Friday, August 30, 2013

Buchanan: Boehner, stand up to Obama on Syria

It's been a while since I've posted anything by my main isolationist paleo-conservative, Mr. Pat Buchanan. But with the proverbial excrement about to hit the ventilator over Assad's alleged use of chemical weapons, it's about time.  I can't find much to disagree with below.

I could give a shilling about the U.S. or Obama saving face.  The dangerous idea that we must "lead" and intervene everywhere, even where our vital interests are not at stake, or else risking losing our influence, is the road to empire, overreach and collapse.  

By Patrick J. Buchanan
August 30, 2013 | Human Events

The next 72 hours will be decisive in the career of the speaker of the House. The alternatives he faces are these:

John Boehner can, after “consultation,” give his blessing to Barack Obama’s decision to launch a war on Syria, a nation that has neither attacked nor threatened us.

Or Boehner can instruct Obama that, under our Constitution, in the absence of an attack on the United States, Congress alone has the authority to decide whether the United States goes to war.

As speaker, he can call the House back on Monday to debate, and decide, whether to authorize the war Obama is about to start. In the absence of a Congressional vote for war, Boehner should remind the president that U.S. cruise missile strikes on Syria, killing soldiers and civilians alike, would be the unconstitutional and impeachable acts of a rogue president.

Moreover, an attack on Syria would be an act of stupidity.

Why this rush to war? Why the hysteria? Why the panic?

Syria and Assad will still be there two weeks from now or a month from now, and we will know far more then about what happened last week.

Understandably, Obama wants to get the egg off his face from having foolishly drawn his “red line” against chemical weapons, and then watching Syria, allegedly, defy His Majesty. But saving Obama’s face does not justify plunging his country into another Mideast war.

Does Obama realize what a fool history will make of him if he is stampeded into a new war by propaganda that turns out to be yet another stew of ideological zealotry and mendacity?

As of today, we do not know exactly what gas was used around Damascus, how it was delivered, who authorized it and whether President Bashar Assad ever issued such an order.

Yet, one Wall Street Journal columnist is already calling on Obama to assassinate Assad along with his family.

Do we really want back into that game? When John F. Kennedy and Robert Kennedy explored the assassination option with Fidel Castro, blowback came awfully swift in Dallas.

Again, what is the urgency of war now if we are certain we are right? What do we lose by waiting for more solid evidence, and then presenting our case to the Security Council?

Kennedy did that in the Cuban missile crisis. U.N. Ambassador Adlai Stevenson made the case. And the world saw we were right.

If, in the face of incontrovertible proof, Russia and China veto sanctions, the world will see that. Then let John Kerry make his case to Congress and convince that body to authorize war, if he can.

But if Obama cannot convince Congress, we cannot — and ought not — go to war. The last thing America needs is an unnecessary, unconstitutional war in that God-forsaken region that both Congress and the country oppose.

Indeed, the reports about this gas attack on Syrian civilians have already begun to give off the distinct aroma of a false-flag operation.

Assad has offered U.N. inspectors secure access to where gas was allegedly used. It is the rebels who seem not to want too deep or long an investigation.

Our leaders should ask themselves. If we are stampeded into this war, whose interests are served? For it is certainly not Assad’s and certainly not America’s.

We are told Obama intends to hit Syria with cruise missiles for just a few days to punish Assad and deter any future use of gas, not to topple his regime. After a few hundred missiles and a thousand dead Syrians, presumably, we call it off.

Excuse me, but as Casey Stengel said, “Can’t anybody here play this game?”

Nations that start wars and attack countries, as Gen. Tojo and Adm. Yamamoto can testify, do not get to decide how wide the war gets, how long it goes on or how it ends.

If the United States attacks Damascus and Syria’s command and control, under the rules of war Syria would be within its rights to strike Washington, the Pentagon and U.S. bases all across the Middle East.

Does Obama really want to start a war, the extent and end of which he cannot see, that is likely to escalate, as its promoters intend and have long plotted, into a U.S. war on Iran? Has the election in Iran of a new president anxious to do a deal with America on Iran’s nuclear program caused this panic in the War Party?

If we think the markets reacted badly to a potential U.S. strike on Syria, just wait for that big one to start. Iran has a population the size of Syria, Afghanistan and Iraq combined, and sits astride the Straits of Hormuz through which the free world’s oil flows.

