Pretty interesting interview:
Writer Debunks The 'Great Education Myth'
Michel Martin
September 28, 2010 | Tell Me More on NPR
URL: http://www.npr.org/130188617
And here is the article which spurred it:
The Neoliberal Bait-and-Switch
By David Sirota
September 10, 2010 | Salon.com
In simplistic, Lexus-and-Olive-Tree terms, the neoliberal economic argument goes like this: Tariff-free trade policies are great because they increase commerce, and we can mitigate those policies' negative effects on the blue-collar job market by upgrading our education system to cultivate more science, technology, engineering and math (STEM) specialists for the white-collar sector.
Known as the bipartisan Washington Consensus, this deceptive theory projects the illusion of logic. After all, if the domestic economy's future is in STEM-driven innovation, then it stands to reason that trade policies shedding "low-tech" work and education policies promoting high-tech skills could guarantee success.
Of course, 30 years into the neoliberal experiment, the Great Recession is exposing the flaws of the Washington Consensus. But rather than admit any mistakes, neoliberals now defend themselves with yet more bait-and-switch sophistry -- this time in the form of the Great Education Myth.
No doubt, you've heard this fairy tale from prominent politicians and business leaders who incessantly insist that our economic troubles do not emanate from neoliberals' corporate-coddling trade, tax and deregulatory policies, but instead from an education system that is supposedly no longer graduating enough STEM experts. Indeed, this was the message of this week's New York Times story about corporate leaders saying America isn't producing "enough workers with the cutting-edge skills coveted by tech firms."
As usual, it sounds vaguely logical. Except, the lore relies on the assumptions that 1) American schools aren't generating enough STEM supply to meet employer demand, 2) the education system -- not neoliberalism -- is driving this alleged STEM drought and 3) if America came up with more of such specialists, they would find jobs.
To know these suppositions are preposterous is to consider a recent study by Rutgers and Georgetown University that found colleges "in the United States actually graduate many more STEM students than are hired each year."
That debunks the supply-and-demand canard. But can we still blame the jobs crisis on schools failing to deliver more STEM graduates?
Nope.
As researchers discovered, many students are pursuing finance instead of STEM careers because Wall Street jobs "are higher paying" and offer "employment stability" and "less susceptib(ility) to offshoring."
This is the truth that the Great Education Myth aims to obscure. It's not that schools are ill-equipped to train STEM specialists. It's that the additional students who might boost our STEM workforce are choosing to avoid STEM majors because they see an economy that is more hospitable to careers in Wall Street casinos rather than in high-tech innovation -- a financialized economy based less on creating tangible assets than on encouraging worthless speculation.
[And from personal experience, I know a lot of MBA-Finance students who were engineers and IT guys who wanted higher pay and more job security - J]
This doesn't mean that our education system is perfect. But it does mean that without reforming the trade, tax and regulatory policies that reward high-tech outsourcing and incentivize careers in finance, our schools can never be an engine of value-generating information-age jobs.
Why, then, do neoliberals nonetheless press the Great Education Myth? Because it deliberately distracts from a situation that enriches neoliberals and the powerful interests they rely on.
Tariff-free trade pacts inflate the profits of transnational businesses by helping them troll the globe for cheap exploitable labor. Loopholes exempting foreign earnings from taxes encourage companies to move jobs overseas. And both deregulation and bailouts disproportionately balloon financial industry revenues.
The neoliberal corporate class makes big money off this status quo, and neoliberal lawmakers get their cut via campaign contributions. The last thing either wants is an honest debate about neoliberalism's downsides. And so they play to our lust for silver-bullet solutions, endlessly telling us that everything is the schools' fault.
As mythology goes, it's certainly compelling. If only the facts didn't get in the way.
Wednesday, September 29, 2010
Friday, September 17, 2010
Lobbying firms rush to hire Republicans -- Cha-CHING!
I know Democrats benefit from it, too, but isn't it simply disgusting how our cash-driven political system works? Know-nothing Congressmen becoming senior executives at investment banks, energy firms, and gov't contractors as soon as they leave office... is this what makes the private sector superior?!?
