Thursday, June 28, 2012

Compassion Trumps Selfishness

The Supreme Court decided today, 5-4, that Obamacare is legal. That is, in the immortal words of Vice President Joe Biden, “a big fucking deal.”  Affordable health care for millions of Americans who otherwise didn’t have it, was what Obama said he “would stake my presidency on.”  The guy knows how to roll the dice.

The decision was along party lines, with the four conservatives voting against, the four liberals voting for it, and Chief Justice Roberts breaking the tie by saying, “Okay, it’s legal, but only if you call it a tax increase.” 

Why the party-line division? Conservatives are systematically against anything that contributes to the common good.  They seem to believe in radical individualism, which is a great philosophy if you are a rich and privileged individual. Then you don’t have to worry about the other guys (the 99%).
Radical individualism translates also into “states rights,” which is another way to say, keep your government off my personal freedom.


The “official” Conservative objection is that Obamacare represents the worst of “big government” which intrudes on individual freedom.  But this argument is spurious. Insurance is a statistical game. It has nothing to do with individuals. It’s a method of pooling risk in large groups of people, transferring that risk away from the individual, who is not able to sustain it alone.

What about the “freedom” part though?  Conservatives chafe at the idea that they are required to buy insurance.  It should be a free, personal, economic choice, they say. Again, the argument is spurious, because insurance (unlike buying broccoli), is not a personal matter. Insurance is, by definition, communal.

But what if an individual does not want to participate in the community’s shared risk?  Let’s say this person imagines himself or herself  to be a monad, willing to bear their own risk. Shouldn’t that person have the freedom to not participate in the community’s pooled risk and not buy health insurance if they don’t want it?

That would be a defensible choice, but only if that person also agreed not to use the community’s resources when they get sick.  No emergency room services (which the community paid for collectively). No police and ambulance support when you are tangled up in a car wreck (those are public, community-paid services). No publicly funded hospital care. No Medicare or Medicaid. And no public burial when you die. You’re completely on your own. Capice?

Unfortunately, human beings are compassionate by nature (most of us, anyway). We will not watch you bleed to death on the highway because you didn’t buy insurance. We will, in fact, pull you out of your burning car and put you into an ambulance and try to save you, at community expense.  By the terms of the Conservative economic argument, we should instead just step over your body, because you didn’t pay. But that’s not how it works.

It’s the same argument from motorcycle riders who declare it a matter of personal freedom whether or not to wear a helmet while riding. It would be, if you also agreed that when you go down (and you will), the rest of us can just shovel your injured body into the ditch, to clear the highway. Even if you agreed to that (out of stupidity, say), we wouldn’t actually do it, because we can’t, and so your so-called individual freedom makes you an unconscionable social free-rider (and that’s not a Nicholas Cage movie).

Every person, without exception, gets sick, nearly everyone gets seriously injured or suffers a serious disease at some point. Everyone, without exception, gets old. Everyone dies. It is ridiculous to insist on “personal freedom” from pooled health care costs unless you are extremely wealthy, because you will need expensive health care eventually. That's an inescapable fact.


So, Mr. Conservative, you can insist on your precious freedom, and when you do get sick, even though you are a selfish bastard, the rest of us will care for you at community expense.  We’ll curse you the whole time, but we’ll do it. Because that’s how human nature works, for most people.

So the argument that the community has no “right” to make you participate in the shared expense of caring for you, is either profoundly ignorant or psychopathically selfish.


Thursday, March 22, 2012

Save Gas In Rising Prices?

I need a second car, small, with high mpg. I thought a hybrid or even an electric would be a great choice, with gas prices going up the way they are. But after a little research, I realized that is not going to happen.

My current car is a 2005 Scion xB that gets, on average, 28 mpg, well over 30 on a straight, flat highway, no passing, no air conditioning. That was terrific mileage back in ’05, but today I would expect a lot more.

The Toyota Prius is the hybrid mileage leader at 45 mpg, or 40 mpg in the city. I used the more optimistic figure of 45 mpg for my comparisons.

Other hybrids, like the Honda Civic and the Ford Fusion get closer to 40 mpg, less in the city. Some, like the Kia and Hyundai hybrids, are optimized for city, so they get 40 in the city and less on the highway. So I took 40 mpg as my point of comparison for non-Prius hybrids.

Any of those numbers sounds a lot better than my measly 28 mpg, as gas approaches $4 a U.S. gallon. It’s $3.70 right now where I live, but climbing inexorably. I am mentally prepared for $5 gas within a year.

But the clinker is the new car price. Hybrids command an $8,000 premium, on average. I can get a traditional gasoline-only small car that meets my needs for a second car, easily, for $20K. But a hybrid of comparable size, power, and cargo space will cost $28K on average. Sure it’s possible to get into the hybrid game for $24K, but it’s also possible to buy a perfectly adequate gasoline-only car for 17K. I’m comparing at a level of features that meet my needs, and at that level, hybrids are $8K more money.

