Sunday, June 30, 2013

MB360: Record-high delinquency of student loans

I don't necessarily agree with MB360 that student loan debt is a "bubble" in the sense that speculation is driving up prices beyond any underpinning value.  A few weeks ago, Law professor Charles J. Reid explained why:

Student loans, however, are not like this, for the simple reason that they are non-dischargeable in bankruptcy. They are not a bubble and cannot become one. What they can become -- and show increasing signs of actually becoming -- is an anchor that is sinking the fortunes of an entire generation.

But just because they're not a bubble doesn't mean these levels of indebtedness are not extremely worrying. They are.  These delinquency rates mean that graduates are not getting the kinds of jobs they thought they would get thanks to their expensive degrees.  If higher education is not the key to employment and higher income, then what is?  So far, our nation does not have another answer.

By mybudget360 
June 30, 2013

If the news for college graduates couldn’t get any better.  Our woefully motivated millionaire Congress is unable to figure out what is necessary to stop the doubling of interest rates on student debt.  While the Fed can turn on a dime to rectify zero percent interest rates for member banks, trying to help the youth of the nation well, that is just too hard to do.  Milling around through the data I found that for the first time in history, student debt had the highest delinquency rate of all household debts.  This is a big deal given that Americans now carry over $1 trillion in student debt and most of it is in the hands of the young.  At the nucleus of this argument is that people are going into too much debt to finance their educational pursuits.  Collecting tips at the Olive Garden is not exactly going to payoff that $50,000 in student debt.  How is it that the Fed can subsidize big banks with zero percent rates so they can speculate in real estate and other ventures while college graduates are now faced with the doubling of interest rates?

Half of college graduates not utilizing degree

Part of the problem is the voting power (or lack of it) from younger Americans.  Many simply do not vote.  And the baby boomer cohort is guiding many policies through elected officials although they only serve a tiny pizza slice of the baby boomers at that.  So with that said, the voice of the young is largely drowned out by big business and higher education has turned into a very lucrative private-public venture.  With that as our backdrop, half of college graduates are not utilizing their increasingly more expensive degrees:

college graduates underemployed

Half of recent college graduates are either unemployed or underemployed.  And recently many have given up on pursuing careers where their degrees would be utilized and have taken up other jobs.  Other jobs that would have gone to lower skilled workers.  And of course, these workers get pushed down into a lower level of the economic ladder.  And what a shocker that as we go into the various levels of Dante’s Economic Inferno we find that 47.7 million Americans are on food stamps.

The above chart is rather sobering because many recent graduates are leaving school with high levels of debt.  Incomes for many of these graduates are not justifying the sky high rates of tuition at many schools.  Education is still a worthy venture and that is why people continue to go into high levels of debt for this.  Yet our banking system has been rather obsessed with one sector of our economy since the tech bubble burst in the early 2000s.  Real estate has seemed to dominate every big decision in the last decade to the detriment of creating an economy where millions of jobs are added to meet this more educated workforce.  That has clearly not happened.  Colleges are not going to turn their back on willing students with fresh loans in hand.  And I suppose that is the point.  Easy access to debt is like an aphrodisiac for the industry.  Go to any college campus and you will see palatial stadiums and massive buildings.  Do Olympic sized pools make people discover cures for modern diseases quicker?

What is even more troubling is that the underemployment rate for recent college graduates has trended up in the last few years while the overall unemployment rate has fallen:

recent college grad data

No, we are not looking at a chart of Spain or Greece but a chart of US recent graduates.  A large part of the decline in the unemployment rate has come because the civilian employment population ratio continues to lower:

civilian pop ratio

While many older Americans have dropped off the radar, many recent graduates simply do not have this option.  Many over the last few years have clearly opted to take on jobs that are underutilizing their degrees.  Does that mean they overpaid for their education?  $1 trillion in student debt seems to give us an answer that not only did many overpay, they didn’t even have the funds to afford it in the first place.  Higher tuition would make more sense if wages were also rising but that doesn’t seem to be the case with the new batch of graduates.  And many are falling into student debt quicksand and are unable to pay the loans they now have.

The most delinquent of them all

Student debt before the 2000s hit was typically a safe financial bet.  Delinquencies on student debt reflected this.  Today, we now find ourselves at the precipice of another bubble with student debt having the highest delinquency of any form of household debt:

student loan bad debt

You can see this rate doubling only in the last few years.  Keep in mind this is occurring without the potential doubling of student loan interest rates.  Rates are set to go from 3.4 percent to 6.8 percent if Congress does not act.  Amazingly, they are able to act quickly when it comes to the interest of large banking but to help the young in our nation?  No, let us go on holiday break and see what happens.