BTW, those of you who believe in eliminating Congressmen's pensions, cutting their pay and perquisites, and establishing terms limits, should realize that those measures would only make the revolving door between business and government turn faster, with more incentives for politicians to cash in sooner. Think about it: the incentive would be to get elected, pass horrible bills to benefit your corporate benefactors, then cash out after your term with a cushy 6- or 7-figure job with said corporation. Is that what you really want?
Campaign finance reform -- specifically shorter, publicly funded elections -- is the answer. I know it smacks to you of socialism, but public financing would save us money in the larger account.
By Eric Lichtblau
September 9, 2010 | New York Times
Campaign cash surges from undisclosed donors
The Great Recession doesn't seem to be hurting firms' business investments in our elections. Since the private sector always knows what they're doing, they must be pretty sure they'll get a good ROI. Don't you love capitalism + democracy?
And it's all in secret with zero transparency. (FYI, it's called "free speech" when you make a secret cash donation to somebody to air a negative ad for you but not explicitly on your behalf. Check the Bill of Rights, it's in there somewheres....)
Thanks, Supreme Court d***wads!
By Peter Overby
September 16, 2010 | All Things Considered - NPR
Bailed-out banks lend back to Little Guy at 455% interest
First they destroyed the economy. Then Dubya bailed them out. Then they got to borrow money at zero percent interest from the gov't to pay back their gov't loans. Then they finally started lending to the Little Guy whom they had crushed, economically -- but only through payday lenders at an average interest rate of 455 percent.
And you teabaggers are mad about mosques. Suckers.
By William Alden
September 14, 2010 | Huffington Post
Big banks that received TARP bailout money are funding payday lenders -- companies Senator Dick Durbin (D - Ill.) termed "bottom feeders" -- and which charge high interest rates and fees for short-term loans, according to a report released Tuesday.
The banks, which include Wells Fargo, Bank of America and JP Morgan, currently provide roughly $1.5 billion in credit lines to publicly-held payday loan companies and between $2.5 to $3 billion to the larger payday loan industry, says the report, which was issued jointly by community group network National People's Action and non-partisan watchdog Public Accountability Initiative.
The payday lenders, including Advance America, Cash America and ACE Cash Express, which allow customers to borrow against future paychecks, and which, according to the report, charge an average interest rate of 455 percent on top of fees of $15-18 per $100 loaned, often depend on the big banks' financing for their business.
"The very same banks that helped tank the economy and then needed hundreds of billions of dollars in taxpayer-funded bailouts are now aiding the bottom-feeders of the financial industry, as they seek--the payday lenders--to strip even more wealth away from everyday Americans," NPA executive director George Goehl, who also called payday lending "legalized loan sharking," said in a telephone press conference. "If Al Capone was alive today you might even get a better loan from him." (Goehl is also a HuffPost blogger)
The report, called "The Predators' Creditors," which features a picture of three sharks on the cover, says that some banks abstain from business with payday lenders because of what Advance America itself calls "reputational risks." The report also notes, though, that some of these payday lenders have ties to Wall Street. For example, the board of Advance America includes former executives from Bank of America, Morgan Stanley and Credit Suisse.
PAI co-director Kevin Connor, who co-authored the report, said in the press conference that big banks are attracted to the payday loan industry because "Americans were losing their jobs and homes in record numbers but they still had their family treasure to borrow against"
Connor also noted that the big banks themselves pay close to zero interest when they borrow from the Fed, a stark contrast to the high interest rates paid by consumers.
NPA and PAI are calling for an end to these credit lines from banks. Goehl said a protest campaign will launch today in Ohio and continue in Iowa, Kansas, Missouri and Illinois through next week, culminating in a meeting of the organizers in Chicago. "This report is really the beginning, not the end," he said.
Stiglitz: Gov't, stop interfering; Banks, write down mortgages
By Joseph E. Stiglitz
September 8, 2010 | Project Syndicate
A sure sign of a dysfunctional market economy is the persistence of unemployment. In the United States today, one out of six workers who would like a full-time job can't find one. It is an economy with huge unmet needs and yet vast idle resources.