Maybe I should have bought five years ago when there was a $7,500 tax credit for hybrid cars. But I didn’t have the need then. This is now, and there is no tax credit now. A hybrid buyer just has to eat the hybrid premium.

What about an all-electric? I live in the southwest U.S. where it is 25 miles round trip to the grocery store, 50 to school and 70 to the doctor, so I need plenty of “range,” which only the Chevy Volt can offer. (It’s nominally all-electric, though it has a tiny gasoline “assist” engine). A Volt costs about $40k. There is a tax credit of about $2,500 for an all-electric, so the net is $37.5K. That’s a whopping $10,000 price premium. The other, cheaper electrics don’t have range, so it’s Volt or nothing. Nothing is cheaper.

Going back to the $8000 hybrid premium, wouldn’t I save that much in gas purchases in a short time? Alas, no. I don’t commute every day and often my car doesn’t even leave the garage two days out of the week. My annual mileage is only 8400. So I burn 300 gallons of gas in a year. For $5 gas, that is $1500 a year in fuel (and of course I am not actually paying $5 yet!)

If I had a Prius, I would need only 192 gallons a year, costing me $933, an annual savings of $567. That savings would be nice, but it wouldn’t go very far toward offsetting the $8,000 premium I had to pay to get the Prius. It would take me almost 14 years to break even! The warranty on a Prius is only 5 years.

Ah, but what if the price of gas really went through the roof, which it well could? What if gas ramped up to $12 a gallon? The Prius, with its 45mpg would cost me $2,240 annually in fuel, compared to my current clunker, which would cost an eye-watering $3,600. That’s a monster savings of $1,360 a year for the Prius. Unfortunately, that still is more than a six-year break even.

Of course the savings calculations are even less favorable for hybrids other than the Prius, with their lower mpg ratings. So the obvious conclusion is that the savings in fuel costs I could expect from a hybrid do not even come close to balancing the premium I would have to pay to get the hybrid in the first place. The calculations simply scale up the same problem if I were driving 12,000 miles or more a year. The math just doesn’t work.

I could tell myself I would be contributing to America’s effort to reduce dependence on foreign oil, so maybe that $8000 hybrid premium is worth it. Maybe it is, to some rich person. For me, $8000 is a lot of money to donate just because the U.S. congress is incapable of passing a rational energy policy. No thanks; it’s not worth subsidizing incompetence to that extent.

And here’s the sick part. When I look at the mpg of smaller, lightweight “crossover” vehicles, gasoline-only, like the Honda CR-V, I see mileage ratings like 22/32, which isn’t even as good as I get now with my aging box. The new Scions, regrettably, are bigger and heavier and now get only 22/28, no improvement for me. I could get a tiny 2-seater Like a Scion IQ or a Smart, that will make 37 mpg, as long as I stayed away from the freeway, where I would be crushed like a bug by one of those 18-wheelers smoking north out of Mexico.

Or I could bow to harsh reality, and go for a traditional smaller sedan with mileage only slightly better than what I get now:
Chevy Cruz 28/42
Chevy Sonic 30/40
Ford Fiesta 29/40
Ford Focus 28/40
Honda Civic 29/41
Hyundai Accent 30/40
Hyundai Elantra 29/40
Hyundai Veloster 30/40
Mazda 3 28/40

Monday, February 20, 2012

Why Rationality is Not Relevant

In an op-ed column in last Sunday’s New York Times (Feb 18, 2012), Tom Friedman suggests that if Rick Santorum wins the Republican nomination, a third-party candidate for president would emerge, someone more moderate and reasonable, who could appeal to a larger constituency, and possibly beat Obama.

Friedman recommends David Walker, former the U.S. comptroller general under the G.W. Bush administration, for that role, because, according to Friedman, Walker says reasonable, moderate things about fiscal policy.

This idea demonstrates that Friedman misunderstands the current political climate, which has nothing to do with policies. Rather, the upcoming election is about self-identity. Republicans want a candidate who will represent who they think they are, plain working folks. They want someone who can stand up to the snooty elites in Washington who they think try to tell them how to live and what to believe. That’s what it’s about: identity, inclusion, and respect. It has nothing to do with fiscal policy or any other policy.

Virtually no normal person willingly accepts and enjoys a negative self-identity. Nobody will admit or declare, “I am an unschooled, uninformed, unintelligent, unskilled, ineffectual, fearful, dull-witted sheep in search of a shepherd. Help me.”

Instead, a person wants a self-identity that says “I am salt of the earth; embracing the real virtues, the ones endorsed by God, not Washington; I am humble, intuitive, honest, strong, brave, hard-working, steadfast, resilient, self-sufficient, abundantly possessed of common sense, imbued with wholesome, traditional values, rooted in the past, unimpressed by fancy arguments, statistics, or reasoning; and I won’t be bullied. Respect me.”

