Securus to a SPAC – the same scam Trump pulled with Truth Social – the negative publicity about Securus's unsound morals and financials killed the deal:
Congress passed the Martha Wright-Reed Just and Reasonable Communications Act, giving the FCC the power to regulate the price of federal prisoners' communications. Securus's debt prices tumbled further:
https://www.govtrack.us/congress/bills/117/s1541
Securus's debts were coming due: it owes $1.3b in 2024, and hundreds of millions more in 2025. Platinum has promised a $400m cash infusion, but that didn't sway S&P Global, a bond-rating agency that re-rated Securus's bonds as "CCC" (compare with "AAA"). Moody's concurred. Now, Securus is stuck selling junk-bonds:
https://www.govtrack.us/congress/bills/117/s1541
The company's creditors have given Securus an eight-month runway to find a new lender before they force it into bankruptcy. The company's debt is trading at $0.08 on the dollar.
Securus's major competitor is Viapath (prison tech is a duopoly). Viapath is also debt-burdened and desperate, thanks to a parallel campaign by Worth Rises, and has tried all of Securus's tricks, and failed:
Viapath's debts are due next year, and if Securus tanks, no one in their right mind will give Viapath a dime. They're the walking dead.
Worth Rise's brilliant guerrilla warfare against prison-tech and its private equity backers are a master class in using the master's tools to dismantle the master's house. The finance sector isn't a friend of justice or working people, but sometimes it can be used tactically against financialization itself. To paraphrase MLK, "finance can't make a corporation love you, but it can stop a corporation from destroying you."
Yes, the ruling class finds solidarity at the most unexpected moments, and yes, it's easy for appeals to greed to institutionalize greediness. But whether it's funding unbezzling journalism through short selling, or freeing prisons by brandishing their cooked balance-sheets in the faces of bond-rating agencies, there's a lot of good we can do on the way to dismantling the system.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
TOMORROW NIGHT (July 20), I'm appearing in CHICAGO at Exile in Bookville.
Here's a tip for policymakers hoping to improve the lives of the most Americans with the least effort: help prisoners.
After all, America is the most prolific imprisoner of its own people of any country in world history. We lock up more people than Stalin, than Mao, more than Botha, de Klerk or any other Apartheid-era South African president. And it's not just America's vast army of the incarcerated who are afflicted by our passion for imprisonment: their families and friends suffer, too.
That familial suffering isn't merely the constant pain of life without a loved one, either. America's prison profiteers treat prisoners' families as ATMs who can be made to pay and pay and pay.
This may seem like a losing strategy. After all, prison sentences are strongly correlated with poverty, and even if your family wasn't desperate before the state kidnapped one of its number and locked them behind bars, that loved one's legal defense and the loss of their income is a reliable predictor of downward social mobility.
Decent people don't view poor people as a source of riches. But for a certain kind of depraved sadist, the poor are an irresistible target. Sure, poor people don't have much money, but what they lack even more is protection under the law ("conservativism consists of the principle that there is an in-group whom the law protects but does not bind, and an out-group whom the law binds but does not protect" -Wilhoit). You can enjoy total impunity as you torment poor people, make them so miserable and afraid for their lives and safety that they will find some money, somewhere, and give it to you.
Mexican cartels understand this. They do a brisk trade in kidnapping asylum seekers whom the US has illegally forced to wait in Mexico to have their claims processed. The families of refugees – either in their home countries or in the USA – are typically badly off but they understand that Mexico will not lift a finger to protect a kidnapped refugee, and so when the kidnappers threaten the most grisly tortures as a means of extracting ransom, those desperate family members do whatever it takes to scrape up the blood-money.
What's more, the families of asylum seekers are not much better off than their kidnapped loved ones when it comes to seeking official protection. Family members who stayed behind in human rights hellholes like Bukele's El Salvador can't get their government to lodge official complaints with the Mexican ambassador, and family members who made it to the USA are in no position to get their Congressjerk to intercede with ICE or the Mexican consulate. This gives Mexico's crime syndicates total latitude to kidnap, torture, and grow rich by targeting the poorest, most desperate people in the world.
The private contractors that supply services to America's prisons are basically Mexican refugee-kidnappers with pretensions and shares listed on the NYSE. After decades of consolidation, the prison contracting sector has shrunk to two gigantic companies: Securus and Viapath (formerly Global Tellink). These private-equity backed behemoths dominate their sector, and have diversified, providing all kinds of services, from prison cafeteria meals to commissary, the prison stores where prisoners can buy food and other items.
If you're following closely, this is one of those places where the hair on the back of your neck starts to rise. These companies make money when prisoners buy food from the commissary, and they're also in charge of the quality of the food in the mess hall. If the food in the mess hall is adequate and nutritious, there's no reason to buy food from the commissary.
This is what economists call a "moral hazard." You can think of it as the reason that prison ramen costs 300% more than ramen in the free world:
(Not just ramen: in America's sweltering prisons, an 8" fan costs $40, and the price of water went up in Texas prisons by 50% during last summer's heatwave.)
It's actually worse than that: if you get sick from eating bad prison food, the same company that poisoned you gets paid to operate the infirmary where you're treated:
Now, the scam of abusing prisoners to extract desperate pennies from their families is hardly new. There's written records of this stretching back to the middle ages. Nor is this pattern a unique one: making an unavoidable situation as miserable as possible and then upcharging people who have the ability to pay to get free of the torture is basically how the airlines work. Making coach as miserable as possible isn't merely about shaving pennies by shaving inches off your legroom: it's a way to "incentivize" anyone who can afford it to pay for an upgrade to business-class. The worse coach is, the more people you can convince to dip into their savings or fight with their boss to move classes. The torments visited upon everyone else in coach are economically valuable to the airlines: their groans and miseries translate directly into windfall profits, by convincing better-off passengers to pay not to have the same thing done to them.
Of course, with rare exceptions (flying to get an organ transplant, say) plane tickets are typically discretionary. Housing, on the other hand, is a human right and a prerequisite for human thriving. The worse things are for tenants, the more debt and privation people will endure to become home-owners, so it follows that making renters worse off makes homeowners richer:
For Securus and Viapath, the path to profitability is to lobby for mandatory, long prison sentences and then make things inside the prison as miserable as possible. Any prisoner whose family can find the funds can escape the worst of it, and all the prisoners who can't afford it serve the economically important function of showing the prisoners whose families can afford it how bad things will be if they don't pay.
If you're thinking that prisoners might pay Securus, Viapath and their competitors out of their own prison earnings, forget it. These companies have decided that the can make more by pocketing the difference between the vast sums paid by third parties for prisoners' labor and the pennies the prisoners get from their work. Remember, the 13th Amendment specifically allows for the enslavement of incarcerated people! Six states ban paying prisoners at all. North Carolina caps prisoners' wages at one dollar per day. The national average prison wage is $0.52/hour. Prisoners' labor produces $11b/year in goods and services:
Forced labor and extortion are a long and dishonorable tradition in incarceration, but this century saw the introduction of a novel, exciting way of extracting wealth from prisoners and their families. It started when private telcos took over prison telephones and raised the price of a prison phone call. These phone companies found willing collaborators in local jail and prison systems: all they had to do was offer to split the take with the jailers.
