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Oregon's economic growth--powered by high-tech marvels like Intel--continued to top business news. Our success showed up in an uncommon combination of low inflation (3.3 percent) and low unemployment (5.4 percent). There were, however, some short circuits. The UPS strike, which captured the nation's attention during the summer, threw a spotlight on the thorny truth about our economy: Booming corporate profits weren't being distributed evenly. Oregon's blue-collar workers had a front-row seat to the disparity. A report issued in August by the Oregon Department of Employment (accompanied by a graph that looked something like a downhill ski slope) pointed out that "the hourly and weekly earnings of Oregon's manufacturing production workers have dropped sharply... hourly earnings fell 19.5 percent!" Another big story, the new global economy, touched down hard in Portland as well. Thanks to Nike's decision to rely on cheap labor in Vietnam, Indonesia and China, Portlanders became acquainted with the grisly mechanics of borderless capitalism. Other equally important business stories included Fujitsu's decision to back out of its strategic-investment-program commitment of bringing445 jobs to Multnomah County; the Republican-led Legislature's failed attempt to kill a voter-mandated increase in the minimum wage; and the demise of Scott's Auto Sales. But what may have been the biggest story of the year garnered few headlines. Take a close look back at 1997: It's becoming clear that in the 21st century, consumers won't pay only for goods, but also for access to those goods. Just as the cable industry transformed our concept of television--it now seems perfectly normal to pay for something that used to be free--more and more industries are trying to control, and profit from, delivery systems. This is precisely why Enron showed up in Portland and spent $3.2 billion to buy out Portland General Electric this year. The Houston-based energy company is less interested in the sale and generation of electricity than in offering other companies access to consumers. Electricity deregulation is just around the corner, and Enron now owns the local delivery system. The costs that power companies will pay Enron for access to that system will, obviously, find their way to the consumer. The business of making money by controlling access to consumers showed up in 1997 when US West--the phone company that serves 90 percent of Oregon's telephone customers. This year, a report released in May by a coalition of consumer watchdog groups accused US West of abusing its position as the gatekeeper to customers. The study said the fees that US West was charging other phone-service companies for access to its phone lines were so high that customer rates were projected to skyrocket. The clearest example of the trend toward access fees was the sudden omnipresence of debit cards. "1997 was the year debit cards went mainstream," says Don Davis, a researcher at banking industry newsletter Bank Network News. The newsletter reports thatdebit card usage grew 60 percent in the past year--doubling the previous year's increase. A look at Oregon's major banks confirms this observation. US Bank, Wells Fargo and Bank of America have all demonstrated a dramatic surge in promotion and distribution of debit cards. Debit cards are plastic versions of checks. They siphon money directly out of your account when you slap them down to pay for gas, groceries and dinner. How does this relate to profiting off access? Simple: The gas station, grocer or restaurateur pays a fee to the bank to collect your payment. Banks have digitized your checking account and downloaded it into the same computer network as your credit card balance. Retailers then access your account directly, after paying a fee to the bank. "The bank receives fees of up to 5 percent from the retailer every time you use your debit card," says Davis. According to consumer advocates, retailers aren't the only ones who'll be paying for access to bank accounts. "While debit cards are now heavily marketed as cheap and easy," says OSPIRG consumer advocate Laura Culberson, "consumers will soon see additional charges placed on the use of debit cards." Culberson has good reason to believe user fees will soon be part of the debit-card deal. An OSPIRG study released in 1997 showed that the number of local banks that levied new surcharges on traditional ATM cards rose from 10 percent in 1996 to 51 percent this year. The gradual appearance of bank fees heightens fears about the marketplace of the future. In these waning days of the century, we're already susceptible to grim sci-fi visions of computerized culture in which an eerie and faceless corporate state controls our access to our own money. Debit cards, despite all their conveniences, provoke this fear by consolidating the means of commerce into one brave new network that dictates the rules of access to money--the central component of the marketplace. |