And who will be our foremost fighting ally in Syria should we attack Assad’s army? The Al-Nusra Front, an arm of al-Qaida and likely successor to power, should Assad fall.

Whom the gods would destroy, they first make mad.

The unglorious truth about rapid economic development

About a month ago, I forwarded to several friends in the development biz this op-ed written by Zack Exley in reply to a controversial op-ed by scion Peter Buffett against charitable "conscience laundering," i.e. the $316 billion annual "business" of philanthropy.

I asked for their reactions.  I got none.

Now I think I know why.  Because it makes development professionals seem inconsequential. For that matter, it makes the World Bank, NGOs, and a lot of economic literature seem inconsequential.

Here's Exley's "secret" to how poor developing countries in the 20th century became rich and developed [emphasis mine]:

How did they pull billions out of poverty so quickly? Unfortunately, the answer is totally unfashionable and will never, ever be discussed at hipster social venture forums. They all had one thing in common: the people in charge -- whether they were social democrats, conservative nationalists, communists or military dictators -- carried out programs of rapid economic development designed to give most people access to means of making a living.

But how did that do that? They built factories, railroads, universities and everything else required to make the things and do the things that go into a decent living (or were valuable enough to trade for them). Communists and dictatorships used various forms of force -- often brutal. Democrats and republicans (small d and small r) used the market and public-private partnerships. By hook or by crook, wherever eliminating poverty was one of the top few national priorities, it was eliminated.

You know, I can't think of a single counter example.  I can't think of a single country that sincerely tried to invest in rapid economic expansion and failed to achieve it. The agent isn't important, it's the action. The action always works.    

In international development, we're always chipping away at the edges, dealing with obstinate or corrupt bureaucrats and elected officials who won't take our advice, donor agencies engaged in external turf battles and internal pissing matches, and apathetic communities who don't believe in us, or believe that their leaders will listen to us.  And yet to effect massive, dramatic economic development, donors don't matter.  It's the "locals" (to use the condescending development vernacular) that must be onboard, from the small towns up to the president or prime minister. And when that happens, so do economic miracles. 

Ideology and political economy seem irrelevant, I hate to say it.  

Go ahead, somebody prove me wrong!  

By Zack Exley
July 29, 2013 | Huffington Post

'McJobs' lead to middle class?!

Never say I don't give equal time. To wit, here's the chairman of the National Restaurant Association Phil Hickey carrying water (er, super-size soda?) for America's "McJobs" creators:

The truth is that both part-time and full-time positions make the restaurant industry a versatile career option for a variety of workers. From underemployed or hard-to-employ workers to college graduates, the industry provides a pathway to the middle class and often beyond.

Efforts to devalue the industry and mandate changes, like raising the minimum wage, hurt workers by preventing businesses of all sizes from creating more jobs.

Hickey argues that the $7.25 federal minimum wage doesn't need to be raised because... hardly anybody earns minimum wage:

According to the Bureau of Labor Statistics, 71% of minimum-wage employees in the restaurant industry are under the age of 25; 47% are teenagers.  

So why is Hickey wrong?  First, Hickey is actually admitting that 53 percent of fast-food workers earning minimum wage are adults.  He is also admitting, indirectly, that the current minimum wage sucks and people don't deserve it.

In fact, according to USA Today, the average non-management fast-food employee currently earns $9.09 per hour or $18,886 per year. Though that is still below the 2013 federal poverty threshold of $19,530 for a family of three.

Moreover, "Eighty-eight percent of workers in jobs paying less than $10 an hour are older than 20, and a third are older than 40, according to the Economic Policy Institute."  

Granted, two adults working full-time in fast food could make for a (barely) middle-class household... but don't forget that most fast food joints don't offer their employees health insurance or other benefits. BTW, who's taking care of their kid(s)? And if a family is paying its health costs out of pocket without insurance then God help them, because one medical emergency could bankrupt them. As indeed will happen to 2 million Americans this year. 

And if a family of three elects to buy health insurance on their own, either HSA or HDHP, then chances are their annual deductible + monthly costs will be $10,000 and up, or about 1/3 of that fast-food family's gross income.  