With the advent of the internet, things got far worse. Digitalization meant that prisons could replace the library, adult educations, commissary accounts, letter-mail, parcels, in-person visits and phone calls with a single tablet. These cheaply made tablets were offered for free to prisoners, who lost access to everything from their kids' handmade birthday cards to in-person visits with those kids.
In their place, prisoners' families had to pay huge premiums to have their letters scanned so that prisoners could pay (again) to view those scans on their tablets. Instead of in-person visits, prisoners families had to pay $3-10/minute for a janky, postage-stamp sized video. Perversely, jails and prisons replaced their in-person visitation rooms with rooms filled with shitty tablets where family members could sit and videoconference with their incarcerated loved ones who were just a few feet away:
Capitalists hate capitalism. The capital classes are on a relentless search for markets with captive customers and no competitors. The prison-tech industry was catnip for private equity funds, who bought and "rolled" up prison contractors, concentrating the sector into a duopoly of debt-laden companies whose ability to pay off their leveraged buyouts was contingent on their ability to terrorize prisoners' families into paying for their overpriced, low-quality products and services.
One particularly awful consequence of these rollups was the way that prisoners could lose access to their data when their prison's service-provider was merged with a rival. When that happened, the IT systems would be consolidated, with the frequent outcome that all prisoners' data was lost. Imagine working for two weeks to pay for a song or a book, or a scan of your child's handmade Father's Day card, only to have the file deleted in an IT merger. Now imagine that you're stuck inside for another 20 years.
This is a subject I've followed off and on for years. It's such a perfect bit of end-stage capitalist cruelty, combining mass incarceration with monopolies. Even if you're not imprisoned, this story is haunting, because on the one hand, America keeps thinking of new reasons to put more people behind bars, and on the other hand, every technological nightmare we dream up for prisoners eventually works its way out to the rest of us in a process I call the "shitty technology adoption curve." As William Gibson says, "The future is here, it's just not evenly distributed" – but the future sure pools up thick and dystopian around America's prisoners:
My background interest in the subject got sharper a few years ago when I started working on The Bezzle, my 2023 high-tech crime thriller about prison-tech grifters:
One of the things that was on my mind when I got to work on that book was the 2017 court-case that killed the FCC's rules limit interstate prison-call gouging. The FCC could have won that case, but Trump's FCC chairman, Ajit Pai, dropped it:
With that bad precedent on the books, the only hope prisoners had for relief from the FCC was for Congress to enact legislation specifically granting the agency the power to regulate prison telephony. Incredibly, Congress did just that, with Biden signing the "Martha Wright-Reed Just and Reasonable Communications Act" in early 2023:
With the new law in place, it fell to the FCC use those newfound powers. Compared to agencies like the FTC and the NLRB, Biden's FCC has been relatively weak, thanks in large part to the Biden administration's refusal to defend its FCC nomination for Gigi Sohn, a brilliant and accomplished telecoms expert. You can tell that Sohn would have been a brilliant FCC commissioner because of the way that America's telco monopolists and their allies in the senate (mostly Republicans, but some Democrats, too) went on an all-out offensive against her, using the fact that she is gay to smear her and ultimately defeat her nomination:
But even without Sohn, the FCC has managed to do something genuinely great for America's army of the imprisoned. This week, the FCC voted in price-caps on prison calls, so that call rates will drop from $11.35 for 15 minutes to just $0.90. Both interstate and intrastate calls will be capped at $0.06-0.12/minute, with a phased rollout starting in January:
It's hard to imagine a policy that will get more bang for a regulator's buck than this one. Not only does this represent a huge savings for prisoners and their families, those savings are even larger in proportion to their desperate, meager finances.
It shows you how important a competent, qualified regulator is. When it comes to political differences between Republicans and Democrats, regulatory competence is a grossly underrated trait. Trump's FCC Chair Ajit Pai handed out tens of billions of dollars in public money to monopoly carriers to improve telephone networks in underserved areas, but did so without first making accurate maps to tell him where the carriers should invest. As a result, that money was devoured by executive bonuses and publicly financed dividends and millions of Americans entered the pandemic lockdowns with broadband that couldn't support work-from-home or Zoom school. When Biden's FCC chair Jessica Rosenworcel took over, one of her first official acts was to commission a national study and survey of broadband quality. Republicans howled in outrage:
The sector is dirty beyond words, and it corrupts everything it touches – bribing prison officials to throw out all the books in the prison library and replace them with DRM-locked, high-priced ebooks that prisoners must toil for weeks to afford, and that vanish from their devices whenever a prison-tech company merges with a rival:
The Biden presidency has been fatally marred by the president's avid support of genocide, and nothing will change that. But for millions of Americans, the Biden administration's policies on telecoms, monopoly, and corporate crime have been a source of profound, lasting improvements.
It's not just presidents who can make this difference. Millions of America's prisoners are rotting in state and county jails, and as California has shown, state governments have broad latitude to kick out prison profiteers:
Support me this summer on the Clarion Write-A-Thon and help raise money for the Clarion Science Fiction and Fantasy Writers' Workshop!
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Kickstarting “The Bezzle” audiobook, sequel to Red Team Blues
I'm heading to Berlin! On January 29, I'll be delivering Transmediale's Marshall McLuhan Lecture, and on January 30, I'll be at Otherland Books (tickets are limited! They'll have exclusive early access to the English edition of The Bezzle and the German edition of Red Team Blues!).
I'm kickstarting the audiobook for The Bezzle, the sequel to last year's Red Team Blues, featuring Marty Hench, a hard-charging, two-fisted forensic accountant who spent 40 years in Silicon Valley, busting every finance scam hatched by tech bros' feverish imaginations:
http://thebezzle.org
Marty Hench is a great character to write. His career in high-tech scambusting starts in the early 1980s with the first PCs and stretches all the way to the cryptocurrency era, the most target-rich environment for scamhunting tech has ever seen. Hench is the Zelig of tech scams, and I'm having so much fun using him to probe the seamy underbelly of the tech economy.
Enter The Bezzle, which will be published by Tor Books and Head of Zeus on Feb 20: this adventure finds Marty in the company of Scott Warms, one of the many bright technologists whose great startup was bought and destroyed by Yahoo! (yes, they really used that asinine exclamation mark). Scott is shackled to the Punctuation Factory by golden handcuffs, and he's determined to get fired without cause, so he can collect his shares and move onto the next thing.
That's how Scott and Marty find themselves on Catalina island, the redoubt of the Wrigley family, where bison roam the hills, yachts bob in the habor and fast food is banned. Scott invites Marty on a series of luxury vacations on Catalina, which end abruptly when they discover – and implode – a hamburger-related Ponzi scheme run by a real-estate millionaire who is destroying the personal finances of the Island's working-class townies out of sheer sadism.
Scott's victory is bittersweet: sure, he blew up the Ponzi scheme, but he's also made powerful enemies – the kinds of enemies who can pull strings with the notoriously corrupt LA County Sheriff's Deputies who are the only law on Catalina, and after taking a pair of felony plea deals, Scott gets the message and never visits Catalina Island again.
That could have been the end of it, but California's three-strikes law – since rescinded – means that when Scott picks up one more felony conviction for some drugs discovered during a traffic stop, he's facing life in prison.
That's where The Bezzle really gets into gear.