That’s what the Republican primary is about, identity, not policy differences or “principles.” If discussion were to shift to policy, there would be no meaningful distinction between self and other, which is tantamount to psychological self-annihilation for a person without a mature self-identity.

Rational discourse will only resume when the out-party feels included and respected, and therefore sufficiently safe from bullying and humiliation. Obama thought he could facilitate a bipartisan feeling, but he didn’t count on racism, which is not rational, nor the bifurcation of American society into those who could adapt to a rapidly changing world and those who cannot. He is, in fact, facilitating the eventual return to civil discourse, just by being in the office and conducting himself with dignity. A genuine return to rationality in the body politic could take a long time, generations, perhaps. It’s like growing up: nothing can be done to rush it.

Nevertheless, we should note, the current unpleasant and unhelpful atmosphere of irrational squawking is far, far better than the alternative kind of discourse we see in other parts of the world: guns and bombs.

Friday, February 3, 2012

Why Theocracy?

What is the Attraction of Theocracy? It seems like a lot of people in the world wish for a government controlled by religious principles. Some places have that already, like Iran, Saudi Arabia, Vatican City. Some countries are nominally secular but under constant influence and pressure from religion, countries such as Turkey, Egypt, Libya, Indonesia, Pakistan, Israel, America.

For certain people, controlling a government seems desirable because of the power and relative wealth it would bring to them. So naturally they would like to see themselves in power. But the venality of a few aside, the real mystery is why so many ordinary people seem also to desire government by religion. Why would anybody want that?

This thought was provoked by a recent article in the Arizona Daily Star (http://azstarnet.com/): Rhonda Bodfield, “2 AZ bills would allow Bible class in schools,”
posted Tuesday, January 17, 2012 12:00 am.

According to this article, “A Republican lawmaker from Tucson wants to allow the Bible to be taught as an elective in high school. State Rep. Terri Proud said … HB 2563 and HB 2473 aren't about bringing church in the classroom, but aim to familiarize students with the way biblical references impact literature, art, music and public policy.”

Apparently, instead of explaining to students the meaning of a biblical reference in Shakespeare, it would be better to just teach the Bible itself, old and new testaments.

Arizona being Arizona, this kind of thinly disguised push toward theocratic indoctrination is an endemic disease on the body politic. It can’t be stopped, and probably shouldn’t be anyway, in deference to the First Amendment. And it's not just Arizona of course. The theocratic impulse seems quite alive in national political figures like Newt Gingrich, Rick Perry, Sarah Palin, Mike Huckabee, and on and endlessly on.

Still, it made me wonder what motivates people like that. What do they think would be the good part of a theocracy?

Historically, government not separated from religion has led to decades, and even centuries, of violence and oppression. But let’s assume Rep. Proud, and most people, don’t know history and don’t fear it. What then are the positive benefits they would hope to gain from a government imbued with religion?

Let’s imagine the public schools could teach the Bible obsessively to their heart's content, pray in school endlessly, indoctrinate the youth, leading to a uniformity of thought centered on Christian doctrine, expunging evolution, cosmology, and other contentious topics from the curriculum. After a generation or two, we could have a theocratic government, perhaps much like Iran’s, complete with thought police. What is the good part of that?

Why is a government without diversity and freedom considered desirable? Our constitution prohibits the government from supporting any particular religion, and at the same time guarantees freedom of religious expression outside of government. What is the flaw in that setup that makes people want to move instead to theocracy? I just don’t get it.

Friday, December 9, 2011

How To Leave Your Big Bank


I decided to leave my big national bank and move to a local credit union. It was not easy. Here are some tips on how to do it.

First though, why do this? There are many reasons, but the main one is that the big banks don’t play fair. They are hoarding trillions in cash but refuse to make loans. Why? Because they do not want to properly value the mountains of bad mortgage derivatives they still hold from the financial crisis, because if they did that, it would be obvious that they are virtually insolvent. So they would rather perpetuate the national housing crisis than write down their own profits.

Secondly, most are indeed virtually insolvent. I had serious concerns about my big bank, which keeps announcing cutbacks and layoffs. Just because they are called “too big to fail” does not mean they are too big to fail.

Third, fees keep creeping up and service keeps declining. My bank told me the only way I could retain my no-fee checking account was to go 100% e-banking, totally online, which was fine with me, but they also said I was no longer welcome in the lobby of the bank and if I ever talked to a live person in the bank, I would have to pay a fee. Friendly!

Next, their software has become unstable. Several times I have been locked out of my accounts because of faults in their software that suddenly does not recognize me or any of my credentials. When I call the 800 number, the agent knows nothing can do nothing. Usually after a couple of days, the software rights itself and I can bank again. A financial institution must NOT have unstable software.