Next fact: in the U.S., workers' wages make up 25 to 35 percent of the cost of fast food, according to experts. Meanwhile, the norm in Europe where the minimum wage is higher is about 45 percent; and yet somehow, McDonald's manages to operate more than 7,400 restaurants in Europe. This indicates there is room for higher U.S. wages.  Still, the cost of fast food would probably go up, since restaurant owners, whose average profit margins hover around 4 percent, would pass on all or most of a wage increase to customers. 

"That's terrible, higher prices must be avoided at all costs!" my conservative interlocutor will object. To them inflation is the biggest bogeyman next to taxes. But you know what? I'm cool with it.  Poorer people would do well to eat less fast food anyway, and prepare their own meals; and wealthier people could afford to pay a little more. 

It reminds me how "Papa" John Schnatter warned in dire terms that Papa John's restaurants would have to raise their prices 14 cents per pizza to give their employees health insurance to comply with Obamacare. But what's 14 cents to a customer who can afford to buy a pizza instead of groceries? Plus it's customary to tip the deliver guy at least a couple bucks.

(BTW, President Obama's proposal in February to raise the minimum wage to $9 and tie it to the cost of living was projected to raise the price of fast food 3 percent. With a $9 minimum wage, the average cost of a McDonald's Extra Value Meal would then increase from $4.45 to $4.58.  Hardly noticeable.  Doing a little algebra -- although I have no idea if this is economically sound -- at the same ratio, a $15 minimum wage would increase the cost of fast food by 13.3 percent, for a Value Meal price of $5.03.  Heck, let's suppose a $15 wage would raise the price 40 percent: the Value Meal would still cost only $6.23.  Not exactly hyperinflation.)

According to economic theory, there is a big benefit to higher wages: lower employee turnover. Lower turnover leads to higher productivity (output per employee per hour). U.S. workers, incidentally, are already the most productive in the world, although you wouldn't guess it, considering real U.S. incomes have been stagnant since the 1970s; and the median male is especially worse off today, earning as much in real dollars as a man in 1964!

Next problem with Hickey's apologia: McDonald's, Walmart and most other retailers employ few full-time workers anyway; workers are not permitted to work full time.  So we're really talking about workers below the U.S. poverty line unless they work two part-time jobs.  That is, assuming they can get those part-time jobs: there are still 3 applicants for every job opening.

To protest this sad state of affairs, yesterday fast-food workers in about 60 U.S. cities carried out a one-day strike for a minimum hourly wage of $15.  

Theirs is the next great struggle for organized labor and fair compensation.  But it's not their struggle alone.  Even the middle and upper classes stand to lose -- or gain -- along with the lowest-paid Americans.  

"There is a spillover effect from raising the minimum wage, and those who are currently earning [just] above it will also benefit, as many employers will raise their wages too," said Lawrence Mishel of the Economic Policy Institute.

Furthermore, as entrepreneur Nick Hanauer explained in his Bloomberg op-ed, "The Capitalist’s Case for a $15 Minimum Wage": 

Raising the minimum wage to $15 an hour* would inject about $450 billion into the economy each year. That would give more purchasing power to millions of poor and lower-middle-class Americans, and would stimulate buying, production and hiring.

Studies by the Economic Policy Institute show that a $15 minimum wage would directly affect 51 million workers and indirectly benefit an additional 30 million. That’s 81 million people, or about 64 percent of the workforce, and their families who would be more able to buy cars, clothing and food from our nation’s businesses.

... [C]ontrary to conventional economic orthodoxy, increases in the minimum wage increase employment. In 60 percent of the states that raised the minimum wage during periods of high unemployment, job growth was faster than the national average.

Some business people oppose an increase in the minimum wage as needless government interference in the workings of the market. In fact, a big increase would substantially reduce government intervention and dependency on public assistance programs.

(*Here's yet more equal time for crusty conservatives, a very long argument why "A $15 minimum wage is a terrible idea" by Dylan Matthews over at WaPo's Wonkblog.)

Regardless of whether the new minimum wage should be $9 or a few bucks more, $7.25 'MCJobs' just aren't cutting it for our economy.  And 'McJobs' are certainly not "a pathway to the middle class and often beyond" -- not unless something changes.  