At its core, The Bezzle is a novel about the "shitty technology adoption curve": the idea that our worst technological schemes are sanded smooth on the bodies of prisoners, mental patients, kids and refugees before they work their way up the privilege gradient and are inflicted on all of us:
America's prisons are vicious, brutal places, and technology has only made them worse. When Scott's prison swaps out in-person visits, the prison library, and phone calls for a "free" tablet that offers all these services as janky apps that cost ten times more than they would on the outside, the cruelty finds a business model.
Working inside and outside the prison Marty Hench and Scott Warms figure out the full nature of the scam that the captive audience of prisoners are involuntary beta-testers for, and they discover a sprawling web of real-estate fraud, tech scams, and offshore finance that is extracting fortunes from the hides of America's prisoners and their families. The criminals who run that kind of enterprise aren't shy about fighting for what they've got, and they're more than happy to cut some of LA County's notorious deputy gangs in for a cut in exchange for providing some kinetic support for the project.
The Bezzle is exactly the kind of book I was hoping I'd get to write when I kicked off the Hench series – one that decodes the scam economy, from music royalties to prison videoconferencing, real estate investment trusts to Big Four accounting firm bogus audits. It's both a fast-moving, two-fisted crime novel and a masterclass on how the rich and powerful get away with both literal and figurative murder.
It's getting a big push from both my publishers and I'll be touring western Canada and the US with it. The early reviews are spectacular. But despite all of this, I had to make my own audiobook for it, which I'm pre-selling on Kickstarter:
http://thebezzle.org
Why? Because Audible – Amazon's monopoly gatekeeper to the audiobook world, with more than 90% of the market – refuses to carry my work.
Audible uses Digital Rights Management to lock every audiobook they sell to their platform. Legally, only an Audible-authorized app can decrypt and play the audiobooks they sell you. Distributing a tool that removes Audible DRM is a felony under Section 1201 of the 1998 DMCA.
That means that if you break up with Audible – delete your Audible apps – you will lose your entire audiobook library. And the fact that you're Audible's hostage makes the writers you love into their hostages, too. Writers understand that if they leave the Audible platform, their audience will have to choose between following them, or losing all their audiobooks.
That's how Audible gets away with abusing its performers and writers, up to and including the $100m Audiblegate wage-theft scandal:
https://www.audiblegate.com/
Audible can steal $100m from its writers…and the writers still continue to sell on the platform, because leaving will cost them their audience.
This is canonical enshittification: lock in users, then screw suppliers. Lots of companies abuse DRM to do this, but none can hold a candle to Amazon, who understand that the DMCA is a copyright law that protects corporations at the expense of creators.
Under DMCA 1201 commercial distribution of a "circumvention device" carries a five-year prison sentence and a $500,000 fine. That means that if I write a book, pay to have it recorded, and then sell it to you through Audible, I am criminally prohibited from giving you the tool to take it from Audible to another platform. Even though I hold the copyright to that work, I would face a harsher sentence than you would if you simply pirated the audiobook from some darknet site. Not only that: if you shoplifted the audiobook in CD form, you'd get a lighter sentence than I, the copyright holder, would receive for giving you a tool to unlock it from Amazon's platform! Hell, if you hijacked the truck that delivered the CD, you'd get off lighter than I would. This is a scam straight out of a Marty Hench novel.
This is batshit. I won't allow it. My books are licensed on the condition that they must not be sold with DRM. Which means that Audible won't sell my books, which means that my publishers are thoroughly disinterested in paying thousands of dollars to produce audiobooks of my titles. A book that isn't sold in the one store than accounts for 90% of all sales is unlikely to do well.
That's where you come in. Since 2020, I've used Kickstarter to pre-sell five of my audiobooks (I wrote nine books during lockdown!). All told, I've raised over $750,000 (gross! but still!) on these crowdfunders. More than 20,000 backers have pitched in! The last two of these books – The Internet Con and The Lost Cause – were national bestsellers.
This isn't just a way for me to pay off a lot of bills and put away something for retirement – it's proof that readers care about supporting writers and don't want to be locked in by a giant monopolist that depends on its drivers pissing in bottles to make quota.
It's a powerful message about the desire for something better than Amazon. It's part of the current that is driving the FTC to haul Amazon into court for being a monopolist, and also part of the inspiration for other authors to try treating Amazon as damage and routing around it, with spectacular results:
And I'm doing it again. Last December, I went into Skyboat Media's studios where Gabrielle De Cuir directed @wilwheaton, who reprised his role as Marty Hench for the audiobook of The Bezzle. It came out amazing:
https://archive.org/details/bezzle-sample
Now I'm pre-selling this audiobook, as well as the ebook and hardcover for The Bezzle. I'm also offering bundles with the ebook and audiobook for Red Team Blues (naturally these are all DRM-free). You can get your books signed and personalized and shipped anywhere in the world, courtesy of Book Soup, and I've partnered with Libro.fm to deliver DRM-free audiobooks with an app for people who don't want to mess around with sideloading.
I've also got some spendy options for high rollers. There's three chances to name a character in the next Hench novel (Picks and Shovels, Feb 2025). There's also five chances to commission a Hench short story about your favorite tech scam, and get credited when the story is published.
The Kickstarter runs for the next three weeks, which should give me time to get the hardcopy books signed and shipped to arrive around the on-sale date. What's more, I've finally worked out all the post-Brexit kinks with shipping my UK publisher's books to EU backers. I'm working with Otherland Books to fulfill those EU orders, and it looks like I'm going to be able to sign a giant stack of those when I'm in Berlin later this month to give the annual Marshall McLuhan lecture at the Canadian embassy:
Red Team Blues and its sequels are some of the most fun – and informative – work I've done in my quarter-century career. I love how they blend technical explanations of the scam economy with high-intensity technothrillers. That's the the same mix as my bestselling YA series Little Brother series – but these are firmly adult novels.
The Bezzle came out great. I hope you'll give it a try – and that you'll come out to see me in late February when I hit the road with the book! Here's that Kickstarter link again:
http://thebezzle.org
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Prison-tech is a scam - and a harbinger of your future
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
Here's how the shitty technology adoption curve works: when you want to roll out a new, abusive technology, look for a group of vulnerable people whose complaints are roundly ignored and subject them to your bad idea. Sand the rough edges off on their bodies and lives. Normalize the technological abuse you seek to inflict.
Next: work your way up the privilege gradient. Maybe you start with prisoners, then work your way up to asylum seekers, parolees and mental patients. Then try it on kids and gig workers. Now, college students and blue collar workers. Climb that curve, bit by bit, until you've reached its apex and everyone is living with your shitty technology:
Prisoners, asylum seekers, drug addicts and other marginalized people are the involuntary early adopters of every form of disciplinary technology. They are the leading indicators of the ways that technology will be ruining your life in the future. They are the harbingers of all our technological doom.
Which brings me to Minnesota.
Minnesota is one of the first states make prison phone-calls free. This is a big deal, because prison phone-calls are a big business. Prisoners are literally a captive audience, and the telecommunications sector is populated by sociopaths, bred and trained to spot and exploit abusive monopoly opportunities. As states across America locked up more and more people for longer and longer terms, the cost of operating prisons skyrocketed, even as states slashed taxes on the rich and turned a blind eye to tax evasion.
This presented telco predators with an unbeatable opportunity: they approached state prison operators and offered them a bargain: "Let us take over the telephone service to your carceral facility and we will levy eye-watering per-minute charges on the most desperate people in the world. Their families – struggling with one breadwinner behind bars – will find the money to pay this ransom, and we'll split the profits with you, the cash-strapped, incarceration-happy state government."
