There is a lot of concern about AI potentially causing massive unemployment. The question of whether “this time will be different” is still open. But another insidious effect is gaining speed: putting tools in the hands of large companies that make it more expensive and more oppressive to run into financial trouble. In essence, harder to live on the edges of “The System.”
- Cars with even one late payment can be spotted, and repossessed, faster. “Business has more than doubled since 2014….” This is during a period of ostensible economic growth.
- “Even with the rising deployment of remote engine cutoffs and GPS locators in cars, repo agencies remain dominant. … Agents are finding repos they never would have a few years ago.”
- “So much of America is just a heartbeat away from a repossession — even good people, decent people who aren’t deadbeats,” said Patrick Altes, a veteran agent in Daytona Beach, Fla. “It seems like a different environment than it’s ever been.”
- “The company’s goal is to capture every plate in Ohio and use that information to reveal patterns. A plate shot outside an apartment at 5 a.m. tells you that’s probably where the driver spends the night, no matter their listed home address. So when a repo order comes in for a car, the agent already knows where to look.”
- Source: The surprising return of the repo man – The Washington Post
Why worry about taking cars back from deadbeats? 2 lines of evidence. First, during the housing meltdown of 2008-2011?, banks evicted owners from literally millions of houses based on false records. That is, they were completely untrustworthy in their claims about who owed them money. They also used a variety of tactics to make repossession more profitable, such as tacking on a variety of dubious or illegal charges.
Second, the tension between lenders and borrowers goes back centuries, and will never be fully resolved. But we should think about bankruptcy laws, repossession laws, and the like as a balance between their interests struck by the political system. Neither side gets everything, but if the laws are passed fairly the results are viewed as a reasonable compromise. If a company wanted to go after a supposedly deadbeat borrower, it had to put serious work into the effort. It would not make sense to do this until the probability of ultimate default was quite high.
Now, however, we still have the old laws, but the transactions costs of going after creditors are falling dramatically. Cars can now be repossessed remotely, using cellular communication to cut off the engine. Do you trust a bank that stole houses from recently unemployed families to not illegally shut off your cousin’s car? (Disclaimer: I still have an account with Wells Fargo Bank, one o the worst of the mortgage abusers. And there is a house on my street of $600,000 homes that has been boarded up since 2008. What a waste for both the dispossessed family and the bank.)