The rising delinquency rates are simply the last straw in the student debt bubble.  This is a bubble.  When you have prices soaring without any underlying economic change, you have a big problem on hand.  Keep in mind that what you can afford and the price of something are fully disengaged since the government will lend pretty much whatever is necessary to go to school.  If the cap was $100,000 a year, you can rest assured you will have some for-profits cropping up with $100,000 a year degrees.  Record delinquencies and half of recent graduates working in jobs where a massively expensive degree is not being used does not bode well for higher ed at the moment.  No one has a crystal ball on how this will play out but you can rest assured that something is going to give.  You don’t need a college degree to figure that one out.

One-page solution to climate change

You know why this cannot work, politically?  Because it involves a tax.  That's it.  Economically, it makes the best sense.  It wouldn't require any expensive red tape or intrusive regulation of business.  Just a tax.  But Americans hate the word "tax," especially new taxes, so this could never fly.  Too bad.  

But at least you and I know the solution.  We won't let our politics make us dumber, right??....

By David Kestenbaum
June 28, 2013 | NPR

Climate change seems like this complicated problem with a million pieces. But Henry Jacoby, an economist at MIT's business school, says there's really just one thing you need to do to solve the problem: Tax carbon emissions.

"If you let the economists write the legislation," Jacoby says, "it could be quite simple." He says he could fit the whole bill on one page.

Basically, Jacoby would tax fossil fuels in proportion to the amount of carbon they release. That would make coal, oil and natural gas more expensive. That's it; that's the whole plan.

Jacoby's colleague John Reilly told me the price of gasoline might rise by 25 cents a gallon in the first year. Over time, that would increase. By 2050, Reilly figures the carbon tax would add about $1 to the price of every gallon. Across the economy, prices of energy-intensive goods and services would rise. This would encourage people and businesses to be more efficient.

This is why economists love a carbon tax: One change to the tax code and the entire economy shifts to reduce carbon emissions. No complicated regulations. No rules for what kind of gas mileage cars have to get or what specific fraction of electricity has to come from wind or solar or renewables. That's by and large the way we do it now.

Reilly says the current web of rules is a more complicated and more expensive way of getting the same outcome as a carbon tax. The current system "pretty much is one of the worst ways we could do it," he says.

As with any fix for climate change, a carbon tax would hit some people harder than others. People with long commutes would pay more. People who work in coal mines could lose their jobs.

But here is where Reilly brings up what is perhaps the most surprising thing about a carbon tax: If you do it right, he says, carbon tax can be nearly painless for the economy as a whole.

Besides reducing carbon emissions, a carbon tax brings in a bunch of money — it's a tax after all. So, Reilly says, you can reduce, say, income tax to balance out the new taxes people are paying for carbon emissions. People pay more for gas, but they get to keep more of their income.

I called around and talked to a bunch of economists about this, and they said the basic idea was sound: If you give the carbon-tax money back by cutting income taxes, you can probably offset a lot of the pain.

President Obama has indicated he would support a market-based solution to climate change. But a carbon tax would, of course, require an act of Congress. And right now, that seems unlikely.

Sunlight Foundation: 31,385 people control USA

Here's yet another reason wealth inequality is bad: it gives inordinate power to the top one one-thousandth of the U.S. population.  This is plutocracy, not republican democracy!  

Here's how the Sunlight Foundation sums up its study:

The U.S. now has a campaign finance system where a tiny slice of individuals – 31,385 people, not even enough to fill half of a professional football stadium – collectively account for more than a quarter of all individual contributions (that we can trace), even though they represent just one in ten thousand Americans. Every single member of Congress elected in 2012 received a contribution from this group of individuals, and the vast majority of those elected (84 percent) received more money from the "1% of the 1%" than they did from all small donations (under $200).

A tiny sliver of Americans who can afford to give tens of thousands of dollars in a single election cycle have become the gatekeepers of public office in America. Through the growing congressional dependence on their contributions, they increasingly set the boundaries and limits of American political discourse – who can run for office, what their priorities should be and even what can be said in public. And in an era of unlimited campaign contributions, the power of the 1% of the 1% only stands to grow with each passing year.

We need shorter, publicly financed election campaigns!  Then a whole host of "unsolvable" policy problems would be solved naturally, almost immediately.

You gotta read the whole article to see who these people are, where they're from, and how much money they give to whom.  