Next, I think it makes more sense to support banking in my own community instead of financing fat bonuses for parasites in New York.

I’ve been thinking about changing banks for a long time, but the Occupy movement convinced me to finally do it.

So here’s how it went.

1. The first thing is to write down all memorized passwords, pins, user ID’s and so on that you use at the big bank. Hide that scrap of paper in a secure location. You do this because the changeover to the new bank can take up to two months and you will forget all those secret codes as you develop new ones at the new bank.

2. Find a community bank you can work with. I surveyed several credit unions in my city for availability of branches near me, no-fee checking, ATMs and other services I need. I visited three of them. In two, I couldn’t get anyone’s attention. If you walk right up to a teller, the teller cannot open a new account and will only refer you to a “manager.” But the closest I ever got to a manager was a clerk who handed me some brochures. At the third CU, there was a greeter at the door who welcomed me and made an appointment for 5 minutes later with an appropriate manager.

3. Read the financial statement of the new bank. This is available in the lobby, or you can ask the manager for it. Just check the balance sheet to see if they are making money, not deeply in debt. If you don’t know how to read it, get a friend who does. Make sure your deposits are insured by the appropriate federal agency for that type of institution.

4. Verify that the new bank offers the services you need at rates you are willing to pay. My new CU has virtually free checking, savings, home and car loans, and they sell some kinds of insurance. The checking is “virtually” free because you must maintain a $25 savings balance to make the checking account work, so that is basically a one-time charge for opening a checking account, okay with me.

5. Open a test account with a minimal balance, just to see how the paperwork goes. I opened an account for a hobby that generates about $20 a month in deposits. With such an account, you can test the bank’s bill-paying software and other online services, get some checks printed, and you can try their ATM network. Most credit unions have collaboration agreements to honor each other’s debit cards, so even though the small bank has far fewer branches and fewer ATMs compared to the big bank, the collaboration makes a virtual network just as functional. Some of the participating credit unions charge a small fee for using their ATM with another bank’s card, but many do not. When you’re traveling, you can use the network, or use the old grocery store trick to get cash (pay with debit card and ask for cash back). The big stores will give $100 with no question.

6. Make sure you have enough money left in the big bank to pay a month’s worth of bills while you transfer your direct deposits over to the new bank.

7. If you have a credit card with the big bank, stop using it and start using a new credit card, either from your new bank, or from an airline, or somewhere else. If you have investment accounts, your new broker will roll them over. The new broker might be at your new bank, or be an independent broker, even an online service such as Fidelity or Vanguard, etc. If you have loans with the old bank, the new bank will help you move them over.

8. If all has gone well, open another account at the new bank to handle your main financial transactions (or just use the hobby account if you didn't really need it for that), then acquire and fill out the forms necessary to arrange for direct deposits to the new bank. You get direct deposit authorization forms from your employer, your pension manager, investment broker, social security, whatever. Send those in. Let a month to six weeks go by until you are sure deposits are going to your new bank, not your old bank.

9. While you are waiting, begin documenting your payee information for the new bank. You will find that the old bank will not reveal your payee information to you, because that is one way they make it difficult for you to leave. So when a new bill comes in the mail, or comes due online, write down all the information you need to pay it, including account number, the full address of where the payment goes, the customer service phone number, everything. Then you can enter that information in the new bank’s online bill payer service. Keep the written copy because the new bank probably will also hide most of the information from you (it’s a common bank strategy).

10. As direct deposits come in to the new bank, use them to pay whatever payees that you have set up so far online at the new bank, to make sure the bill payment system is working right. If you have authorized some creditors to debit your account directly, you need to contact them and change the debit to the new bank. Until all the deposits are finally coming in to the new bank, pay the rest of your bills out of the old bank until it is out of money, which will be after all the direct deposits have switched over to the new bank. Eventually, you will have transferred all your deposits and all your payees to the new bank.

11. Use your new bank account to pay off the balance on your old bank credit card, or, if you can’t do that, transfer the balance to the new card.

12. When all is good, write a check against the old bank to zero out the balance and deposit it in the new bank. Be sure to get an accurate current balance at the old bank, net of any fees. You can do that at their ATM. After that check clears, notify your old bank in writing or email that you are closing the account. If you fail to do that, they can continue to assess fees on you and when you don’t pay them hassle you and your credit rating. You can just cut up your old bank credit card or you can call the 800 number and cancel it. (cartoon soxfirst.com)

Monday, November 28, 2011

Are the Super-Rich Really Job-Creators?

In a New York Times op-ed column today, the ever-surprised economist, Paul Krugman, argued that it makes sense to tax the rich (“Things to Tax: http://www.nytimes.com/2011/11/28/opinion/krugman-things-to-tax.html?_r=1&ref=opinion). To those who say taxing the rich wouldn’t raise much revenue, he counters that “The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money…” Let’s note also, that’s from just one-tenth of one percent of taxpayers.

