Commerce

Haul of Injustice

July 05, 2017

Multiple Pages
Haul of Injustice

Peonage, in which workers are bound to their jobs by debts to their employers, is a traditional curse of Latin American cultures. Perhaps inevitably, as the United States merges demographically with Mexico, Latin-style economic arrangements have been reemerging in the United States.

For example, over the past decade at the enormously lucrative port of Los Angeles/Long Beach, through which much of the country’s Chinese-made imports enter, a form of debt bondage has emerged among short-haul truckers that sounds like something from a 1940s Tennessee Ernie Ford song about how “I owe my soul to the company store.” It’s kind of like being an Uber driver if you bought your ride from Uber for six figures.

According to hundreds of country & western songs, truck driver used to be an all-American occupation, the red-state equivalent of taxi driver, like all those movies with Robert De Niro or Ernest Borgnine telling their fares what they think about politicians. But in recent years, truck driving, like cab driving before it, has increasingly become a job for foreigners. In California, 46 percent of truck drivers are immigrants. The “port truckers” who have gotten themselves into debt servitude tend to be uneducated immigrants who can barely speak English.

Obviously (although, oddly enough, controversially), increasing the supply of potential truck drivers through immigration bids down their pay. More subtly, Mexican and Central American workers tend to be relatively easy to fool and exploit through complex contracts, which helps explain their popularity with American elites.

“It’s kind of like being an Uber driver if you bought your ride from Uber for six figures.”

Other than the occasional chaotic revolution, Mexico has been a good country to be rich in, in part because the masses of peons haven’t been terribly effective at organizing themselves to maximize their bargaining leverage. As the great 19th-century explorer Alexander von Humboldt remarked:

New Spain is the country of inequality. Nowhere does there exist such a fearful difference in the distribution of fortune.

Debt bondage in Mexico goes back to the 16th century, according to T.R. Fehrenbach’s Fire and Blood: A History of Mexico:

...small debts which he could never pay off chained him to the soil. The peon, or farm worker, became a debt slave. Landholders easily kept ignorant workers eternally in debt by small advances of wages…. The practice became so engrained that even in the twentieth century many Mexican laborers still expected to receive advances and considered being in debt to employers a natural condition, habits baffling to foreigners.

This happy-go-lucky fatalism of Mexicans toward signing themselves into debts that they aren’t likely to be able to pay off played a sizable role in the mortgage meltdown of a decade ago.

To fight severe inequality, Mexico has undergone several land reforms. In 1856, for instance, the Lerdo Law confiscated the lands of the Catholic Church and the communal holdings of Indian villages. The high-minded goal was to transform subsistence farmers into the Mexican version of Jeffersonian yeoman proprietors.

But, like so many reforms in Mexico, this didn’t work. By 1910, only 2.4 percent of households in rural Mexico lived on land they owned, versus about 75 percent of country dwellers in the United States. Not surprisingly, the extremely bloody Mexican Revolution broke out the next year.

But even after a century, Mexico remains a society with a tendency toward winner-take-all exploitative economics, with a few huge winners and millions of small losers. Thus the paradox of Mexico’s third-world economy allowing Carlos Slim to regularly compete for the title of world’s richest man. (He’s currently in sixth place with $64 billion.) Of course, the Mexican monopolist’s respectability in 21st-century America as the financial savior of The New York Times suggests that American culture is becoming more understanding of the point of view of Mexico’s plutocrats.

There are still some very good jobs at the Port of Los Angeles, but they belong to members of the International Longshore and Warehouse Union. Six figures are standard for crane operators, and the median for foremen is over $200,000. Of course, you probably need to have a few relatives in the union to get in, or, like Michael Madsen’s Mr. Blonde in Tarantino’s Reservoir Dogs, have made important people grateful by keeping your mouth shut while serving your sentence.

For lesser workers, such as the port truckers who haul cargo from the expensive real estate at the docks to the huge warehouses in the cheaper Inland Empire about an hour away, the globalist pressure on wages has taken its toll.

These short-haul truck drivers at the Los Angeles port used to have a decent gig in that they could buy worn-out trucks that were no longer reliable enough for long-haul trucking. The pay was poor, but you slept at home, and you could be your own boss.

In 2008, however, according to Brett Murphy’s USA Today investigative report “Rigged,” the state of California got tired of all the air pollution these broken-down trucks were spewing and ordered them to be replaced by state-of-the-art big rigs.

Few port truckers could qualify for a loan, so trucking companies stepped in and bought the trucks and then offered them to drivers on a lease-to-own basis:

Drivers gave their old trucks—many of which they owned outright—to their company as a down payment. And just like that they were up to $100,000 in debt to their own employer. The same guys would have had a tough time qualifying for a Hyundai days earlier.

The payments on the truck loans were deducted from wages. Except your contract meant you weren’t, legally, an employee working for wages, you were an independent contractor for whom the minimum-wage laws didn’t apply.

Granted, if you were handy with an Excel spreadsheet, you could have carefully read through the contract you were offered and built a model that should have shown you that you wouldn’t be making much for all the hours that you’d be expected to work (often exceeding the legal limits imposed for public safety so more motorists don’t wind up like poor Tracy Morgan). And you’d have noticed that if you didn’t work all those hours, you’d default on your loan and lose not just your job but also everything you’d paid in over the years toward your truck.

Of course, if you were good with Excel, or even literate in English, you’d probably have a better job than port trucking. That’s just the way it goes in modern Mexifornia.

To lenders who are clever with Excel, however, mass Mexican immigration is America’s moral obligation because more Latinos are, to them, more fresh meat.

Reading about port truckers and their contracts is reminiscent of reading about the focus groups that Washington Mutual bank (seized by the FDIC in 2008) ran in Southern California during the housing bubble to see if its heavily Hispanic borrowers were confused about any of the precise terms of their adjustable-rate mortgages, only to find out that their customers didn’t understand anything about their debts. A WaMu market researcher told Kirsten Grind for her book Lost Bank:

Jenne came to believe that the Option ARM wasn’t just a bad idea—it might be evil. “After awhile, I lost that feeling,” Jenne said. “Then I came back to it later on. And then I thought, ‘No, no, this product is definitely evil.’”

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