Is ‘The Handmaid’s Tale’ a Pre-Documentary? The Surprisingly Interesting (and Scary) Financial Side of the Story

Posted in: Tax and Economics

In light of this week’s leak of Samuel Alito’s draft opinion by which the Supreme Court will soon overrule Roe v. Wade, we can expect to see a return of memes and protests drawing from the story and imagery of The Handmaid’s Tale, Canadian author Margaret Atwood’s 1985 novel depicting a dystopian United States that has been torn apart by civil war and turned into a deeply misogynistic Christian theocratic state.

Before the news about Roe’s likely fate broke this week, it so happens that I was planning to publish a column looking at an underappreciated aspect of Atwood’s nightmarish vision of the future. I have decided to go ahead and publish that planned column today as Part One of a two-part column that will conclude tomorrow. Even though the financial story on which I focus here is necessarily less lurid than the other aspects of the story, in some ways it is scarier and more immediate. In any event, Part Two will turn the focus back to the non-financial side of the story, which is most likely to dominate the national discussion going forward.

Several months ago, I was giving a talk to a local civic group, explaining my reluctant conclusion that the United States is now, as I wrote here on Verdict in August of last year, a “Dead Democracy Walking.” During the question-and-answer period, a listener asked me about analogies to the TV adaptation of Atwood’s book, also called “The Handmaid’s Tale,” which currently has four seasons under its belt and has one or two more in store. Because I have been an engrossed watcher of that show, I was not surprised that a question about it would arise in discussions about catastrophic turns in the near-future United States.

I answered that question by stating bluntly that I viewed the TV show as a “pre-documentary,” that is, that every substantial element of it—even, or maybe especially, the most extreme parts of the story—seemed not only possible but likely to come about. No, I was not saying that the bizarre sexual rituals involving the systematic rape of enslaved women were about to come true (although even that is not out of the question). That, however, is not the essence of the story. My claim is that we could well end up witnessing the unraveling of the rule of law in a way that would resemble what we see in the show, especially the replacement of constitutional democracy with a tyrannical minoritarian government that rules through violence and intimidation.

[As an aside, I will specify here that I will use the TV show as my point of reference, rather than the book. There are always differences between original novels and movie or TV adaptations, and I am choosing to rely on the version that is more likely to be familiar to more people.]

As I will explain tomorrow in Part Two, much of this is in fact already happening in this country. Here, however, I want to turn my attention to how such an autocratic takeover could be facilitated by what might look like boring financial tactics—tactics that are in fact available to an authoritarian government even under current US law.

How Do We Know Whether We Have Any Money—or Own Anything at All?

Each Spring, I teach a course called “Deferred Compensation” in the Graduate Tax Program at the University of Florida’s Levin College of Law. That course probably should be renamed simply “Retirement,” but for reasons of inertia and legal jargon, such a change is unlikely. In any case, the course covers the various ways in which people try to prepare financially for their retirements. We cover Social Security, traditional pensions, 401(k) plans, Individual Retirement Accounts (IRAs), and all of the various programs through which Congress has subsidized retirement saving.

When we discuss Social Security, which has long been one of the core topics that I study in my scholarly research (and which I occasionally discuss in more accessible terms here on Verdict), the question is sure to arise: “But can’t Congress take Social Security away at any time?” The answer is yes, because it is always possible to amend the Social Security Act in ways that would harm future retirees, including shutting it all down. But that possibility leads to two further questions: (1) Would any Congress ever do that? and either way, (2) Is the alternative safer, that is, can we be sure that what we set aside in individual accounts will not be taken away from us before we need it?

The answer to (1) is rather easy, because despite occasional Republican flirtations with partial privatization of Social Security (and Medicare), even Donald Trump appealed to his older White voters by promising to leave their middle-class entitlements intact. It is the answer to the second question, however, that always surprises my students, because private accounts are certainly no safer as a matter of law than Social Security is, and they are probably less safe as a matter of politics.

Some students nervously object: “But that’s my money! The government can’t steal it from me.” They quickly learn that there are countless ways in which a future Congress could either take away people’s retirement savings directly or allow it to be legally stolen by financial predators.

How is that possible? As every law student learns, ownership is a legal construct, and the rules of ownership can be (and often are) changed in ways that affect what people own. Not only could a future Congress simply increase taxes on withdrawals from retirement accounts (or impose new taxes on the account balances themselves), but it could also do something more subtle, such as changing the laws of fiduciary responsibility that govern fund management companies or allowing fund managers to charge ruinous fees of an almost infinite variety (as banks have been caught doing time and again with regular deposit accounts and credit cards).

Although new laws that make nefarious changes could shock people who thought that their money was safe, it might not even require a change in the law to cheat people out of their nest eggs. Many of the rules currently in place are difficult to understand and even more difficult to enforce. Moreover, it is difficult even to understand just what it is that we own at any given time. Anyone who has been monitoring their retirement accounts recently, for example, has surely been experiencing agita as they have watched their balances shrink. This past weekend, a friend told me that she had lost $500,000 of “her money” in just the last month, according to her retirement fund’s website. Where did the money go?

The most direct answer was that her deposits have been invested in stocks, and the values of most stocks have plummeted so far this year, especially in April. But how does she know that the amount that she lost has been calculated correctly? The smart-alecky answer is: Well, how do you know that the gains were calculated correctly? It is all a black box, and we simply trust what we see on our computer screens. A person is invested in a stock-index fund, tied to the S&P 500 market? What does that even mean? If the numbers change, how do we know that the reported loss (or gain) was legitimate, accurate, or even legal?