Republican Senator John Kyl is ready with a well-worn comeback. Also in the New York times today, Kyl argues that the Bush tax cuts for the wealthy should be continued because, “increasing taxes on the most affluent Americans, including small-business owners who report business income on their personal tax returns, would undermine the fragile economic recovery. The best way to hurt economic growth is to impose more taxes on the people who do the hiring…” (http://www.nytimes.com/2011/11/28/us/politics/senator-questions-extension-of-tax-cut.html ).

This is a common Republican refrain, though patently bogus. Do the top one-tenth of one percent of income earners in America actually “do the hiring?” Notice that Kyl’s criterion is “small-business owners who report business income on their personal tax returns.” That’s a different group than the top 0.1% of income earners.

Anybody can report business income. That doesn’t mean they are creating jobs. If you sell some stuff on Ebay, you should report that as business income, even though it doesn’t make you a job creator and it doesn’t automatically put you in the top 1% of earners.

What is “business income?” The treasury department defines small business income as any ordinary income, long-term or short-term gains, from sole proprietorships, S corporations, partnerships, estates and trusts. (factcheck.org, March 6, 2009).

By this definition, are the rich the small business owners? 73% of Americans in the top two tax brackets report some kind of business income on their tax returns, but that does not mean they are “hiring employees” or “creating jobs.” They could be just cashing their trust fund checks.

It is a crude sleight of hand to suggest that anyone who is rich is automatically a job-creator. If that were true, it would be hard to explain why employment has not jumped way up over the past ten years while the incomes of the upper 1% of Americans rose 18 percent. (http://mediamatters.org/research/201110200011). It must be that all those rich people were not actually “hiring,” as Republicans claimed.

Some of the super-wealthy are corporate executives whose companies do create many jobs. It is hard to imagine that increasing the marginal tax rate on their personal income would cause their companies to hire fewer people. And anyway, they are not “small” business owners, the ones who actually create most of the jobs in America.

In fact only 27% of upper income tax returns show business income that makes up more than half of wages. Presumably, a real small business owner would take home most of his or her wages from the business (factcheck.org, March 6, 2009). The vast majority of people who report business income on their tax return are not running a small company that’s on a hiring spree. And even among those who are, only 2% of them earn enough money to make it into the top tax brackets (factcheck.org).

The categories, “rich” and “job creator” are almost non-overlapping. Yet Republicans routinely equate them. It is a spurious equation and I can’t understand why the news media let it go uncommented. Even Krugman doesn’t mention it. It is a completely false argument that taxing the rich destroys jobs. How Republicans continue to get away with spouting such nonsense is a mystery.

Tuesday, September 6, 2011

Why the Wheels Fell Off

Three years after the financial collapse of ’08, the American economy is still on life support. The main devastation occurred in unemployment, which remains above 9% nationally, as high as 25% in some regions and much higher among some age and ethnic groups. Even among those employed, the mortgage crisis limits economic growth, with almost half of mortgages worth more than equity, and tens of millions of houses in foreclosure. GDP has been limping along at 1% for years, with no prospect of an upturn as long as consumers don’t spend (what would they spend?) and retail credit remains inaccessible. There is talk about continued recession for at least two more years, more likely six.

What happened is that rich people took all the money. They left next to nothing for the rest of us. They played the capitalist game and won. They are still winning, and I expect will continue to do so, barring the unforeseen. This does not make the rich, bad people. The whole point of the capitalist game is to get rich. There are winners and there are losers. But the present outcome, painful recession for most people, is the inevitable consequence of the rich siphoning off America’s wealth over the last thirty years. It could have been moderated, but it wasn’t. Now here we are.

First, let’s make sure we understand that in fact, the rich have siphoned off the country’s wealth. According to G. William Domhoff (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html),

As of 2007, the top 1% of American households (the upper class) owns 34.6% (more than a third) of all privately held wealth in this country.

The next 19% (the managerial, professional, and small business stratum) holds 50.5% (more than half).

This means that the wealthiest 20% of Americans hoard 85% of the country’s wealth, leaving only 15% for the rest of us (wage and salary workers).

If you exclude the value of one’s home from the calculations (because the rich often have very expensive homes), then you see that just the top 1% of households owns 42.7% of the all the nation’s financial wealth. The richest 20% hold more than 93% of financial wealth. That’s basically all the money there is! Nearly all of the country’s money is in the personal bank accounts of just a few people. The rest of us are left to squabble over the remaining 7%.

The rich are the big winners in the game of capitalism, and the winnings have been huge. A hundred years ago, the richest 1% of Americans owned only 18% of the nation’s wealth (Noah, http://www.slate.com/id/2266025/entry/2266026). Today’s huge wealth inequality is a recent phenomenon, since about 1980. It is the most obvious outcome of a capitalist system gone awry, and an explanation of the current economic recession.