This was the opening salvo, and it turned into a fantastic little money-spinner. Prison telco companies and state prison operators were the public-private partnership from hell. Prison-tech companies openly funneled money to state coffers in the form of kickbacks, even as they secretly bribed prison officials to let them gouge their inmates and inmates' families:
As digital technology got cheaper and prison-tech companies got greedier, the low end of the shitty tech adoption curve got a lot more crowded. Prison-tech companies started handing out "free" cheap Android tablets to prisoners, laying the groundwork for the next phase of the scam. Once prisoners had tablets, prisons could get rid of phones altogether and charge prisoners – and their families – even higher rates to place calls right to the prisoner's cell.
Then, prisons could end in-person visits and replace them with sub-skype, postage-stamp-sized videoconferencing, at rates even higher than the voice-call rates. Combine that with a ban on mailing letters to and from prisoners – replaced with a service that charged even higher rates to scan mail sent to prisoners, and then charged prisoners to download the scans – and prison-tech companies could claim to be at the vanguard of prison safety, ending the smuggling of dope-impregnated letters and other contraband into the prison system.
Prison-tech invented some wild shit, like the "digital stamp," a mainstay of industry giant Jpay, which requires prisoners to pay for "stamps" to send or receive a "page" of email. If you're keeping score, you've realized that this is a system where prisoners and their families have to pay for calls, "in-person" visits, handwritten letters, and email.
It goes on: prisons shuttered their libraries and replaced them with ebook stores that charged 2-4 times the prices you'd pay for books on the outside. Prisoners were sold digital music at 200-300% markups relative to, say, iTunes.
Remember, these are prisoners: locked up for years or decades, decades during which their families scraped by with a breadwinner behind bars. Prisoners can earn money, sure – as much as $0.89/hour, doing forced labor for companies that contract with prisons for their workforce:
So those $3 digital music tracks are being bought by people earning as little as $0.10/hour. Which makes it especially galling when prisons change prison-tech suppliers, whereupon all that digital music is deleted, wiping prisoners' media collection out – forever (literally, for prisoners serving life terms):
Let's recap: America goes on a prison rampage, locking up ever-larger numbers of people for ever-longer sentences. Once inside, prisoners had their access to friends and family rationed, along with access to books, music, education and communities outside. This is very bad for prisoners – strong ties to people outside is closely tied to successful reentry – but it's great for state budgets, and for wardens, thanks to kickbacks:
Back to Minnesota: when Minnesota became the fourth state in the USA where the state, not prisoners, would pay for prison calls, it seemed like they were finally breaking the vicious cycle in which every dollar ripped off of prisoners' family paid 40 cents to the state treasury:
But – as Katya Schwenk writes for The Lever – what happened next is "a case study in how prison communication companies and their private equity owners have managed to preserve their symbiotic relationship with state corrections agencies despite reforms — at the major expense of incarcerated people and their families":
Immediately after the state ended the ransoming of prisoners' phone calls, the private-equity backed prison-tech companies that had dug their mouth-parts into the state's prison jacked up the price of all their other digital services. For example, the price of a digital song in a Minnesota prison just jumped from $1.99 to $2.36 (for prisoners earning as little as $0.25/hour).
As Paul Wright from the Human Rights Defense Center told Schwenk, "The ideal world for the private equity owners of these companies is every prisoner has one of their tablets, and every one of those tablets is hooked up to the bank account of someone outside of prison that they can just drain."
The state's new prison-tech supplier promises to double the amount of kickbacks it pays the state each year, thanks to an aggressive expansion into games, money transfers, and other "services." The perverse incentive isn't hard to spot: the more these prison-tech companies charge, the more kickbacks they pay to the prisons.
The primary prison-tech company for Minnesota's prisons is Viapath (nee Global Tel Link), which pioneered price-gouging on in-prison phone calls. Viapath has spent the past two decades being bought and sold by different private equity firms: Goldman Sachs, Veritas Capital, and now the $46b/year American Securities.
Viapath competes with another private equity-backed prison-tech giant: Aventiv (Securus, Jpay), owned by Platinum Equity. Together, Viapath and Aventiv control 90% of the prison-tech market. These companies have a rap-sheet as long as your arm: bribing wardens, stealing from prisoners and their families, and recording prisoner-attorney calls. But these are the kinds of crimes the state punishes with fines and settlements – not by terminating its contracts with these predators.
These companies continue to flout the law. Minnesota's new free-calls system bans prison-tech companies from paying kickbacks to prisons and prison-officials for telcoms services, so the prison-tech companies have rebranded ebooks, music, and money-transfers as non-communications products, and the kickbacks are bigger than ever.
This is the bottom end of the shitty technology adoption curve. Long before Ubisoft started deleting games that you'd bought a "perpetual license" for, prisoners were having their media ganked by an uncaring corporation that knew it was untouchable:
https://www.youtube.com/watch?v=VIqyvquTEVU
Revoking your media, charging by the byte for messaging, confiscating things in the name of security and then selling them back to you – these are all tactics that were developed in the prison system, refined, normalized, and then worked up the privilege gradient. Prisoners are living in your technology future. It's just not evenly distributed – yet.
As it happens, prison-tech is at the heart of my next novel, The Bezzle, which comes out on Feb 20. This is a followup to last year's bestselling Red Team Blues, which introduced the world to Marty Hench, a two-fisted, hard-bitten, high-tech forensic accountant who's spent 40 years busting Silicon Valley finance scams:
In The Bezzle, we travel with Marty back to the mid 2000s (Hench is a kind of tech-scam Zelig and every book is a standalone tale of high-tech ripoffs from a different time and place). Marty's trying to help his old pal Scott Warms, a once-high-flying founder who's fallen prey to California's three-strikes law and is now facing decades in a state pen. As bad as things are, they get worse when the prison starts handing out "free" tablet and closing down the visitation room, the library, and the payphones.
This is an entry to the thing I love most about the Hench novels: the opportunity to turn all this dry, financial skullduggery into high-intensity, high-stakes technothriller plot. For me, Marty Hench is a tool for flensing the scam economy of all its layers of respectability bullshit and exposing the rot at the core.
It's not a coincidence that I've got a book coming out in a week that's about something that's in the news right now. I didn't "predict" this current turn – I observed it. The world comes at you fast and technology news flutters past before you can register it. Luckily, I have a method for capturing this stuff as it happens:
Writing about tech issues that are long-simmering but still in the periphery is a technique I call "predicting the present." It's the technique I used when I wrote Little Brother, about out-of-control state surveillance of the internet. When Snowden revealed the extent of NSA spying in 2013, people acted as though I'd "predicted" the Snowden revelations:
But Little Brother and Snowden's own heroic decision have a common origin: the brave whistleblower Mark Klein, who walked into EFF's offices in 2006 and revealed that he'd been ordered by his boss at AT&T to install a beam-splitter into the main fiber trunk so that the NSA could illegally wiretap the entire internet:
Mark Klein inspired me to write Little Brother – but despite national press attention, the Klein revelations didn't put a stop to NSA spying. The NSA was still conducting its lawless surveillance campaign in 2013, when Snowden, disgusted with NSA leadership for lying to Congress under oath, decided to blow the whistle again:
The assumption that let the NSA get away with mass surveillance was that it would only be weaponized against the people at the bottom of the shitty technology adoption curve: brown people, mostly in other countries. The Snowden revelations made it clear that these were just the beginning, and sure enough, more than a decade later, we have data-brokers sucking up billions in cop kickbacks to enable warrantless surveillance, while virtually following people to abortion clinics, churches, and protests. Mass surveillance is chugging its way up the shitty tech adoption curve with no sign of stopping.