Eric Liu, a former speechwriter for Bill Clinton, summed it up best in his TIME piece, "McDonald’s and the Fate of the Middle Class":

Too many American think that the plight of the low-wage worker has nothing to do with them. In fact it is both a preview and a parable. The fate of the middle class rests, in part, on whether more Americans learn to see the fate of fry cooks as their own.

We must all rise or fall together!

Thursday, August 29, 2013

MB360: FIRE sector is back, big time

MB360 gives us great stats to illustrate starkly the so-called financialization of the U.S. economy: 

In 1947, the FIRE side of the economy made up roughly 10 percent of GDP. Today it is 21 percent.  On the other hand manufacturing in 1947 made up 25 percent of GDP while today it is closer to 11 percent.

Near-zero interest rates by the Fed and TBTF bank bailouts are direct federal government aid to the FIRE sector.  It's called socializing risk and privatizing rewards.  

Meanwhile, bizzaro conservatives assure us that if only Americans would stop being so lazy and collecting food stamps, then our economy would turn around. [Facepalm].  Foks, this is government-sponsored upward redistribution of wealth.  

If only the Tea Parties would brandish their pitchforks over the real redistribution problem in America!

Posted by mybudget360 
August 27, 2013

The current economy is juiced on the rivers of easy debt.  An addiction that is only getting worse.  Want to go to college?  You’ll very likely go into deep student debt given the rise in college tuition.  Want a home?  Prices are soaring because of speculation but you’ll need a bigger mortgage to buy.  Want a modest car? A basic new car that has four wheels will likely cost $20,000 after taxes after fees are included.  Need gas for that car?  The price of a gallon has quadrupled since 2000.  Combine this with the reality that half of Americans are living paycheck to paycheck and you can understand why the debt markets continue to grow at an unrelenting pace.  Here is some food for thought; in the last 10 years, GDP has gone up $5.2 trillion however, the total credit market has gone up by $24.5 trillion.  An increasingly large part of our economic growth is coming from massive leverage.  This is why the market sits fixated on the Fed’s next move regarding interest rates even though in context, rates are already tantalizingly low.  The FIRE economy is driving a large portion of corporate profits yet most Americans are left in the cold winds of austerity.

GDP being driven by FIRE

More and more of our growth is coming from a massive expansion of debt:

total credit market debt owed

The total credit market is now roughly 4 times the size of our annual GDP (inching closer to $60 trillion in the US).  While some think that this growth is natural and easy, in reality most of it is coming from growth in the financial services side of the economy.  The banking system is currently operating in a way that really does not benefit the typical Americans family.  Take a look at two employment sectors over the last few years:


In 1947, the FIRE side of the economy made up roughly 10 percent of GDP.  Today it is 21 percent.  On the other hand manufacturing in 1947 made up 25 percent of GDP while today it is closer to 11 percent.  It comes as no surprise especially as we now see big banks and hedge funds crowding out the real estate trade.  Prices in real estate continue to rise at levels last seen during the bubble yet the homeownership rate continues to fall.  We keep adding more and more Americans as “non-workers” and then wonder why we have 47 million on food stamps:

not in labor force

The number of Americans not in the labor force is booming because of demographics but also because people are dropping out of the workforce.  This certainly doesn’t coincide with some of the data being produced from other channels.

The reason why most Americans are not feeling the recovery trickle down to them is that the FIRE side of the economy is capturing a large share of the profits (more fuel for the growing income inequality trend).  Just take a look at how much of the recent growth has come courtesy of financial engineering:


Corporate profits as a percent of GDP are at generation high levels.  Yet GDP growth is weak (especially if you consider how much growth is coming from FIRE activity).  This is reflected in stagnant household income growth and the reality that wealth continues to shift into the hands of a very few Americans.

Redoing the last bubble

The problem with all of this is that we are simply redoing the last bubble.  This is a similar variation of our last bubble (i.e., financial sector deep into speculation, quickly rising real estate, no income growth, leveraging on debt, etc).  The finance and real estate side of the economy is driving profits and speculation, yet we see that for most Americans, the gains are simply not there.  This is just part of the financialization of our current system.  It is odd that big banks and firms are so interested in rental real estate yet they can extract money from Americans via this measure because the Fed is basically offering zero percent rates to member banks.  In other words, it is a riskless trade so why not grab all the real assets you can while the Fed continues to devalue the purchasing power of Americans?