Today’s painful recession is the consequence of the richest people having sucked all the money out of the economy since 1980. The rich are not having a recession. The Dow Jones Industrial Average is about 11,000 today, down a few percentage points from its bubbly high of three years ago, but by no means disastrous for the companies indexed, such as American Express, Chevron, IBM, Microsoft, Verizon, and others. Some of the big banks are having disasters recently, but that is a separate situation, and long overdue anyway. Most large businesses are doing well, making plenty of money. It’s ordinary wage-earners who are hurting.

How did nearly all the money in America flow to the top 20% of bank accounts, leaving the rest of us in recession? In my opinion, the main factors since 1980, in order of importance, were:

1. The information technology revolution.
2. Failure of education.
3. Government corruption and incompetence.
4. Globalization of economics.

The rise of the computer put a lot of people out of work from automation. I made much of my personal wealth doing just that (although not for that reason – I plead na├»vete). I spent many years automating the pulp and paper industry with computer controls and robots, putting scores of hard-working people out of jobs forever. My bad. As a possible redemptive factor, I spent many more years using networked computers trying to educate the youth. However, I had far more success with the former than the latter.

Other aspects of the computer and information revolution made it easier for those who understood and controlled technology to separate people from their money, through deceptive and unscrupulous advertising and marketing (e.g, Big Pharma, Big Finance, etc.), and accumulation and exploitation of information about people. Technology and information resources are expensive and knowledge-intensive. Those who could understand it, and who could afford to put it to work, reaped wealth. Those who couldn’t, suffered. The technology revolution was not neutral – it favored the economically privileged and the well-educated, and still does. It was a primary factor causing wealth to flow from the bottom to the top of the economic pyramid.

And that brings me to the second cause of today’s financial crisis: failure of education. I have been a lifelong educator of youth and adults (except for my two-decade stint as a technology raptor). From personal experience, I can say that the educational system in this country is largely ineffective, virtually moribund. The basic cause of that is economics. Teachers are not well-paid because their product is very long-term (tomorrow’s leaders, movers, and shakers) and as we know, future value is heavily discounted. Also, students don’t vote, so why worry about them? Consequently, society as a whole has little incentive to properly finance education. Granted, many teachers are incompetent and curricula laughable, but those are consequences of economic underdevelopment, not causes.

There are plenty of smart people in this country who would become educators if they thought they could make a living at it. But except for the most elite, it is not possible. I myself dropped out of academia for twenty years because I needed to make some money. If a starting college teacher made $75,000 a year (instead of 30,000), and could expect salary growth comparable to a business or legal career, there would be qualified candidates. Actually, if there even were such a thing as a starting college teaching position, it would be an improvement. About half of college teachers are now “adjuncts,” which means part-time, with no health-care or pension, and that percentage is on the rise. Currently, postsecondary education is not a viable career for a principal earner. The situation is comparable for K-12 education (but much less so for educational administrators, who do better).

This economic analysis assumes that talent in education, as in any other field, costs more than lack of it. It is simply not reasonable that widespread, high-quality education in this country is impossible. The problem is that inadequate investment is made in classroom and administrative talent. There are also profound structural flaws in the educational system that entrenched interests are loath to address. In addition, political corruption favors the status quo (see #3: Corruption). The failure of education ultimately makes it easier for the economic elites to separate ordinary people from their wealth.

Third on my list of causal factors is government corruption and incompetence. The corruption is a direct consequence of how American politics is financed. The rich pay the politicians, who in turn, write laws that favor the rich. It’s an incestuous system that works well for both sides, selling power for money, trading money for privilege, all at the expense of ordinary people. It is not overt bribery, usually; this is not suitcases full of money. No, just as racism and sexism have moved from being overt to subtle, government corruption at all levels is now only detectible to the discerning. Just a special-purpose clause in a bill here, an appropriations contingency there, a blind regulatory eye, a tax loophole, and plenty of rhetorical obfuscation. It doesn’t take much to shave points off a game.

I’m not saying that illegal things are being done (though recent history suggests some of that goes on too), only that corrupt things are being done. Actions are corrupt when they violate the trust that ordinary people grant to politicians when they ask them to work on their behalf. Anyone who doubts that the American political system is corrupt is under-informed (see #2: Education).

The fourth and final causal factor in my list is globalization of economics. This came about mainly as a consequence of the technology and information revolution (see #1), which allowed rationalization of labor markets and currencies. As a result, jobs flowed out of America’s expensive labor market to cheaper markets abroad, to the great benefit of many millions of people around the world (e.g., in China, Mexico, and elsewhere), but to the loss of high-priced American workers.

Globalization of labor will continue, eventually consuming the livelihoods of the American affluent. We are already seeing this as jobs like legal research, financial trading, and X-ray interpretation move offshore. That trend will continue as global economics reaches equilibrium over the next couple of centuries, when even the most wealthy will find it difficult to exploit market anomalies to their own advantage.