Money is Not Real, and Changes in Policies Can Take It Away from Anyone

We generally do not doubt the safety of our financial investments, but at a fundamental level, whether we own anything at all is radically unknowable. That is, we cannot know with certainty that we will continue to own what we think we own as a matter of law, and we also do not know if we will be able to use anything that we do own to buy things that we will want to buy in the future—especially after we have retired and are relying on these legal entitlements known as investment accounts to allow us to withdraw funds and use them to buy goods and services.

Money, after all, is a group delusion—or, as I wrote in 2013: “Money is Magic.” People who think of money as being real have failed to understand that what we call money is only valuable because other people think it is valuable. If enough people start to doubt the value of our current version of money, it will cease to be useful as money. This is, I should emphasize, equally true of so-called hard assets—using commodities like gold and silver as money—no less than for paper currencies. Cryptocurrencies most definitely face the same issue.

It is not a matter of whether a government does or does not back a currency (although doing so makes it more likely that a currency will achieve the group buy-in that is necessary to make the delusion at least temporarily reliable), because what truly matters is whether having stacks of $100 bills, or chests of gold doubloons, or cartons of cigarettes will allow a person to trade for what they want and need.

With everything having gone online, we are no longer even talking about tangible representations of buying power, like paper currency and metallic coins. The last time I visited Stockholm, for example, I withdrew about one hundred US dollars’ worth of Swedish krona, only to discover that there were no longer any shops, restaurants, cafes, or bars that would accept even their own country’s cash. Everything was done via credit cards with chip technology.

Several years before that, the Swedish government issued new notes that replaced its prior issue of notes, and I was not in the country when it was possible to exchange the old for the new money. The (small) amount of krona that I had held for future trips was made literally worthless.

The Handmaid’s Financial Ruin

Why is any of this relevant to “The Handmaid’s Tale”? In one of the flashbacks that give viewers bits and pieces of the story of the collapse of the old United States and the emergence of Gilead, two of the main characters are in a coffee shop in Boston. When they casually try to use a payment card to buy their drinks, the card is rejected by the electronic reader. Another card is rejected as well. The barista then utters some vulgar misogynistic comments, but the protagonists are more amused than insulted by his frat-boy insults.

They quickly learn, however, that their financial assets have been seized. Married women’s money has been transferred by the new government of Gilead to their husbands’ ownership, and single women are forbidden to own anything at all. The two friends discover that, without warning or logic, they have gone from being relatively prosperous urbanites to being penniless and without legal recourse.

Note, moreover, that this did not even require the government to change currency. It was only necessary to use its legal powers (which, of course, it had granted to itself) to dispossess tens of millions of American women of that which they thought was their money.

Does that sound implausible in the real world? If so, think again. Americans generally cheered when, soon after Vladimir Putin’s campaign of mass murder in Ukraine began earlier this year, Western governments seized the assets of Russian oligarchs and their enablers. Were the UK simply to declare that the billions of dollars of London-based real estate investments by now-disfavored foreigners were no longer legally recognized, what could the oligarchs do? Because the UK is (for now) a functioning democracy operating under the rule of law, lawsuits would surely ensue, but in the end, that country’s government has the power—both legally and via the state’s monopoly on violence—to take both financial and real assets away from people.

This is no less true in the United States, where the government has long felt free to exercise its legal authority to seize the assets of entities and people that it wishes to punish, such as the government of Iran. But could that power be aimed at our own citizens?

The law as currently written endows the president with surprisingly sweeping powers that he can invoke by declaring a state of emergency. Readers might recall, for example, that Donald Trump in 2019 declared a state of emergency to divert congressionally appropriated funds from their legally required uses, instead seizing the money to fund his border wall boondoggle. On Verdict, Michael Dorf rightly called this a “bogus emergency,” but even so, the law on which Trump relied allowed him to declare an emergency under the flimsiest of pretexts and then to veto Congress’s attempt to re-redirect the funds back to their intended uses. When a large enough number of Republicans banded together to block an attempted veto override, Trump was able to seize those funds for his preferred (mis)use.

The fact is that there is what seems like a limitless range of presidential emergency powers that are, in the end, all but absolute. And a government like the one that Republicans seem to want to put in place starting in 2025 would be led either by Trump or a Trump-like figure, willing to use the powers of the government to punish its perceived enemies, foreign and domestic.

As I have noted in a different context, this can all be done without formally violating any laws, in a process that I call “legalistic lawlessness.” Because an autocratic government can change its own laws, it can make anything legal in a formal sense. Here, it would not even require passing new laws but merely a president’s willingness to abuse the powers that existing laws have provided, followed by Congress’s acquiescence. And it would all be called “perfectly legal.”

This dystopian vision is quite obviously not what comes to most people’s minds when they think about “The Handmaid’s Tale.” Even so, we need to be aware that the means to impoverish us are there, waiting to be abused. Even huge corporations like Disney have discovered to their dismay that displeasing the powers that be can lead to financial retaliation. No one should assume that they are safe.

In Part Two tomorrow, I will return to the non-financial, dominant storyline from “The Handmaid’s Tale,” asking just how much it might turn out to be the pre-documentary that I have declared it to be.

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