The FIRE economy is back in a big way.  Of course you shouldn’t be surprised that this isn’t helping most Americans prosper.

Eskrow: Where did U.S. wages go?

Here's Eskrow's key observation, one that you cannot even make nowadays in America without being accused of a socialist bent [emphasis mine]:

We don't have a problem of inadequate wealth. The problem is inadequate wealth distribution. For 99 percent of Americans, wage growth has lagged significantly behind increases in productivity. As the authors [of the briefing paper "A Decade of Flat Wages"] note, this is true "regardless of occupation, gender, race/ethnicity, or education level." Since the Great Recession productivity has grown by 7.7 percent, while wages have actually fallen for the bottom 70 percent of earners.

[...] Between 2001 and 2012 productivity grew by 22.2 percent, while wages grew only 0.8 percent. 

My Republican friends, take special note of the phrase, "...regardless of occupation, gender, race/ethnicity or education level."  This phrase should stifle your knee-jerk reactions to blame those other people for America's economic woes.

So the facts are indisputable.  The question is: what are the causes? Eskrow points out a few:

A companion report from EPI, The State of Working America, 12th Edition, identifies some of the causes: Growing inequality. Policy inaction which eroded the value of the minimum wage. The weakening of employees' rights. Tax policy. Wall Street deregulation.

Other factors are left unmentioned, including problems in corporate governance and the distorting effect of changing executive compensation on corporate management practices.

Eskrow also blames another cause: "centrist" Democrats, aka 1990s-era Republicans who today call themselves Democrats: 

The word "centrist" is placed in quotation marks because polls show that their economic views are to the right of the American mainstream. On issues such as corporate taxation, Social Security benefits, and free trade, they stand to the right of most Americans -- and sometimes to the right of most registered Republicans.

Forget Republicans in Congress, they're nuts.  We need Democrats to be Democrats again, grow a spine, or get out of office.

By Richard (RJ) Eskrow
August 28, 2013 | Huffington Post

Wednesday, August 28, 2013

Pitts: Black crime not a racial statement

Right on time, my man Leonard Pitts nailed it:

No, what is meant is that even when violence is done against you [as a black person], you may automatically be considered the “suspect” and your killer set free. What is meant is that judges are harder on you, doctors less aggressive in treating you, banks more apt to deny you, landlords less likely to show you apartments, hiring officers more likely to round-file your application. What is meant is good luck hailing a cab in midtown Manhattan. What is meant is that other people will airily dismiss the reality of those things, or, as has many times happened to me, admit the reality but advise that you should accept your lot in silence.

Then in the next breath, those same people will ask you to empathize with how racially victimized they are. The sheer, blind gall of it beggars imagination.

We poor, oppressed white people!  Oh Lord, deliver us from this reverse racism!  

Hey, here's an idea: let's all overdose on tanning pills like C. Thomas Howell in Soul Man and then we'll be living on easy street... right? Right?  [Crickets chirping].

This white guy figured out how to beat reverse racism back in 1986.

By Leodard Pitts
August 27, 2013 | Miami Herald

I have nothing to say about the murder of Christopher Lane.

Except this:

The killing of this Australian man, allegedly by a group of boys who were bored and could think of nothing better to do, suggests chilling amorality and a sociopathic estrangement from the sacredness of life. The fact that these teenagers were able to get their hands on a gun with which to shoot the 22-year-old student in the back on Aug. 16 as he was jogging in the small Oklahoma town of Duncan, leaves me embarrassed for my country — and thankful I am not the one who has to explain to his country how such a thing can happen.

None of this will satisfy the dozens, perhaps hundreds, of people who have written me emails demanding (it is always interesting when people think they can demand a column) that I write about this drive-by shooting as an act of  racial bigotry, an inverse of the Trayvon Martin killing, if you will. There is a numbing repetitiveness to these screeds: Where is Jesse Jackson, they demand. Where is Al Sharpton? Where are you? Or as one subject line puts it: “Why no outrage!”

Actually, I have plenty outrage. Just not the flavor of outrage they would like me to have.