Beyond labor market equilibration, globalization of trade, especially in oil, has sucked money out of the economy and funneled it to Big Oil. It is largely due to government corruption and incompetence (see #3) that America’s addiction to oil has not been treated in the past half century, despite numerous and obvious warnings.

What should be done, what can be done, about the current economic recession and its dark shadow of unconscionable wealth inequality? I have ideas, but that’s a different essay. Here I want only to enumerate my perception of the fundamental, distal factors causing the deep economic hole we are now in and from which we may never fully emerge.

Tuesday, July 5, 2011

Paper Training David Brooks

In today’s New York Times, Op-ed columnist David Brooks, the last rational conservative in the country, claims that the Republican party is unable to make a decision that does not even require a brain: compromise on the negotiations to raise the national debt ceiling. Republicans have the opportunity to significantly cut government spending and put long term limits on the growth of the federal government, with negligible harm to current economic growth. (www.nytimes.com/2011/07/05/opinion/05brooks.html?_r=1&ref=opinion).

These are all allegedly goals that Republicans hold in high priority. Yet they reject the opportunity to achieve them because the word “tax” has been mentioned. They are so religiously, irrationally, fetishistically, unreasonably opposed to any sort of revenue increase, they literally will walk out of negotiations if even the phrase, “closing tax loopholes” is mentioned. (http://articles.boston.com/2011-06-24/news/29699882_1_budget-talks-jay-carney-debt-limit)

Are Republicans mentally deficient, then? Brooks notes that they do not accept the logic of compromise, reject clear evidence, won’t hear expert opinion, deny the legitimacy of scholarship, have no economic theories to back up their position, lack moral grounding, indulge fanatical “fixation” on worshiping “their idol” of resisting all forms of government revenue increase, and are “not fit to govern.” Other than that, though, I wonder how he feels?

Now, I am no fan of these Republican tactics either. I would add to Brook’s litany of complaints that the Republican behavior is hypocritical, even extremely cynical. They care nothing for governmental fiscal responsibility, as the previous eight years of Republican rule amply demonstrated (two unfunded wars, unfunded tax cuts for the rich, failure to regulate the financial industry, unfunded drug benefits for the elderly, untrammeled military spending, and on and on and on). The record speaks for itself: Republicans care only for money and power, nothing else. Their talk about fiscal responsibility is transparent cover for their greedy pursuit of personal gain through economic rape of the country. Touche, Brooks.

Nevertheless, purely as an exercise critical thinking, it might be interesting to consider: what could they be thinking in the current negotiations about raising the government’s debt ceiling? Surely they realize that if the U.S. government defaults on its debt, the worldwide consequences would be catastrophic. Let’s assume for the sake of argument that these Republican negotiators are not mentally deficient and that they do have a rational strategy. What would it be?

I think it might be the same strategy one uses in paper-training a puppy. You want the dog to stop peeing on the floor, so what do you do? You whap it on the nose with a rolled up newspaper in the presence of its smelly offense, and you reward it with a dog biscuit when it goes on the paper. Simple, and effective.

Here is what you do NOT do: You do not try to reason with the animal, explaining why it is better for everyone’s health and state of mind, and for the relationship itself, that peeing should take place only on the paper. You also do not give a dog biscuit reward when the puppy pees a little closer to the paper than usual, because it was “pretty close” or “at least in the right direction.” It’s pee on the paper or nothing. You also do not refrain from the painful and humiliating swat on the nose when the animal pees “just a little”on the carpet. It’s swat if you missed the paper, no compromise.

Republicans believe, let us suppose, that discussion on the matter of federal spending, is pointless. Many discussions have been had in the past, all to no avail. Spending continues to increase and so do taxes to pay for it, they believe. The Republicans may also realize that they have no legitimate standing to argue for restraint, given their own history of profligacy.

So if discussion is pointless, that leaves only behavioral control. Like any good animal trainer, they will enforce a painful and humiliating government shutdown as long as the government continues to pee money on the carpet, and they will only allow the biscuit of revenue when the government shows proper restraint, which is to cut Medicare and Social Security.

There is a logic to this strategy, even though it incorrectly presupposes that Republicans have the intellectual, moral, or political authority to arrogate the role of trainer. But they do have a bit of leverage with the debt ceiling limit looming and control of the House. Of course the proper way to train the government is to win a popular mandate at the ballot box, but they haven’t been able to accomplish that, so this is an opportunistic substitute. It’s a flawed logic, but it is a logic, and a case could be made that the Republicans are being canny, not retarded.

However, I do agree with Brooks that this animal training strategy is so primitive, so flawed, so misconceived, that it will backfire and result in their own humiliation in November, 2012.