Like Little Brother, The Bezzle is intended as a kind of virtual flythrough of what life is like further down on that curve – a way for readers who have too much agency to be in the crosshairs of a company like Viapath or Avently right now to wake up before that kind of technology comes for them, and to inspire them to take up the cause of the people further down the curve who are mired in it.
The Bezzle is an intense book, but it's also a very fun story – just like Little Brother. It's a book that lays bare the internal technical workings of so many scams, from multi-level marketing to real-estate investment trusts, from music royalty theft to prison-tech, in the course of an ice-cold revenge plot that keeps twisting to the very last page.
It'll drop in six days. I hope you'll check it out:
How finfluencers destroyed the housing and lives of thousands of people
For the rest of May, my bestselling solarpunk utopian novel THE LOST CAUSE (2023) is available as a $2.99, DRM-free ebook!
The crash of 2008 imparted many lessons to those of us who were only dimly aware of finance, especially the problems of complexity as a way of disguising fraud and recklessness. That was really the first lesson of 2008: "financial engineering" is mostly a way of obscuring crime behind a screen of technical jargon.
This is a vital principle to keep in mind, because obscenely well-resourced "financial engineers" are on a tireless, perennial search for opportunities to disguise fraud as innovation. As Riley Quinn says, "Any time you hear 'fintech,' substitute 'unlicensed bank'":
But there's another important lesson to learn from the 2008 disaster, a lesson that's as old as the South Seas Bubble: "leverage" (that is, debt) is a force multiplier for fraud. Easy credit for financial speculation turns local scams into regional crime waves; it turns regional crime into national crises; it turns national crises into destabilizing global meltdowns.
When financial speculators have easy access to credit, they "lever up" their wagers. A speculator buys your house and uses it for collateral for a loan to buy another house, then they make a bet using that house as collateral and buy a third house, and so on. This is an obviously terrible practice and lenders who extend credit on this basis end up riddling the real economy with rot – a single default in the chain can ripple up and down it and take down a whole neighborhood, town or city. Any time you see this behavior in debt markets, you should batten your hatches for the coming collapse. Unsurprisingly, this is very common in crypto speculation, where it's obscured behind the bland, unpronounceable euphemism of "re-hypothecation":
Loose credit markets often originate with central banks. The dogma that holds that the only role the government has to play in tuning the economy is in setting interest rates at the Fed means the answer to a cooling economy is cranking down the prime rate, meaning that everyone earns less money on their savings and are therefore incentivized to go and risk their retirement playing at Wall Street's casino.
The "zero interest rate policy" shows what happens when this tactic is carried out for long enough. When the economy is built upon mountains of low-interest debt, when every business, every stick of physical plant, every car and every home is leveraged to the brim and cross-collateralized with one another, central bankers have to keep interest rates low. Raising them, even a little, could trigger waves of defaults and blow up the whole economy.
Holding interest rates at zero – or even flipping them to negative, so that your savings lose value every day you refuse to flush them into the finance casino – results in still more reckless betting, and that results in even more risk, which makes it even harder to put interest rates back up again.
This is a morally and economically complicated phenomenon. On the one hand, when the government provides risk-free bonds to investors (that is, when the Fed rate is over 0%), they're providing "universal basic income for people with money." If you have money, you can park it in T-Bills (Treasury bonds) and the US government will give you more money:
On the other hand, while T-Bills exist and are foundational to the borrowing picture for speculators, ZIRP creates free debt for people with money – it allows for ever-greater, ever-deadlier forms of leverage, with ever-worsening consequences for turning off the tap. As 2008 forcibly reminded us, the vast mountains of complex derivatives and other forms of exotic debt only seems like an abstraction. In reality, these exotic financial instruments are directly tethered to real things in the real economy, and when the faery gold disappears, it takes down your home, your job, your community center, your schools, and your whole country's access to cancer medication:
Being a billionaire automatically lowers your IQ by 30 points, as you are insulated from the consequences of your follies, lapses, prejudices and superstitions. As @[email protected] says, Elon Musk is what Howard Hughes would have turned into if he hadn't been a recluse:
The same goes for financiers during periods of loose credit. Loose Fed money created an "everything bubble" that saw the prices of every asset explode, from housing to stocks, from wine to baseball cards. When every bet pays off, you win the game by betting on everything:
https://en.wikipedia.org/wiki/Everything_bubble
That meant that the ZIRPocene was an era in which ever-stupider people were given ever-larger sums of money to gamble with. This was the golden age of the "finfluencer" – a Tiktok dolt with a surefire way for you to get rich by making reckless bets that endanger the livelihoods, homes and wellbeing of your neighbors.
Finfluencers are dolts, but they're also dangerous. Writing for The American Prospect, the always-amazing Maureen Tkacik describes how a small clutch of passive-income-brainworm gurus created a financial weapon of mass destruction, buying swathes of apartment buildings and then destroying them, ruining the lives of their tenants, and their investors:
Tcacik's main characters are Matt Picheny, Brent Ritchie and Koteswar “Jay” Gajavelli, who ran a scheme to flip apartment buildings, primarily in Houston, America's fastest growing metro, which also boasts some of America's weakest protections for tenants. These finance bros worked through Gajavelli's company Applesway Investment Group, which levered up his investors' money with massive loans from Arbor Realty Trust, who also originated loans to many other speculators and flippers.
For investors, the scheme was a classic heads-I-win/tails-you-lose: Gajavelli paid himself a percentage of the price of every building he bought, a percentage of monthly rental income, and a percentage of the resale price. This is typical of the "syndicating" sector, which raised $111 billion on this basis:
Gajavelli and co bought up whole swathes of Houston and other cities, apartment blocks both modest and luxurious, including buildings that had already been looted by previous speculators. As interest rates crept up and the payments for the adjustable-rate loans supporting these investments exploded, Gajavell's Applesway and its subsidiary LLCs started to stiff their suppliers. Garbage collection dwindled, then ceased. Water outages became common – first weekly, then daily. Community rooms and pools shuttered. Lawns grew to waist-high gardens of weeds, fouled with mounds of fossil dogshit. Crime ran rampant, including murders. Buildings filled with rats and bedbugs. Ceilings caved in. Toilets backed up. Hallways filled with raw sewage:
https://pluralistic.net/timberridge
Meanwhile, the value of these buildings was plummeting, and not just because of their terrible condition – the whole market was cooling off, in part thanks to those same interest-rate hikes. Because the loans were daisy-chained, problems with a single building threatened every building in the portfolio – and there were problems with a lot more than one building.
This ruination wasn't limited to Gajavelli's holdings. Arbor lent to multiple finfluencer grifters, providing the leverage for every Tiktok dolt to ruin a neighborhood of their choosing. Arbor's founder, the "flamboyant" Ivan Kaufman, is associated with a long list of bizarre pop-culture and financial freak incidents. These have somehow eclipsed his scandals, involving – you guessed it – buying up apartment buildings and turning them into dangerous slums. Two of his buildings in Hyattsville, MD accumulated 2,162 violations in less than three years.