It is, for some people, a foregone conclusion that any time violent crime crosses racial lines, some kind of racial statement is intended. But violent criminals are not sociopolitical theoreticians, and violent crime is not usually a social manifesto. With relatively rare exceptions — we call them hate crimes — the fact is, if a thug shoots you, it is not because you are white, black, gay or Muslim, but because you are there.

So is Lane’s shooting one of those exceptions? A case can be made that it is. One of the young black suspects, after all, tweeted his anti-white bigotry back in April. The hashtag: HATE THEM.

But a case can also be made that it isn’t. Of the remaining two suspects, one is reportedly white and the other, the alleged shooter, apparently has a white mother. The prosecutor told the Duncan Banner newspaper there’s no evidence Lane was targeted because of his race, and in any event, bringing hate-crime charges is a moot point. In Oklahoma, hate crimes are misdemeanors; the boys are already facing felonies.

Again, none of this will satisfy those dozens, if not hundreds, of email writers, not to mention the authors of similar screeds on right-wing websites. What they’re doing is simple. They are using tragedy to play a cynical game of tit-for-tat: “I’ll see your Trayvon Martin and raise you a Christopher Lane.” In other words, they want to use this tragedy to validate their view that white people are victims of black racism.

And if all that was meant when African Americans decry racism is that sometimes white people do violence against you, then the email writers and right-wing pundits might have a point. But it isn’t and they don’t.

No, what is meant is that even when violence is done against you, you may automatically be considered the “suspect” and your killer set free. What is meant is that judges are harder on you, doctors less aggressive in treating you, banks more apt to deny you, landlords less likely to show you apartments, hiring officers more likely to round-file your application. What is meant is good luck hailing a cab in midtown Manhattan. What is meant is that other people will airily dismiss the reality of those things, or, as has many times happened to me, admit the reality but advise that you should accept your lot in silence.

Then in the next breath, those same people will ask you to empathize with how racially victimized they are. The sheer, blind gall of it beggars imagination.

Last week, Christopher Lane was killed for no good reason, apparently by three morally defective boys.

Sorry, but he’s the victim here. White America is not.

JPMorgan would be worth more broken up

JPMorgan CEO Jamie Dimon: 'I will dong-slap you with my huge wallet.'

So what's Jamie Dimon and his pocket board's excuse for not voluntarily breaking themselves up and giving their shareholders a 30 percent premium?

We know the answer why not: power.  Dimon doesn't want to give up control of JP Morgan's four main divisions: asset management, retail banking, investment banking and private equity. 

Break up the TBTF banks! 

By Eleazar David Melendez
August 26, 2013 | Huffington Post

Study: The rich are more narcissistic

Here is yet more scientific evidence to prove F. Scott Fitzgerald's famous words:

Let me tell you about the very rich.  They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves.  Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different.

Other recent scientific studies have shown that rich people are more likely to be aggressive driversact unethicallylack empathycare more about tax rates than jobs and education... and have more sex. So there you go.

The original narcissist.  If only rich pricks would turn into pretty flowers!

Tuesday, August 27, 2013

Taibbi: College loan system scam

Better late than never, I'm posting this exposé by Taibbi about the exorbitant cost of U.S. higher education.

Today's graduates leave college with have an average of $27,000 in student loan debt.

As Taibbi reveals, 

... the dirty secret of American higher education is that student-loan interest rates are almost irrelevant. It's not the cost of the loan that's the problem, it's the principal – the appallingly high tuition costs that have been soaring at two to three times the rate of inflation, an irrational upward trajectory eerily reminiscent of skyrocketing housing prices in the years before 2008.

Another dirty little secret is that the federal government, by its own estimates, stands to make $185 billion in profit on student loans over the next 10 years. Boosting the government's profits, borrowers cannot discharge their student loan debt through personal bankruptcy. The Department of Education can even garner federal disability checks!

So why is college so expensive in America?  The knee-jerk conservative response is: tenured ivory tower professors; and money for Democrats from the education lobby.

The former is untrue and the latter is only partly true.  But conservatives should note that the federal student loan system does cause a kind of market distortion, the so-called "Bennet hypothesis," named after conservative William Bennett: with any accredited college eligible to receive students with federal financial aid, there is really no incentive for colleges to cut costs, compete, or focus on degrees that give students a decent Return on Investment (ROI).  