By Lee Drutman
June 24, 2013 | Sunlight Foundation

More than a quarter of the nearly $6 billion in contributions from identifiable sources in the last campaign cycle came from just 31,385 individuals, a number equal to one ten-thousandth of the U.S. population.

In the first presidential election cycle since the Supreme Court's decision in Citizens United v. FEC, candidates got more money from a smaller percentage of the population than any year for which we have data, a new analysis of 2012 campaign finance giving by the Sunlight Foundation shows. These donors contributed 28.1 percent of all individual contributions in the 2012 cycle, a record high.

One sign of the reach of this elite “1% of the 1%”: Not a single member of the House or Senate elected last year won without financial assistance from this group. Money from the nation’s 31,385 biggest givers found its way into the coffers of every successful congressional candidate. And 84 percent of those elected in 2012 took more money from these 1% of the 1% donors than they did from all of their small donors (individuals who gave $200 or less) combined.

This elite 1% of the 1% dominated campaign giving even in a year when President Barack Obama reached new small donor frontiers (small donors are defined as individuals giving in increments of less than $200). In 2014, without a presidential race to attract small donors, all indicators are that the 1% of the 1% will occupy an even more central role in the money chase.

The nation’s biggest campaign donors have little in common with average Americans. They hail predominantly from big cities, such as New York and Washington. They work for blue-chip corporations, such as Goldman Sachs and Microsoft. One in five works in the finance, insurance and real estate sector. One in 10 works in law or lobbying. The median contribution from this group of elite donors? $26,584. That’s a little more than half the median family income in the United States.


Saturday, June 29, 2013

Rush misunderstands natural law

Rush: "'We hold these truths to be self-evident...' was so obvious that those truths had to be written down."

Unwittingly, Rush Limbaugh has given us another teachable moment. Teachable as in, we should avoid repeating the errors of an ignoramus.

Rush and his caller last Friday discussed natural law.  What's that?  Well let me define it for you, alternatively, as:

1. (Philosophy) an ethical belief or system of beliefs supposed to be inherent in human nature and discoverable by reason rather than revelation;
2. (Philosophy) a nonlogically necessary truth; law of nature. See also nomological;
3. (Philosophy) the philosophical doctrine that the authority of the legal system or of certain laws derives from their justifiability by reason, and indeed that a legal system which cannot be so justified has no authority.

What Rush and his interlocutor meant to say was divine natural law:

Divine natural law represents the system of principles believed to have been revealed or inspired by God or some other supreme and supernatural being. These divine principles are typically reflected by authoritative religious writings such as Scripture. 

Notice that these two are not necessarily the same.  One could be an atheist and a Darwinist and yet subscribe to natural law, because certain laws just make sense in our historical-human context.  For example, murdering somebody is morally wrong for all kinds of obvious reasons, and you don't need God in the guise of a burning bush to tell you why.  Same thing with stealing, bearing false witness against your neighbor, etc.  These immoral acts cause unnecessary conflict, strife and suffering.  

Here's a more generic definition of natural law that covers the two above: "A principle or body of laws considered as derived from nature, right reason, or religion and as ethically binding in human society."  So it's either/or/or.  

The major difference between the non-religious and religious definitions would be the concept of "inalienable rights."  Personally, I find the concept of inalienable rights awfully stupid, and it's easy to demonstrate why:

Imagine it's just you and a liberal (or a conservative, it doesn't make a difference) all alone on a deserted island.  You're fighting over coconuts to survive.  While arguing for your fair share of coconuts on the island, you remind him about your "inalienable" rights to "life, liberty and the pursuit of happiness"... and in reply he hits you on the head with a club and takes all the coconuts for himself.  Your rights were easily made alienable with that club.

Meanwhile, God or Zeus does not strike him down with a thunderbolt, preventing him from taking all the tasty, life-sustaining coconuts and saving your cranium from a cracking.  In fact, he gets fat on coconuts while you become tropical fish food.  So where do your inalienable rights figure in there?  Sorry, there was no overreaching government there to protect your inalienable rights. 

So the concept of "rights" without a strong government to uphold them is just academic-philosophical flim flam.  And who are the biggest opponents of strong government?  Advocates of divine natural law, that's who.  See the cognitive disconnect?  

Non-religious definitions of natural law don't subscribe to "inalienable rights," that's why they're superior.  They rely on innate arguments from logic, experience and history, not from dry old sectarian texts.  This is not to say I'm a believer in natural law.  I'm not.  What may seem "obvious" or a "law of nature" to you may not be so obvious to me; so again, any right of yours that depends on persuading me cannot be innate or natural.  