Arbor graduated from owning slums to creating them, lending out money to grifters via a "crowdfunding" platform that rooked retail investors into the scam, taking advantage of Obama-era deregulation of "qualified investor" restrictions to sucker unsophisticated savers into handing over money that was funneled to dolts like Gajavelli. Arbor ran the loosest book in town, originating mortgages that wouldn't pass the (relatively lax) criteria of Fannie Mae and Freddie Mac. This created an ever-enlarging pool of apartments run by dolts, without the benefit of federal insurance. As one short-seller's report on Arbor put it, they were the origin of an epidemic of "Slumlord Millionaires":
The private equity grift is hard to understand from the outside, because it appears that a bunch of sober-sided, responsible institutions lose out big when PE firms default on their loans. But the story of the Slumlord Millionaires shows how such a scam could be durable over such long timescales: remember that the "syndicating" sector pays itself giant amounts of money whether it wins or loses. The consider that they finance this with investor capital from "crowdfunding" platforms that rope in naive investors. The owners of these crowdfunding platforms are conduits for the money to make the loans to make the bets – but it's not their money. Quite the contrary: they get a fee on every loan they originate, and a share of the interest payments, but they're not on the hook for loans that default. Heads they win, tails we lose.
In other words, these crooks are intermediaries – they're platforms. When you're on the customer side of the platform, it's easy to think that your misery benefits the sellers on the platform's other side. For example, it's easy to believe that as your Facebook feed becomes enshittified with ads, that advertisers are the beneficiaries of this enshittification.
But the reason you're seeing so many ads in your feed is that Facebook is also ripping off advertisers: charging them more, spending less to police ad-fraud, being sloppier with ad-targeting. If you're not paying for the product, you're the product. But if you are paying for the product? You're still the product:
In the same way: the private equity slumlord who raises your rent, loads up on junk fees, and lets your building disintegrate into a crime-riddled, sewage-tainted, rat-infested literal pile of garbage is absolutely fucking you over. But they're also fucking over their investors. They didn't buy the building with their own money, so they're not on the hook when it's condemned or when there's a forced sale. They got a share of the initial sale price, they get a percentage of your rental payments, so any upside they miss out on from a successful sale is just a little extra they're not getting. If they squeeze you hard enough, they can probably make up the difference.
The fact that this criminal playbook has wormed its way into every corner of the housing market makes it especially urgent and visible. Housing – shelter – is a human right, and no person can thrive without a stable home. The conversion of housing, from human right to speculative asset, has been a catastrophe:
Of course, that's not the only "asset class" that has been enshittified by private equity looters. They love any kind of business that you must patronize. Capitalists hate capitalism, so they love a captive audience, which is why PE took over your local nursing home and murdered your gran:
Homes are the last asset of the middle class, and the grifter class know it, so they're coming for your house. Willie Sutton robbed banks because "that's where the money is" and We Buy Ugly Houses defrauds your parents out of their family home because that's where their money is:
The fight for decent housing is the fight for a decent world. That's why unions have joined the fight for better, de-financialized housing. When a union member spends two hours commuting every day from a black-mold-filled apartment that costs 50% of their paycheck, they suffer just as surely as if their boss cut their wage:
The solutions to our housing crises aren't all that complicated – they just run counter to the interests of speculators and the ruling class. Rent control, which neoliberal economists have long dismissed as an impossible, inevitable disaster, actually works very well:
There are ways to have a decent home and a decent life without being burdened with debt, and without being a pawn in someone else's highly leveraged casino bet.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
The true post-cyberpunk hero is a noir forensic accountant
I'm touring my new, nationally bestselling novel The Bezzle! Catch me in TOMORROW (Apr 17) in CHICAGO, then Torino (Apr 21) Marin County (Apr 27), Winnipeg (May 2), Calgary (May 3), Vancouver (May 4), and beyond!
I was reared on cyberpunk fiction, I ended up spending 25 years at my EFF day-job working at the weird edge of tech and human rights, even as I wrote sf that tried to fuse my love of cyberpunk with my urgent, lifelong struggle over who computers do things for and who they do them to.
That makes me an official "post-cyberpunk" writer (TM). Don't take my word for it: I'm in the canon:
One of the editors of that "post-cyberpunk" anthology was John Kessel, who is, not coincidentally, the first writer to expose me to the power of literary criticism to change the way I felt about a novel, both as a writer and a reader:
It was Kessel's 2004 Foundation essay, "Creating the Innocent Killer: Ender's Game, Intention, and Morality," that helped me understand litcrit. Kessel expertly surfaces the subtext of Card's Ender's Game and connects it to Card's politics. In so doing, he completely reframed how I felt about a book I'd read several times and had considered a favorite:
This is a head-spinning experience for a reader, but it's even wilder to experience it as a writer. Thankfully, the majority of literary criticism about my work has been positive, but even then, discovering something that's clearly present in one of my novels, but which I didn't consciously include, is a (very pleasant!) mind-fuck.
A recent example: Blair Fix's review of my 2023 novel Red Team Blues which he calls "an anti-finance finance thriller":
Fix – a radical economist – perfectly captures the correspondence between my hero, the forensic accountant Martin Hench, and the heroes of noir detective novels. Namely, that a noir detective is a kind of unlicensed policeman, going to the places the cops can't go, asking the questions the cops can't ask, and thus solving the crimes the cops can't solve. What makes this noir is what happens next: the private dick realizes that these were places the cops didn't want to go, questions the cops didn't want to ask and crimes the cops didn't want to solve ("It's Chinatown, Jake").
Marty Hench – a forensic accountant who finds the money that has been disappeared through the cells in cleverly constructed spreadsheets – is an unlicensed tax inspector. He's finding the money the IRS can't find – only to be reminded, time and again, that this is money the IRS chooses not to find.
This is how the tax authorities work, after all. Anyone who followed the coverage of the big finance leaks knows that the most shocking revelation they contain is how stupid the ruses of the ultra-wealthy are. The IRS could prevent that tax-fraud, they just choose not to. Not for nothing, I call the Martin Hench books "Panama Papers fanfic."
I've read plenty of noir fiction and I'm a long-term finance-leaks obsessive, but until I read Fix's article, it never occurred to me that a forensic accountant was actually squarely within the noir tradition. Hench's perfect noir fit is either a happy accident or the result of a subconscious intuition that I didn't know I had until Fix put his finger on it.
The second Hench novel is The Bezzle. It's been out since February, and I'm still touring with it (Chicago tonight! Then Turin, Marin County, Winnipeg, Calgary, Vancouver, etc). It's paying off – the book's a national bestseller.
Writing in his newsletter, Henry Farrell connects Fix's observation to one of his own, about the nature of "hackers" and their role in cyberpunk (and post-cyberpunk) fiction:
Schneier, a security expert, broadens the category of "hacker" to include anyone who studies systems with an eye to finding and exploiting their defects. Under this definition, the more fearsome hackers are "working for a hedge fund, finding a loophole in financial regulations that lets her siphon extra profits out of the system." Hackers work in corporate offices, or as government lobbyists.
As Henry says, hacking isn't intrinsically countercultural ("Most of the hacking you might care about is done by boring seeming people in boring seeming clothes"). Hacking reinforces – rather than undermining power asymmetries ("The rich have far more resources to figure out how to gimmick the rules"). We are mostly not the hackers – we are the hacked.