"A degree in bullshit" does the job for both colleges and the government lender when the collection rate on student loans can exceed 100 percent.

And as we all know, the newer for-profit colleges have been gaming the student loan system -- as well as the education allowances given to members of the U.S. Military -- for several years now, even as students at for-profit colleges have a loan default rate as high as 40 percent.

Another reason colleges are so expensive is what Taibbi calls "gilding": the expensive administration buildings, sports stadiums and celebrity professors. These used to be paid for by nervous, eager parents... until they ran out of money. Now the federal government subsidizes colleges. So why shouldn't colleges go on a spending spree?

By Matt Taibbi
August 15, 2013 | Rolling Stone

Monday, August 26, 2013

U.S. missiles won't end Syrian war

Eliot Cohen has a deplorable record as a neoconservative academic who advised Condooleeza Rice and Dick Cheney before and after the disastrous invasions and occupations of Afghanistan and Iraq.  Eliot is coyly mum here on whether he thinks Obama should send U.S. troops into Syria.  

Nevertheless, the man who favors "preemptive war" is giving a wise preemptive warning (that's redundant) to U.S. policymakers: we can't lob a few missiles into Syria and hope to change anything there.  

We ought to stay out of it entirely.  

UPDATE (28.08.2013):  Looks like the US and UK, at least, are going to war with Assad in Syria.  They want to do a limited Kosovo-style air war with "punitive military strikes."  That's the key phrase. They're not pretending that these strikes will affect the direction of the civil war or even prevent more civilian casualties; the West just wants to slap Assad on the wrist for his alleged use of chemical weapons in violation of international law.

This seems like a desperate attempt to remain relevant on the international stage without actually doing anything.

By Eliot A. Cohen
August 26, 2013 | Washington Post 

Sunday, August 25, 2013

Reich: Giving up our public goods

Reich is right, even liberals are too shy anymore to mention public goods and the general welfare:  

Not even Democrats still use the phrase "the public good." Public goods are now, at best, "public investments." Public institutions have morphed into "public-private partnerships" or, for Republicans, simply "vouchers."

Outside of defense, domestic discretionary spending is down sharply as a percent of the economy. Add in declines in state and local spending, and total public spending on education, infrastructure and basic research has dropped dramatically over the past five years as a portion of GDP.

America has, though, created a whopping entitlement for the biggest Wall Street banks and their top executives -- who, unlike most of the rest of us, are no longer allowed to fail. They can also borrow from the Fed at almost no cost, then lend out the money at 3 percent to 6 percent.

All told, Wall Street's entitlement is the biggest offered by the federal government, even though it doesn't show up in the budget. And it's not even a public good. It's just private gain.

We're losing public goods available to all, supported by the tax payments of all and especially the better-off. In its place we have private goods available to the very rich, supported by the rest of us.

There's a class war going on alright, and the super rich and the TBTF banks are winning it.

By Robert Reich
August 24, 2013 | Huffington Post

Trump University: The cost of worshiping the wealthy

Donald Trump is a boorish, egomaniacal plutocrat. But we already knew that. That's not what bothers me today.

What bothers me is how many gullible people were eager to plop down $35,000 on Trump University (disclaimer: not a real university) in the hopes of getting rich like The Donald. Many of the poor students paid "tuition" with their credit card.

The truth is, the best way to become a billionaire is to inherit the money. That's how Donald Trump got rich: by inheriting up to $200 million from his father who made his fortune building FHA-backed (read: Big Government-subsidized) housing.

Trump is not alone.  Less than 40 percent of the Forbes 400 billionaires are self-made, according to the Columbia Journalism Review.  

The most recent study in the U.S. of self-made millionaires that I could find relied on a survey of 482 millionaires.  Only 3 percent said they inherited their wealth.  Mm-hm.  And in a separate survey of male billionaires, only 5 percent reported having a penis under 10 inches.

Kidding.  The fact is, Americans worship the wealthy.  And the wealthy worship themselves. Our politicians and media fawn over life's economic winners, attributing all sorts of super-human qualities to them. Then when a rich person turns out to be, well, more or less normal, the fawning escalates even higher. "My God, he acts just like you and me!" we cry in disbelief that somebody so rich could possibly not be a prick.  (At least during interviews and public appearances).