For Rush and his caller, this discussion of natural law was just a segue to complaining about the all-fronts "assault on God" in America.  That phrase always makes me laugh.  Does God really need the American federal government to protect Him?  Is He really that weak? Aren't churches strong enough?  If not, then... what's their purpose?  Are they just non-profit conservative lobbying organizations?  (In Republicans' ideal US of A, yes, they would be.)

As a member of the Left, let me make it clear: I'm not assaulting anybody's religion.  With my politics, I'm simply ignoring it.  That's all.  If ignoring something is offensive then... Well, if you're a married man, you know it's almost a sin to ignore your wife's new hairdo, outfit, etc.  But I think with religion we should not be so overweening and sensitive, what do you say?  Any religion that's been around more than a millennium can probably fend for itself.  Agreed? 

June 28, 2013 | The Rush Limbaugh Show

Taibbi: All journalists are 'advocacy journalists'

Yes, yes, yes!  Taibbi makes a great point about "objective" journalists, in the context of Glenn Greenwald's scoops on the NSA domestic spying story [emphasis mine]:

... because all reporters are advocates. If we're only talking about people like Glenn Greenwald, who are open about their advocacy, that's a crazy thing to say. People should be skeptical of everything they read. In fact, people should be more skeptical of reporters who claim not to be advocates, because those people are almost always lying, whether they know it or not.

[...] That's what makes this new debate about Greenwald and advocacy journalism so insidious. Journalists of all kinds have long enjoyed certain legal protections, and those protections are essential to a functioning free press. The easiest way around those protections is simply to declare some people "not journalists." Ten years ago, I would have thought the idea is crazy, but now any journalist would be nuts not to worry about it. Who are these people to decide who's a journalist and who isn't? Is there anything more obnoxious than a priesthood?

Journalists are supposed to be fair, not objective.  "Objectivity" is impossible, so let's not set the bar there.  I would much rather have a journalist be honest with me about his convictions (aka biases), then I can filter his reporting as I like, instead of looking for his "hidden" messages.  

This is similar, yet also unrelated, to my personal practice of prefacing any discussion of politics with strangers with, "I'm a big lefty liberal who voted for Obama twice."  Why do I do that?  Because why not?  It's the truth, and I have nothing to hide.  Surprisingly, things go much better after that.  At least my interlocutor knows where I'm coming from.  Then it's all about the merit or weight of my arguments.  Plus people just appreciate honesty.  People are funny that way.  

By Matt Taibbi
June 27, 2013 | Rolling Stone

Some things never change: FBI still infiltrating left-wing groups

Just like in the '60s and '70s, the FBI and now the DHS are spending a huge amount of manpower infiltrating left-wing groups that pose no threat to anybody, instead of catching the next Boston bombers.  It's not just electronic surveillance we must worry about.

Meanwhile, the FBI is increasingly setting up sting operations against clumsy, would-be terrorists by infiltrating them with agents provocateurs.  Hatching terror plots only to foil them and arrest the terrorist co-conspirators is their idea of "deterrence."

Close Encounters of the Lower-Tech Kind 
By Todd Gitlin
June 27, 2013 | Tom Dispatch

USA! USA! We're # 22! USA!

More global rankings.  This time the U.S. came in slightly better with the 22nd best global reputation, according to a survey of 27,000 citizens of G-8 countries.  The survey was based on three dimensions:  Advanced Economy, Appealing Environment and Effective Government.  Within these three dimensions, respondents measured a total of 16 attributes.  

According to those attributes, interestingly, the U.S. came in 2nd to Japan for "Well-Known Brands," 6th in "Culture," and 3rd in "Technology" behind Japan and Germany.  The U.S. did not come in the top 10 in any other attributes, including such as "Business Environment," "Safety," or "Institutional Environment!"

The top 10 countries by reputation in 2013 were:
  1. Canada
  2. Sweden
  3. Switzerland
  4. Australia
  5. Norway
  6. Denmark
  7. New Zealand
  8. Finland
  9. Netherlands 
  10. Austria
Our silent neighbor to the north, Canada, has been either #1 or #2 for the past five years.  Maybe we should go up there more often and check out what they're doing right?  

Finally, I know this has absolutely nothing to do with President Obama's leadership, but America's reputation has increased by more than 9 percentage points since 2009.  

Temp Nation

We need a national Temp Workers Bill of Rights. These are the most vulnerable people in our country, people who really want to work, and they need protection under the law.