For Henry, Marty Hench is a hacker (the rare hacker that works for the good guys), even though "he doesn’t wear mirrorshades or get wasted chatting to bartenders with Soviet military-surplus mechanical arms." He's a gun for hire, that most traditional of cyberpunk heroes, and while he doesn't stand against the system, he's not for it, either.
Henry's pinning down something I've been circling around for nearly 30 years: the idea that though "the street finds its own use for things," Wall Street and Madison Avenue are among the streets that might find those uses:
https://craphound.com/nonfic/street.html
Henry also connects Martin Hench to Marcus Yallow, the hero of my YA Little Brother series. I have tried to make this connection myself, opining that while Marcus is a character who is fighting to save an internet that he loves, Marty is living in the ashes of the internet he lost:
But Henry's Marty-as-hacker notion surfaces a far more interesting connection between the two characters. Marcus is a vehicle for conveying the excitement and power of hacking to young readers, while Marty is a vessel for older readers who know the stark terror of being hacked, by the sadistic wolves who're coming for all of us:
https://www.youtube.com/watch?v=I44L1pzi4gk
Both Marcus and Marty are explainers, as am I. Some people say that exposition makes for bad narrative. Those people are wrong:
"Explaining" makes for great fiction. As Maria Farrell writes in her Crooked Timber review of The Bezzle, the secret sauce of some of the best novels is "information about how things work. Things like locks, rifles, security systems":
https://crookedtimber.org/2024/03/06/the-bezzle/
Where these things are integrated into the story's "reason and urgency," they become "specialist knowledge [that] cuts new paths to move through the world." Hacking, in other words.
This is a theme Paul Di Filippo picked up on in his review of The Bezzle for Locus:
Heinlein was always known—and always came across in his writings—as The Man Who Knew How the World Worked. Doctorow delivers the same sense of putting yourself in the hands of a fellow who has peered behind Oz’s curtain. When he fills you in lucidly about some arcane bit of economics or computer tech or social media scam, you feel, first, that you understand it completely and, second, that you can trust Doctorow’s analysis and insights.
Knowledge is power, and so expository fiction that delivers news you can use is novel that makes you more powerful – powerful enough to resist the hackers who want to hack you.
Henry and I were both friends of Aaron Swartz, and the Little Brother books are closely connected to Aaron, who helped me with Homeland, the second volume, and wrote a great afterword for it (Schneier wrote an afterword for the first book). That book – and Aaron's afterword – has radicalized a gratifying number of principled technologists. I know, because I meet them when I tour, and because they send me emails. I like to think that these hackers are part of Aaron's legacy.
Henry argues that the Hench books are "purpose-designed to inspire a thousand Max Schrems – people who are probably past their teenage years, have some grounding in the relevant professions, and really want to see things change."
(Schrems is the Austrian privacy activist who, as a law student, set in motion the events that led to the passage of the EU's General Data Privacy Regulation:)
Henry points out that William Gibson's Neuromancer doesn't mention the word "internet" – rather, Gibson coined the term cyberspace, which, as Henry says, is "more ‘capitalism’ than ‘computerized information'… If you really want to penetrate the system, you need to really grasp what money is and what it does."
Maria also wrote one of my all-time favorite reviews of Red Team Blues, also for Crooked Timber:
In it, she compares Hench to Dickens' Bleak House, but for the modern tech world:
You put the book down feeling it’s not just a fascinating, enjoyable novel, but a document of how Silicon Valley’s very own 1% live and a teeming, energy-emitting snapshot of a critical moment on Earth.
All my life, I've written to find out what's going on in my own head. It's a remarkably effective technique. But it's only recently that I've come to appreciate that reading what other people write about my writing can reveal things that I can't see.
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
How a billionaire’s mediocre pump-and-dump “book” became a “bestseller”
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
I was on a book tour the day my editor called me and told me, "From now on, your middle name is 'Cory.'"
"That's weird. Why?"
"Because from now on, your first name is 'New York Times Bestselling Author.'"
That was how I found out I'd hit the NYT list for the first time. It was a huge moment – just as it has been each subsequent time it's happened. First, because of how it warmed my little ego, but second, and more importantly, because of how it affected my book and all the books afterwards.
Once your book is a Times bestseller, every bookseller in America orders enough copies to fill a front-facing display on a new release shelf or a stack on a bestseller table. They order more copies of your backlist. Foreign rights buyers at Frankfurt crowd around your international agents to bid on your book. Movie studios come calling. It's a huge deal.
My books became Times bestsellers the old-fashioned way: people bought and read them and told their friends, who bought and read them. Booksellers who enjoyed them wrote "shelf-talkers" – short reviews – and displayed them alongside the book.
That "From now on your first name is 'New York Times Bestselling Author' gag is a tradition. When @wilwheaton's memoir Still Just A Geek hit the Times list, I texted the joke to him and he texted back to say @jscalzi had already sent him the same joke (and of course, Scalzi and I have the same editor, Patrick Nielsen Hayden):
But not everyone earns that first name the same way. Some people cheat.
Famously, the Church of Scientology was caught buying truckloads of L Ron Hubbard books (published by Scientology's own publishing arm) from booksellers, returning them to their warehouse, then shipping them back to the booksellers when they re-ordered the sold out titles. The tip-off came when booksellers opened cases of books and found that they already bore the store's own price-stickers:
The reason Scientology was willing to go to such great lengths wasn't merely that readers used "NYT Bestseller* to choose which books to buy. Far more important was the signal that this sent to the entire book trade, from reviewers to librarians to booksellers, who made important decisions about how many copies of the books to stock, whether to display them spine- or face out, and whether to return unsold stock or leave it on the shelf.
Publishers go to great lengths to send these messages to the trade: sending out fancy advance review copies in elaborate packaging, taking out ads in the trade magazines, featuring titles in their catalogs and sending their sales-force out to impress the publisher's enthusiasm on their accounts.
Even the advance can be a way to signal the trade: when a publisher announces that it just acquired a book for an eyebrow-raising sum, it's not trumpeting the size of its capital reserves – it's telling the trade that this book is a Big Deal that they should pay attention to.
(Of all the signals, this one may be the weakest, even if it's the most expensive for publishers to send. Take the $1.25m advance that Rupert Murdoch's Harpercollins paid to Sarah Palin for her unreadable memoir, Going Rogue. As with so many of the outsized sums Murdoch's press and papers pay to right wing politicians, the figure didn't represent a bet on the commercial prospects of the book – which tanked – but rather, a legal way to launder massive cash transfers from the far-right billionaire to a generation of politicians who now owe him some rather expensive favors.)
All of which brings me to the New York Times bestselling book Read Write Own by the billionaire VC New York Times Bestselling Author Chris Dixon. Dixon is a partner at A16Z, the venture capitalists who pumped billions into failed, scammy, cryptocurrency companies that tricked normies into converting their perfectly cromulent "fiat" money into shitcoins, allowing the investors to turn a massive profit and exit before the companies collapsed or imploded.