There is a whole cottage industry of books, courses and websites that reveal what successful things millionaires do that we normal folks don't. If only we too would sleep 4 hours a night, drop out of school (or stay in school), take huge risks, max out our credit cards and invest all our savings in a simple idea, etc., etc. then we would be super-rich like them.

Sometimes the rich offer advice themselves -- and try to make $ millions off it, like Trump did here.  Other billionaires like Michael Bloomberg offer nuggets of wealth-building wisdom for free, such as: don't take bathroom breaks.  

What the rich often forget to mention is luck.  Yeah, luck.  I guarantee you there are thousands of people who have all the same habits as Bloomberg, including giving themselves urinary tract infections and skipping lunch, and yet they are not rich. Because luck plays a huge role in success. Including luck of birth. If anything, what differentiates the rich from the rest of us is their ability to recognize lucky moments and seize them.  But also having millions of dollars, a rich family or a company at your disposal when lucky moments come along tends to help.  

As Columbia business school professor Michael Maboussin reminds us, "your mind is expert at creating stories to explain results after the fact," and that goes for great success as well as failure.  So just as we shouldn't begrudge the success of the Donalds of the world, we should not attribute that success to their personal grandeur.

By Michael Gormley
August 25, 2013 | AP

Friday, August 23, 2013

Rush: Get rid of health insurance

In continuation of my post the other day about the Tea Partyers' idea that's so old it's new again -- no health insurance for anybody -- here's Rush Limbaugh, riding the crest of this wave of insanity:

How many times have I detailed for you how much money I save not using insurance.  I just go to doctor, go to hospital, negotiate the price, and walk out of there and pay for it.  A lot of people can do this. You don't have to have tons of money to be able to do this, take installment plan payments like everybody else does.  But everybody's so conditioned that they can't get treated unless they've got health insurance.  Everybody's like sheep in this, can't even have an average doctor visit without insurance.  I think it is a crying shame.  I think it is literally a disservice to the people of this country what's been done, attitudinally.  There is, I would say, easily a huge majority, vast majority, of people who believe that without health insurance they're gonna die. That's why it's such a big deal to people. 

[...]  I don't know what it's like to be conscious every day and my foremost fear being my health insurance and whether or not I've got it and am gonna keep it or what have you.  But for a lot of people it's everything.  It's the only thing.  And that exists, the reason people think that way, can't really blame 'em, 'cause every day of their lives they are told that food or that beverage is gonna kill 'em or give them this disease or that disease or their genetics incline them to alcoholism or Parkinson's or whatever.

I don't even know where to begin with such utter bullshit.

Fact: Medical bills are the #1 cause of personal bankruptcy in the U.S.  Fact: 45 million Americans do not have health insurance (and it's not because they're happy shopping around and paying in installments). Fact: you can't bargain for a product when you don't even know what product you need (this is health care in a nutshell). Fact: most hospitals do not have price lists. That's right, even if you offer to pay in cash, they can't tell you the price until well after the fact. Trust me, I've been there. Fact: you can't plan or save for catastrophic injuries and unexpected illnesses, you just can't.  And for this very reason, for such economic instances, smart people invented insurance.

Ah, the good ole' days of family medicine.
Earlier this year, a week in the hospital for my infant child cost more than $30,000, while our insurance paperwork was still in process. Bill collectors were harassing us 3-4 times a day until the paperwork cleared weeks later. ($30,000 is a down payment on a house in most places in America).  There's no time to negotiate or shop around when your child is dying, believe me.  

Rush is such an isolated, aloof, childless, Ivory-Tower gazillionaire that he's completely lost touch with America.  This guy is living in a different country, a different stratosphere.  I can't believe the nerve of him.  I can't believe his listeners don't stone him to death.

If this doesn't prove to you once and for all that Rush Limbaugh and his horde of talk-radio imitators trying to make fast buck by talking irresponsible nonsense are not on the Little Guy's side, and in fact know nothing about the Little Guy's troubles, then I don't know what will.  Just because these hucksters say they like NFL football and fast food doesn't make them one of us.

This is Rush telling poor sick people, "Let them eat cake."  Off with his head!  

The Rush Limbaugh Show | August 23, 2013