Compare today's Temp Nation to what we had from 1950 to about 1980, with a blue-collar U.S. middle class with steady wages, hours and benefits like medical insurance and a pension.  Those people and those jobs made America the greatest economy the world has ever known.  And we're shipping those jobs overseas and replacing the ones that are left with temps.  America cannot sustain its greatness in this way.  We need to think bigger and not leave the "free market" to destroy our labor force and middle class.  

Check it out [emphasis mine]:

Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.

In June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association, the temp industry’s trade group, the pool is even larger: Every year, a tenth of all U.S. workers finds a job at a staffing agency.

The proportion of temp workers in the labor force reached its peak in early 2000 before the 2001 slump and then the Great Recession. But as the economy continues its slow, uneven recovery, temp work is roaring back 10 times faster than private-sector employment as a whole – a pace “exceeding even the dramatic run-up of the early 1990s,” according to the staffing association.

The overwhelming majority of that growth has come in blue-collar work in factories and warehouses, as the temp industry sheds the Kelly Girl image of the past. Last year, more than one in every 20 blue-collar workers was a temp.

And wanna talk about racial inequality?  Blacks and Latinos each make up 20 percent of all temp workers in the U.S., or 40 percent, total.  As conservatives like to note, minorities make up a disproportionate number of welfare recipients, relative to their share of the U.S. population.  Well, the same is true of temp and minimum-wage laborers.  These are poor and minority Americans who want to work and they are forced to live on the knife edge of poverty, with constant insecurity.  We must do better by those who want to work!

By Michael Grabell
June 27, 2013 | Pro Publica

USA! USA! We're # 27! USA!

Does anybody else see the irony?  We went to war in 1991 to liberate Kuwait and today their middle class is richer than ours.  Maybe Kuwait should come and save us?  

Les Leopold tells us why the U.S. middle class is so poor:

The International Labor organization produced a remarkable study, (Global Wage Report 2012-13) that sorts out the causes of why wages have remained stagnant while elite incomes have soared. The report compares key causal explanations like declining bargaining power of unions, porous social safety nets, globalization, new technologies and financialization.

Guess which one had the biggest impact on the growing split between the one percent and the 99 percent?


I've shown you this chart before:

All the growth in U.S. wealth over the past 30 years has been financial wealth and the growth of Too Big Too Fail Banks.  Obviously this is no way to grow our middle class or ensure economic growth for Americans who are not bankers and who do not derive most of their wealth from financial securities.  

Thursday, June 27, 2013

Voting Rights ruling was 'legislating from the bench'

I don't often comment on Supreme Court decisions because they are so blatantly political to me, albeit dressed up in pomp and black robes as something serious, deliberative and solomonic.  As my Uncle T., a lawyer and dyed-in-the-wool conservative, once told me, he can't see much that's legal or constitutional in the way the Supreme Court operates.  I tend to agree with him.  

It's because they are all utterly political appointees, justices whom the appointing President thinks he can rely on to interpret the Constitution with a particular ideological bent, the facts be damned.  Most of the time the Supreme Court's majority can't wait for certain controversial cases to hit their docket so that they can affect the political direction of our country.

That said, I think the SCOTUS went way too far on Tuesday by striking down Section 4 of the 1965 Voting Rights Act.  This time they clearly usurped the powers of Congress.

The power of Congress vested in them by the Constitution is not the power to be right, it's the power to be wrong. One can argue that Congress was wrong to overwhelmingly uphold the Voting Rights Act "coverage formula" in 2006, but then it was wrong with serious bipartisan conviction: 390-33 in the House and 98-0 in the Senate.  Congress provided 15,000 pages of documentation in 2006 to show that voter discrimination was still happening in the jurisdictions that the coverage formula designated for pre-clearance.

This week the U.S. Supreme Court said to hell with that.  The high court majority went beyond the Constitution to examine what it felt were facts on the ground that made the law unnecessary.  I'm sorry, but that's not the high court's job.  We have lots of unnecessary and stupid laws.  That's Congress's prerogative to make them; it's our job every 2 years to vote out the bums to replace or repeal them.  What the "anti-activist judges" majority did on Tuesday was to "legislate from the bench," pure and simple.  In doing so they are were not only hyper-partisan, they werehypocrites against their own judicial philosophy!

Even so, those facts on the ground are debatable, even without study, therefore the SCOTUS should not have so cavalierly struck down a law passed by Congress. What do I mean, without study?  Well, the majority said that the Voting Rights Act has clearly achieved its goal, therefore it was no longer needed. Yet one could argue that without it, racial discrimination against minority voters could easily spring up again.  This possibility is certainly imaginable, and certainly not possible to exclude, logically, yet the Supreme Court majority did just that and excluded it.  "We know everything's going to be fine from now on," they basically said.  

Also, Chief Justice Roberts said the SCOTUS "warned" Congress in 2009 to update the formula by which it determines a history of voter discrimination, and that with case of Shelby County [Alabama] v. Holder hitting the court's docket in 2013 without any action by Congress, the high court had no choice but to strike down the law.  But think about that for a second.  We have an historically gridlocked Congress and Republican majority that wants the Voting Rights Act to remain struck down... but wasn't dumb enough, politically, to offer up a bill to do so.  

Now surely the Republican House will not offer up a new bill now to update the pre-clearance formula that would require the DOJ's approval for any changes in state's voting laws.  (If you think they will, the Supreme Court needs to ban that medical marijuana you're smoking).  And the GOP majority's inevitable inaction in the coming weeks/months -- I would love it if they proved me wrong -- will prove just how absurd was Justice Roberts' utterly political premise for usurping the will of Congress in 2006 that was the law of the land.  

Furthermore, the majority cited states' rights (federalism) as its main justification for striking down the will of Congress.  However, Section 4 of the Voting Rights Act allows individual counties in affected states to "bail out" of the law if they can prove there is no recent history of racial discrimination against voters, as dozens of counties have since 1967.    

All that constitutional stuff aside, I agree with Dr. Martin Luther King that the arc of history bends toward justice... and obviously I agree with the U.S. Census that the arc of demography bends towards a non-white U.S. majority.  Politically, in the long run, this conservative SCOTUS decision -- and the inevitable inaction from a GOP-majority House that will follow it -- will be good for Democrats.  

I predict that this SCOTUS decision and Congress's almost certain failure to respond, combined with Republicans' likely continued inaction on immigration reform, will spur minority turnout rates in 2014 that will exceed 2012.  Republicans are showing once again they just can't get out of their rut... as they shoot themselves in the foot that's stuck in that rut.  

Inequality should matter to conservatives, too

We all know that conservatives don't worry about equality of outcomes; they care about equality of opportunity.  Actually, they don't care about outcomes at all; they only care about establishing rules of the game.  That's a values question, that's conservatives moral bent, although personally I think they're wrong.  We'll never agree.

However, what Bernstein's and other economists' research is showing us is that growing income equality actually diminishes equality of opportunity.  Bernstein talks about it herehereherehere.  This should worry conservatives.  The economic playing field will never be level; but we should be concerned when it's getting more unbalanced every year.

In addition, Bernstein plans to prove that income inequality leads to lower economic growthThat should concern us all, including deficit hawks who want to shore up our federal deficit.  

By Jared Bernstein
June 26, 2013 | Huffington Post

Deford: Separate college from sports -- AMEN!

I'm glad that Grandpa Munster, er, I mean the great Frank Deford, who has spent a lifetime writinge about U.S. sports, agrees with meNCAA sports are a money-losing scam.

It's always nice when the pros like Deford can take a cue from the amateurs like moi.

You know me, being so laissez-faire and all, I want to privatize everything and let the good ole' free market rule the world the way Jesus Christ and Adam Smith intended. That's why I want to privatize sports and take them out of U.S. public education altogether.  

By Frank Deford
June 26, 2013 | NPR

We usually think of college sports in terms of classic big-time schools, polls and bowls.

But, in fact, our athletics are intertwined with — and complicate — all higher education.

The University of North Carolina, Wilmington provides a typical recent case. The Seahawks field teams in 19 Division One sports, but unfortunately, like many colleges, UNCW athletics are in the red, so the chancellor, Gary L. Miller, assembled a committee, which recommended the elimination of five sports: men's and women's swimming, men's cross country and indoor track and softball.

Well, that produced a firestorm, especially with swimming, which has won the conference 12 years in a row and, which, financially, is about on budget. Now, by contrast, the basketball team has a deficit of a million dollars; the coach himself earns almost a half million a season, notwithstanding that the team lost two-thirds of its games and is academically on probation. Hmmm.

So why not just get rid of big basketball? Well, fans don't show up to see cross country or swimming, do they? Isn't part of the power and charm of college sports that it brings town and gown together, cheering our school on? Isn't that the American way from high school right on up?

Like a lot of his colleagues, Chancellor Miller also has to factor in the reality that his school is tilting female. Sixty percent of UNCW students are women, and the majority grows. And Title IX requires athletic percentage to reflect gender proportion.

Chancellor Miller is also being whipsawed to upgrade facilities so the Seahawks can be competitive with their rivals. UNCW is in the Colonial Athletic Association. No, it's not the Big 10, but the CAA stretches about 1,100 miles. Every college is desperate to get into a better conference and maybe even get on ESPN.

So what did Chancellor Miller, a biologist by discipline, do? Well, obviously influenced by the thousands who signed petitions, he decreed that he was keeping all sports.

But, he offered a provocative afterthought. He suggested that those folks so blithe about signing sports petitions might "leverage their passion" –– which is apparently what a polite biologist says when he means "put your money where your mouth is."

We in the U.S. think, nostalgically, of athletics as integral to higher education, but perhaps they're so unusual that they should be entirely separated from the academic and simply turned into an honest commercial adjunct.

Leverage, indeed. Let alumni and local businesses pay for sports. It certainly would make a lot of college presidents happier. And passionate alumni could then sign petitions to keep courses, like medieval history and Western philosophy. Yeah, sure.

Tuesday, June 25, 2013

No correlation between cap. gains tax and investment

Sometimes common sense is not so common... or correct.  Quantitative research, i.e. reality, often contradicts our intuitive sense of they way things ought to work, but actually don't.  Such is the case with capital gains tax rates, real investment and economic growth, as proven by tax law professor Chris Sanchirico of the University of Pennsylvania and Wharton in a recent paper [emphasis mine]: 

On the surface, the growth argument against capital income taxes seems clear and compelling. And many policymakers and pundits—on both sides of the aisle—appear to regard it as common sense. 

A very different picture emerges, however, from the academic research on taxes and growth. Scholarly evidence on the growth argument against capital income taxation is mixed at best. Indeed, it would not be unreasonable to conclude, based on the best available theory and data, that the growth argument has no real basis.

[...]  Compelling intuitions tend to melt away on close inspection, and the data tell no consistent story. When the negative growth effects of offsetting increases in labor income taxes or government borrowing are also taken into account, uncertainty begins to shade into doubt. Attempting to spur economic growth with tax preferences for capital income may be like trying to repair one side of the roof with shingles from the other

Regarding the non-correlation between capital gains and real investment, here's an historical illustration by economist Jared Bernstein:

If it seems to your untrained eye that there is no relationship between the red and blue lines, your eye is correct.  

And if you care about growing income inequality in the U.S. -- most conservatives don't -- then you must note the conclusion of Thomas Hungerford of the Congressional Research Service: "The reason income inequality has been increasing has been the rising income going to the top one percent.  Most of that has come in capital gains and dividends."

Sunday, June 23, 2013

T-shirts show semi-fascist police culture

Like many people, I don't like the police.  They make me nervous.  They give me speeding tickets on empty roads.  They talk in that ridiculous, officious police-report diction.  They are inherently politically conservative.  And I doubt their motives for becoming policemen in the first place: inferiority complexes; the desire for power over others; the right to brandish a gun and use violence, etc.

Nevertheless, I admit our police are necessary.  And I'm sure, objectively, that most cops want to serve and protect people, not bully and intimidate them.  What I don't like is the increasing militarization of our police; and this separation between "us" and "them," especially in big city police forces that often look on local residents as an enemy force.

Radley Balko's article is fascinating and, at first glance, there does seem to be a connection between all these violent, semi-fascist T-shirts popular among police, and instances of police brutality and false evidence.  Check it out!




By Radley Balko
June 21, 2013 | Huffington Post

Elite 'liberal' media slants toward war in Syria

Lately, I've been posting op-eds and editorials from the "liberal" Washington Post about Syria because it shows how strong is the consensus of Left-Right elite opinion in America that the U.S. Government must be actively involved and "leading" in every conflict zone in the world, but especially in the Middle East.  

The good news is, 70 percent of Americans oppose the U.S. sending weapons to Syria's "good" rebels.  Only 20 percent favor it.  

Whereas elite U.S. opinion makers believe that President Obama should "lead" on Syria, which is elite-speak for "ignore public opinion." 

Some opinion elites might argue that 80 percent of Americans doesn't really understand what's at stake in Syria.  But the onus is on them -- and President Obama, if he wants to get the U.S. military involved -- to explain to us what's at stake.  Myself I have been following developments there and I cannot say what vital U.S. interests are at stake in Syria.  Sure, Iran, Hezbollah and Russia are supporting Assad, but if Assad prevails, then they will have only paid dearly in materiel and diplomatic face to preserve the status quo ante.  As noted CNN/Time's Fareed Zakaria, one of the few "big thinkers" on foreign policy in the mainstream media:

Contrary to much of the media commentary, the fact that Iran and Hezbollah are sending militias, arms, and money into Syria is not a sign of strength. It is a sign that they are worried that the Syrian regime might fall and are desperately seeking to shore it up. Keeping them engaged and pouring resources into Syria weakens them substantially.

Unlike Iran and Hezbollah, Russia might yet enjoy the additional moral satisfaction of having publicly stood up to America and gotten its way, but so what? Let Russia choose its battles; we'll choose ours.  

Even if we believe some of our interests are at stake in Syria, we now understand too well the potential for sectarian war, U.S. escalation, and eventual terrorist blowback in our faces.  So far, the costs of intervention in Iraq and Afghanistan have far outweighed any benefits.  And two years after Gadhafi's death and NATO intervention, Libya is a tribal-sectarian basketcase.  Why should Syria be any different?    

Some pundits are still trying their best to convince us.  For example, WaPo's Jim Hoagland actually warned us, quoting an unnamed French diplomat, "that a loss of U.S. credibility in Syria will encourage Iran to intensify its quest for nuclear weapons."  Really?  If we don't get involved in Syria then Iran will develop nuclear weapons?  Gimme a break!

This argument is the last refuge of neoconservative scoundrels.  Think what he's saying: the U.S. must lead in every instance or forfeit its right to lead in necessary instances.  This is the road to empire, overreach and collapse.

Hoagland's main cheapshot argument is that Obama is worried about his presidential legacy: Obama wants to be known for getting us out of two wars, not starting a third one in Syria.  But even if it's true, what's so wrong with that?  

It's too bad Hoagland and the Washington Post's editorial board don't read the Washington Post's news section:

The difference this time is that the mobilization [of foreign fighters] has been stunningly rapid — what took six years to build in Iraq at the height of the U.S. occupation may have accumulated inside Syria in less than half that.

For Syria's neighbors, the conflict in Syria has become a Sunni-Shia regional war by proxy.  And the U.S. is injecting itself into this sectarian divide, taking the Sunnis' side... that incidentally includes al-Qaeda.

Next, let's take the "liberal" New York Times' Thomas Friedman, America's biggest "big thinker" on foreign policy, (God help us).  In his latest op-ed, Friedman gives two options for U.S. actions in Syria.  Conspicuously, not arming the rebels is not one of those options.  This is how elite opinion-makers do their black magic: they give a sense of inevitability to U.S. military action. 

Friedman actually describes the "idealist approach" to Syria (option #2) as putting U.S. boots on the ground and doing another Iraq debacle, er, occupation.  This is what "idealists" want in Tom Friedman's mind!  Who are these people?!

Next, for the record let's note that the "liberal" Chicago Tribune also supports America's arming Syria's "good" rebels.  But the Tribune holds onto the very slim hope that those arms will force a stalemate and Syria's President Assad to the negotiating table.  (I should note that the Tribune's owner, McClatchy Newspapers, has been doing excellent reporting on Syria.)

Likewise the "liberal" Boston Globe also agrees with President Obama's decision to arm Syria's rebels, although it urges mommy-like "caution" and "care" in doing so: "Now you be careful playing with those guns, rebels!  Don't shoot at anybody who doesn't shoot at your first.  And remember, we're not giving these weapons to you because we hate Shiites; and don't give them to terrorists!"  Pathetic.     

Some of you may say I'm getting too worked up about a few U.S. weapons to Syria.  Maybe so.  Maybe this is a classic Obama maneuver: appearing to do something while actually doing nothing.  According to the New York Times"Mr. Obama expressed no confidence it would change the outcome, but privately expressed hope it might buy time to bring about a negotiated settlement."

However, once he involves the U.S. and puts his and our nation's credibility on the line, President Obama will be under immense international pressure and pressure from Congress to turn the tide against Assad's forces.  Then he (we) could be "dragged into an escalating level of support: from light arms to anti-tank weapons to a no-fly zone and so on" ... and so forth, up to putting U.S. boots on the ground -- the "idealist" outcome for the Friedmanites, but the nightmare scenario for Americans.

For admirable lessons on U.S. military restraint vis-a-vis Syria (and Iran), you have to look past the major U.S. newspapers and read stuff like...Daniel Larison at The American Conservative.  

I know, I know, these are strange times....