Read Write Own (subtitle: "Building the Next Era of the Internet") is a monumentally unconvincing hymn to the blockchain. As Molly White writes in her scathing review, the book is full of undisclosed conflicts of interest, with Dixon touting companies he has a direct personal stake in:
But this book's defects go beyond this kind of sleazy pump-and-dump behavior. It's also just bad. The arguments it makes for the blockchain as a way of escaping the problems of an enshittified, monopolized internet are bad arguments. White dissects each of these arguments very skillfully, and I urge you to read her review for a full list, but I'll reproduce one here to give you a taste:
After three chapters in which Dixon provides a (rather revisionistd) history of the web to date, explains the mechanics of blockchains, and goes over the types of things one might theoretically be able to do with a blockchain, we are left with "Part Four: Here and Now", then the final "Part Five: What's Next". The name of Part Four suggests that he will perhaps lay out a list of blockchain projects that are currently successfully solving real problems.
This may be why Part Four is precisely four and a half pages long. And rather than name any successful projects, Dixon instead spends his few pages excoriating the "casino" projects that he says have given crypto a bad rap,e prompting regulatory scrutiny that is making "ethical entrepreneurs … afraid to build products" in the United States.f
As White says, this is just not a good book. It doesn't contain anything to excite people who are already blockchain-poisoned crypto cultists – and it also lacks anything that will convince normies who never let Matt Damon or Spike Lee convince them to trade dollars for magic beans. It's one of those books that manages to be both paper and a paperweight.
And yet…it's a New York Times Bestseller. How did this come to pass? Here's a hint: remember how the Scientologists got L Ron Hubbard 20 consecutive #1 Bestsellers?
As Jordan Pearson writes for Motherboard, Read Write Own earned its place on the Times list because of a series of massive bulk orders from firms linked to A16Z and Dixon, which ordered between dozens and thousands of copies and gave them away to employees or just randos on Twitter:
The Times recognizes this in a backhanded way, by marking Read Write Own on the list with a "dagger" (†) that indicates the shenanigans (the same dagger appeared alongside the listing for Donald Trump Jr's Triggered after the RNC spent a metric scientologyload of money – $100k – buying up cases of it):
There's a case for the Times not automatically ignoring bulk orders. Since 2020, I've run Kickstarters where I've pre-sold my books on behalf of my publisher, working with bookstores like Book Soup and wholesalers like Porchlight Books to backers when they go on sale. I signed and personalized 500+ books at Vroman's yesterday for backers who pre-ordered my next novel, The Bezzle:
But there's a world of difference between pre-orders that hundreds or thousands of readers place that are aggregated into a single bulk order, and books that are bought by CEOs to give away to people who may not have any interest in them. For the book trade – librarians, reviewers, booksellers – the former indicates broad interest that justifies their attention. The latter just tells you that a handful of deep-pocketed manipulators want you to think there's broad interest.
I'm certain that Dixon – like me – feels a bit of pride at having "earned" a new first name. But Dixon – like me – gets something far more tangible than a bit of egoboo out of making the Times list. For me, a place on the Times list is a way to get booksellers and librarians excited about sharing my book with readers.
For Dixon, the stakes are much higher. Remember that cryptocurrency is a faith-based initiative whose mechanism is: "convince normies that shitcoins will be worth more tomorrow than they are today, and then trade them the shitcoins that cost you nothing to create for dollars that they worked hard to earn."
In other words, crypto is a bezzle, defined by John Kenneth Galbraith as "The magic interval when a confidence trickster knows he has the money he has appropriated but the victim does not yet understand that he has lost it."
So long as shitcoins haven't fallen to zero, the bag-holders who've traded their "fiat" for funny money can live in the bezzle, convinced that their "investments" will recover and turn a profit. More importantly, keeping the bezzle alive preserves the possibility of luring in more normies who can infuse the system with fresh dollars to use as convincers that keep the bag-holders to keep holding that bag, rather than bailing and precipitating the zeroing out of the whole scam.
The relatively small sums that Dixon and his affiliated plutocrats spent to flood your podcasts with ads for this pointless 300-page Ponzi ad are a bargain, as are the sums they spent buying up cases of the book to give away or just stash in a storeroom. If only a few hundred retirees are convinced to convert their savings to crypto, the resulting flush of cash will make the line go up, allowing whales like Dixon and A16Z to cash out, or make more leveraged bets, or both. Crypto is a system with very few good trades, but spending chump change to earn a spot on the Times list (dagger or no) is a no-brainer.
After all, the kinds of people who buy crypto are, famously, the kinds of people who think books are stupid ("I would never read a book" -S Bankman-Fried):
There's precious little likelihood that anyone will be convinced to go long on crypto thanks to the words in this book. But the Times list has enough prestige to lure more suckers into the casino: "I'm not going to read this thing, but if it's on the list, that means other people must have read it and think it's convincing."
We are living through a golden age of scams, and crypto, which has elevated caveat emptor to a moral virtue ("not your wallet, not your coins"), is a scammer's paradise. Stein's Law tells us that "anything that can't go on forever will eventually stop," but the purpose of a bezzle isn't to keep the scam going forever – just until the scammer can cash out and blow town. The longer the bezzle goes on for, the richer the scammer gets.
Not for nothing, my next novel – which comes out on Feb 20 – is called The Bezzle. It stars Marty Hench, my hard-driving, two-fisted, high-tech forensic accountant, who finds himself unwinding a whole menagerie of scams, from a hamburger-based Ponzi scheme to rampant music royalty theft to a vast prison-tech scam that uses prisoners as the ultimate captive audience:
Patrick Nielsen Hayden – the same editor who gave me my new first name – once told me that "publishing is the act of connecting a text with an audience." Everything a publisher does – editing, printing, warehousing, distributing – can be separated from publishing. The thing a publisher does that makes them a publisher – not a printer or a warehouser or an editing shop – is connecting books and audiences.
Seen in this light, publishing is a subset of the hard problem of advertising, religion, politics and every other endeavor that consists in part of convincing people to try out a new idea:
This may be the golden age of scams, but it's the dark age of publishing. Consolidation in distribution has gutted the power of the sales force to convince booksellers to stock books that the publisher believes in. Consolidation in publishing – especially Amazon, which is both a publisher and the largest retailer in the country – has stacked the deck against books looking for readers and vice-versa (Goodreads, a service founded for that purpose, is now just another tentacle on the Amazon shoggoth). The rapid enshittification of social media has clobbered the one semi-reliable channel publicists and authors had to reach readers directly.
I wrote nine books during lockdown (I write as displacement activity for anxiety) which has given me a chance to see publishing in the way that few authors can: through a sequence of rapid engagements with the system as a whole, as I publish between one and three books per year for multiple, consecutive years. From that vantagepoint, I can tell you that it's grim and getting grimmer. The slots that books that connected with readers once occupied are now increasingly occupied by the equivalent of the botshit that fills the first eight screens of your Google search results: book-shaped objects that have gamed their way to the top of the list.
I don't know what to do about this, but I have one piece of advice: if you read a book you love, tell other people about it. Tell them face-to-face. In your groupchat. On social media. Even on Goodreads. Every book is a lottery ticket, but the bezzlers are buying their tickets by the case: every time you tell someone about a book you loved (and even better, why you loved it), you buy a writer another ticket.
Meanwhile, I've got to go get ready for my book tour. I'm coming to LA, San Francisco, Seattle, Vancouver, Calgary, Phoenix, Portland, Providence, Boston, New York City, Toronto, San Diego, Salt Lake City, Tucson, Chicago, Buffalo, as well as Torino and Tartu (details soon!).
If you want to get a taste of The Bezzle, here's an excerpt:
