Jacopo: So which Civil War would you like to tackle now?
Esteban: It doesn’t matter to me. I could go on at length about all of them.
Jacopo: Well, we have nothing but time...
Esteban: I’m not sure I do, but that’s the great thing about working in stocks and real estate, isn’t it?
Jacopo: Indeed. I can see why our family’s kept this job.
Esteban: If you can live with the thought of getting fat on other people’s labor, it can be a rather enjoyable life. Other people have no time to remember what they’ve lived. You have the time to live everything you remember.
Jacopo: That can be quite a curse.
Esteban: Indeed it can. Which is why I’m coming to love doing these interviews.
Jacopo: Well, now that you and Bubbie are fully settled in Buenos Aires, I honestly wouldn’t mind doing a lot more of these.
Esteban: I have from now until whenever my time comes.
Jacopo: We can do a lot more. You’re in astonishingly good health.
Esteban: No worse than I was at 30.
Jacopo: And probably better than you were at 25. I can’t believe those pictures of you.
Esteban: I was quite the chazzer at that point.
Jacopo: What changed?
Esteban: I spent the second half of my twenties thinking I was doomed to an early grave. I don’t doubt I’d have ended up there had I continued in music.
Jacopo: What did your music-making sound like?
Esteban: Given the amount of talent I had, pretty abysmal.
Jacopo: Why abysmal?
Esteban: The usual reason. I hated practicing.
Jacopo: Why did you give it up?
Esteban: Because I was abysmal.
Jacopo: Why do you think you were abysmal?
Esteban: Because I didn’t practice.
Jacopo: No, really....
Esteban: Really. As a violinist I would never have been able to hold my own in a fourth-rate professional orchestra.
Jacopo: But you could have conducted it.
Esteban: Not after they heard me play violin.
Jacopo: Does that matter?
Esteban: After a certain point, it certainly does. I could write out most of the great music of the nineteenth century in full score by memory, I probably still can. But I couldn’t memorize the names of their root chords, I could never understand a Schenkerian analysis chart, and I could never play more than a single line at a time on the piano.
Jacopo: How about as a singer?
Esteban: I might have been decent had I not smoked for seven years.
Jacopo: You smoked???
Esteban: So did your Bubbie.
Jacopo: ….I can’t believe what I’m hearing.
Esteban: We were young.
Jacopo: It wasn’t like today when cigarettes are just tea leaves ingested through steam.
Esteban: Shreklekh! Who would ever want to smoke that?
Jacopo: Wait, so you weren’t just addicted? You enjoyed nicotine cigarettes?
Esteban: I loved them. If I wasn’t worried that I’d drop dead of a heart attack at the age of 26, I’d have probably kept going until something real killed me.
Jacopo: How could you be worried about dying of a heart attack at 26?
Esteban: I was a fat smoker who had chest pains. What would you have done?
Jacopo: Not have started smoking.
Esteban: Well, let’s say you were as dumb as I was.
Jacopo: Gone to the doctor?
Esteban: That’s what I did. I went to two different cardiologists who told me that my heart was completely fine.
Jacopo: So you kept smoking?
Esteban: Hell no. That just made me more certain I’d drop dead.
Jacopo: So that was when you lost weight?
Esteban: No. What happened then was that your cousin David Cordova diagnosed me with an ulcer over instant messenger.
Jacopo: Was he even a medical student yet?
Jacopo: Was he right?
Esteban: He must have been. I stopped drinking seltzer water for a few months and I was fine.
Jacopo: It’s difficult to imagine you without a bottle of seltzer.
Esteban: Then imagine how difficult it must have been for me.
Jacopo: So how did you lose the weight?
Esteban: My father bought us a house in Bethany Beach, Delaware.
Jacopo: Isn’t Delaware the state that Pennsylvania nuked over a dispute about toll fees?
Esteban: Exactly. But this was still in the period when Delaware was in the peak of its influence.
Jacopo: Delaware was an influential state?
Esteban: Oh, very. In fact, from a certain vantage point, one might be able to blame the entire fall of America on Delaware. Delaware had hardly any usury laws.
Jacopo: What’s usury?
Esteban: The lending of money at a rate of interest.
Jacopo: I should have known that.
Esteban: That’s alright. At your age I was at least as incompetent with money. You’ll do fine....So anyway, Delaware was the only state in the union that would allow banks and credit card companies no limit in the amount of interest it could charge on its loans. As a result, tens of millions of Americans had to file for personal bankruptcy because they could not pay for loans on houses which banks operating out of Delaware would grant them.
Jacopo: If the borrowers couldn’t pay back the banks, what would the banks do to get the money back?
Esteban: The only thing they could do. They would simply instruct their customers to take out a larger loan.
Jacopo: But if the borrowers couldn’t pay back the smaller loan, how could they pay back the larger one.
Esteban: That’s precisely the point. These banks knew that they couldn’t be paid back, so they would simply wait for the United States Federal Government to bail them out.
Jacopo: So this was all one big scheme to extort money from the Federal Government?
Esteban: Not quite, though that might make for a more entertaining story. What it really was was just another humdrum society-gone-wrong story. At every level, the bank employees had to prove their worth, so at no point was there an incentive for any worker to say “These are terrible loans.”
Jacopo: So it’s a bit like a dictatorship in the corporate sphere.
Esteban: Only a bit. You’d get fired instead of incinerated. But yes, it’s the same basic idea.
Jacopo: Was there any way to break this cycle without the banks being destroyed completely?
Esteban: Well, no. Not without the banks being regulated.
Jacopo: That doesn’t sound hard at all. Why couldn’t the United States government simply have done that?
Esteban: Because the United States government was regulated by the banks. Every congressman who lost an election would become either a Wall Street banker or lawyer, where they could make more money. Most every congressional staffer would be expected to spend as much of their career in a Washington DC lobbying firm as in a congressional office, so they could make more money. Every Secretary of the Treasury from Bill Clinton’s second - Robert Rubin - until Michelle Bachmann’s only Secretary - David H. Koch - was an appointment made because he came with extraordinarily deep Wall Street connections, so the President could raise more money. It was only when Barack Obama was re-elected in 2020 that any president attempted to brake this cycle. Within three months of taking office, Obama had banned congressional staffers from working at lobbying firms, banned all private financing of political campaigns, and appointed Robert Reich - a former secretary of Labor and Brandeis professor who avoided all Wall Street connections - as Secretary of the Treasury. And just in case there was any doubt as to Obama’s intention to do things differently, it was the leaked private memo to Reich from Obama’s Chief of Staff, David Axelrod, which contained that now-famous maxim:“Rule them like a Czar.”
Jacopo: How did Delaware fare in all those economic collapses?
Esteban: They were the last state in the union to be hit. But when they were, they were hit with a vengeance. There were far less people in Delaware than most states. But a far larger portion of them were corporate executives.
Jacopo: So while normal Americans were getting poorer by the month, the government would be writing checks to the executives in the form of corporate bailouts?
Esteban: Not exactly. After the debt crisis of August 2011, it became clear that the bailouts of 2009 failed to keep the United States economy from depression, or from bad credit and a debt crisis. So President Obama decided that he must stop the bailouts and put all of his efforts into paying the United States debt. And then came the most daring act, by degrees of magnitude, which a President had ever attempted. To describe it as the largest austerity measure in the history of the world would be to understate it terribly. Based the International Emergency Economic Powers Act, Obama bypassed congress to freeze the assets of every major bank in the country and used 20% of the money in the coffers of banks like Bank of America, J.P.Morgan Chase, Citigroup, Wells Fargo and Goldman Sachs to pay off as much of the debt as the United States could handle with that. He then raised the age of Social Security to 75, raised the gas tax to 25 cents per gallon, raised every income tax bracket by no less than 8%, raised the marginal tax rate - tax on every dollar over $250,000 - to 90% and included all capital gains as marginal income. He banned all off-shore accounts and banned all state loopholes for corporate tax havens. And just when the world thought he was done, he issued the most radical decrees of all. He cut the military budget by 30%, closed more than half of the US military’s international bases; banned earmarks on all bills, laid off 20% of the US Federal Government’s employees; put a cap of $15,000 per 5 years on how much government would subsidize per capita health care, and charged the rest to insurance companies; cut future student loan subsidies by 75%, eliminated 50% of all farm subsidies, issued a mandatory minimum in local and state income taxes and cut all federal pensions by 30%. He did all this knowing that the entire world would have to undergo a severe depression simply to correct the balance of the World Economy. But also knowing that such a reckoning could happen either in a controlled environment or in a chaotic one.
Jacopo: How could he have made all this take effect once the emergency powers lifted?
Esteban: He couldn’t. And he knew it. But he also knew that the very fact of his declaring all this legislation meant that Republicans would have to practice triage with all their priorities.
Jacopo: What did the Republicans manage to save?
Esteban: Take one guess...
Jacopo: Marginal tax rates?
Esteban: Surprise! Obama was counting on the power of his office to be the one reassurance against the chaos that followed. And that chaos served him extremely well. In the span of a month, the Dow Jones plummeted to five thousand. The banks were 20% poorer. Military contractors had 30% less influence. Oil companies had 25% more initiative to speed up their alternative energy research and that Health Insurance companies now had an initiative to keep their clients in good health. All it took was one terrifying month, and the entire ability for business to control government had been kneecapped. Once they no longer had the money to pay Republicans to do their bidding, what point was there in Republicans opposing him on policies which most of them knew would guarantee them electoral victory and ultimately improve the country?
Jacopo: But he must have known that this would cost him the election.
Esteban: Most Americans were surprised it didn’t cost him his life. He was being called a dictator in every organ of the press - equated with Hitler not just by far-right demagogues but also by the left. The only people who approved were old-school centrist journalists like Thomas Friedman and David Brooks who claimed that Obama saved the country from itself. There were riots all across the South: Houston, Virginia Beach, Memphis, Phoenix, Wichita, San Antonio, Tulsa, Dallas, Jacksonville, Louisville, Nashville. And every time the President called in another division of the National Guard to patrol a different city, we had to be afraid that the National Guard would either shoot the rioters or join them. Fortunately, few did either. But even so, President Obama’s plan managed to reduce the United States’s debt by $10 trillion in five years. Had Michelle Bachmann not become president, the United States might have been bought another hundred years of life, perhaps even of domination. All of this was done in the span of a month. After it was finished, he lifted his emergency powers and stood against the winds that blew. And boy, did they blow.
Jacopo: But since so many corporate executives lived in Delaware, it was the state that made the most money on the Obama plan.
Jacopo: Even with fighting back on Marginal Tax Rates.
Esteban: Obama knew that Marginal Tax Rates would be the ideal red herring. In the years that followed, the economy was so bad that hardly anyone was making more than $250,000 dollars a year. So he allowed the Republicans a Pyrrhic victory while they still managed not to put a dent in his plan. Even if the Republicans got marginal tax rates down to 45%, the State of Delaware was still getting more per-capita income on marginal taxes than any other state in the country.
Jacopo: So even as most of the banks were falling, Delaware was still doing very well.
Esteban: Indeed it was. And continued to do well for nearly another twenty years.
Jacopo: What stopped their success?
Jacopo: Death how?
Esteban: Most of the executives who worked in Delaware stayed there for retirement. Southern Delaware had extremely pleasant beach communities with lots of restaurants, outlet stores and all the other amenities for which a rich retiree could possibly wish. But since Obama had banned all state tax loopholes for corporate residency - twice - corporations no longer had any reason to stay in Delaware. Not even the “Ryan Restoration Plan” could induce corporations to move back.
Jacopo: So eventually all the retired executives just died?
Esteban: Precisely. And when they did, the state had no income left to support itself.
Jacopo: Couldn’t they have simply raised taxes?
Esteban: Yes, they could have. But Delaware would then have to support itself for the first time in over two-hundred years.
Jacopo: What did they do instead?
Esteban: They raised the toll on the Delaware Memorial Bridge to 25 dollars. The rest, as they say, is history.
Jacopo: You still haven’t explained how Pennsylvania nuked Delaware.
Esteban: All in good time boychik. I think your bubbie has lunch ready.
Jacopo: So why don’t we take a break. But you never did tell me how you lost the weight.
Esteban: Oh....Yeah. I bought a bike.
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