Saturday, May 14, 2011

The Afghanistan Pullout

The U.S. is scheduled to start withdrawing troops from Afghanistan in about a month, after a decade of fighting there. Full withdrawal is supposed to be by 2014. Everyone expects the July 2011 withdrawal to be a token number, more symbolic than a meaningful proportion of the 100K troops there, because the battle against the Taliban is still at high pitch and the Afghans are not yet competent.

However, with the recent decapitation of Al Qaeda, there is opportunity to rethink the Afghan plan. The U.S. could plausibly declare the “war on terror” essentially won, because we got the perpetrator of the 9-11 attacks. Then we can get out of Afghanistan (and Iraq too!) much more quickly. Those were Bush’s wars of choice, which Obama inherited, and promised in his presidential campaign to end quickly. This is his chance to do what he said.

There is talk among the punditocracy that we must not “abandon” Afghanistan. We must “stay the course,” and make withdrawal sensitive to “conditions on the ground.” What is behind this kind of cautionary talk?

The fear is that as soon as we leave Afghanistan, the Taliban will take over (probably under the leadership of our man, Karzai). If that happens, then Pakistan may well go Taliban too, and then you’d have nuclear terrorists. Who they would attack first, the U.S., Israel, or Europe, is beside the point; we assume they would attack. Bad scenario. Therefore, do not pull the troops out of Afghanistan “prematurely.”

But that logic can be rethought. There are two sets of arguments for simply declaring victory and pulling out all the troops as quickly as possible. Argument set one is domestic: The war is very unpopular in the U.S.; it is bankrupting us, and Obama needs to win in 2012. One reason for the 2014 date for a “serious” drawdown in troops is that it would be after Obama’s re-election, so couldn’t hurt him, and might give Democrats a boost in the midterms. But that is chicken thinking.

The second set of arguments for pulling out now/soon from Afghanistan is that we are not accomplishing anything significant there anyway. We cannot kill or capture every Taliban terrorist in the country. They breed too fast. They can easily wait us out. As for “nation-building,” we aren’t doing much of that either. We’re trying, with clinics and roads, to make life better for the people, but we are not winning hearts and minds; the populace is ethnically divided and not susceptible to democracy; and it is an opium-based economy. Even the Afghan president, Hamid Karzai, doesn’t’ want us there. Hawks like senator Joe Lieberman insist we need to “build a country we can be at peace with.” But he doesn’t say how to do that, and he can’t, because it is not possible, at least not in his, mine, or Obama’s lifetime. Our position there is unsustainable as a practical matter. We cannot win militarily and we cannot be successful politically. The writing is on the wall: Afghanistan is going to be an anti-western, fundamentalist, Islamic theocracy. Let’s plan for the reality, not the fantasy.

Once Afghanistan has gone over to the dark side, the Taliban probably will influence or virtually take over Pakistan too, which is already halfway down the slippery slope to a failed state. Maybe we could continue to prop up Pakistan, just as we have propped up Israel for decades, and keep the nukes out of the hands of the Taliban. That would be much cheaper than what we are paying to keep troops in Afghanistan. But even that plan is not a sure thing. The Pakis are extremely ambivalent about us. They love our money, but that’s about all. Many are sympathetic to the Taliban. It is not for certain that we can buy their allegiance for much longer, and it is seriously not clear if Pakistan can survive as the pseudo-democracy it is now.

Conclusion:

Let Obama put his silver tongue to work and convince Americans of the real problem: We are stalemated in Afghanistan and so we should get out and plan instead for surgical retaliations when the Taliban acts up, as they surely will. We can, without being public about it, switch from a “global war on terrorism” to more of a police footing, where we kill and capture perpetrators, but do not invade whole countries and fight literal wars on their soil. We need to keep our legal options open. The president probably does not want to give up his “war” authority to pursue badguys to the four corners of the earth, across international borders where necessary, but there is probably some kind of slippery political language to finesse the legal points.

We should also prepare to prop up Pakistan (with the money we save by ending the war!) and also prepare for a failed Pakistan and even for nuclear terrorists. How will we react? Why not plan for the real probable future world, rather than hanging on to the status quo like some talisman that lets us avoid lifting our heads. A “stay the course” policy in Afghanistan is like a child’s superstition: Step on a crack, break your mother’s back. Hey, that won’t save us. It is pure superstition, not realistic policy.

Obama could pull virtually all the troops out of Afghanistan now and be ready to react to the next move. Yes, it’s a reactive approach, but we cannot be proactive against the Taliban in Afghanistan. That is amply demonstrated by the “facts on the ground.” The Taliban will not act rashly before 2012 because they know a Republican victory would probably bring the troops back in. They will wait. That gives Obama time to be ready with a thunderbolt response. Meanwhile the troops stop dying, and the money stops hemorrhaging in Afghanistan, and we’re no worse off geopolitically.