The housing market is another US anomaly: there are hundreds of thousands of homeless people (more than 1.5 million Americans spent at least one night in a shelter in 2009), while hundreds of thousands of houses sit vacant.
Indeed, the foreclosure rate is increasing. Two million Americans lost their homes in 2008, and 2.8 million more in 2009, but the numbers are expected to be even higher in 2010. Our financial markets performed dismally – well-performing, "rational" markets do not lend to people who cannot or will not repay – and yet those running these markets were rewarded as if they were financial geniuses.
None of this is news. What is news is the Obama administration's reluctant and belated recognition that its efforts to get the housing and mortgage markets working again have largely failed. Curiously, there is a growing consensus on both the left and the right that the government will have to continue propping up the housing market for the foreseeable future. This stance is perplexing and possibly dangerous.
It is perplexing because in conventional analyses of which activities should be in the public domain, running the national mortgage market is never mentioned. Mastering the specific information related to assessing creditworthiness and monitoring the performance of loans is precisely the kind of thing at which the private sector is supposed to excel.
It is, however, an understandable position: both US political parties supported policies that encouraged excessive investment in housing and excessive leverage, while free-market ideology dissuaded regulators from intervening to stop reckless lending. If the government were to walk away now, real-estate prices would fall even further, banks would come under even greater financial stress, and the economy's short-run prospects would become bleaker.
But that is precisely why a government-managed mortgage market is dangerous. Distorted interest rates, official guarantees, and tax subsidies encourage continued investment in real estate, when what the economy needs is investment in, say, technology and clean energy.
Moreover, continuing investment in real estate makes it all the more difficult to wean the economy off its real-estate addiction, and the real-estate market off its addiction to government support. Supporting further real-estate investment would make the sector's value even more dependent on government policies, ensuring that future policymakers face greater political pressure from interests groups like real-estate developers and bonds holders.
Current US policy is befuddled, to say the least. The Federal Reserve Board is no longer the lender of last resort, but the lender of first resort. Credit risk in the mortgage market is being assumed by the government, and market risk by the Fed. No one should be surprised at what has now happened: the private market has essentially disappeared.
The government has announced that these measures, which work (if they do work) by lowering interest rates, are temporary. But that means that when intervention comes to an end, interest rates will rise – and any holder of mortgage-backed bonds would experience a capital loss – potentially a large one.
No private party would buy such an asset. By contrast, the Fed doesn't have to recognize the loss; while free-market advocates might talk about the virtues of market pricing and "price discovery," the Fed can pretend that nothing has happened.
With the government assuming credit risk, mortgages become as safe as government bonds of comparable maturity. Hence, the Fed's intervention in the housing market is really an intervention in the government bond market; the purported "switch" from buying mortgages to buying government bonds is of little significance. The Fed is engaged in the difficult task of trying to set not just the short-term interest rate, but longer-term rates as well.
Resuscitating the housing market is all the more difficult for two reasons. First, the banks that used to do conventional mortgage lending are in bad financial shape. Second, the securitization model is badly broken and not likely to be replaced anytime soon. Unfortunately, neither the Obama administration nor the Fed seems willing to face these realities.
Securitization – putting large numbers of mortgages together to be sold to pension funds and investors around the world – worked only because there were rating agencies that were trusted to ensure that mortgage loans were given to people who would repay them. Today, no one will or should trust the rating agencies, or the investment banks that purveyed flawed products (sometimes designing them to lose money).
In short, government policies to support the housing market not only have failed to fix the problem, but are prolonging the deleveraging process and creating the conditions for Japanese-style malaise. Avoiding this dismal "new normal" will be difficult, but there are alternative policies with far better prospects of returning the US and the global economy to prosperity.
Corporations have learned how to take bad news in stride, write down losses, and move on, but our governments have not. For one out of four US mortgages, the debt exceeds the home's value. Evictions merely create more homeless people and more vacant homes. What is needed is a quick write-down of the value of the mortgages. Banks will have to recognize the losses and, if necessary, find the additional capital to meet reserve requirements.
This, of course, will be painful for banks, but their pain will be nothing in comparison to the suffering they have inflicted on people throughout the rest of the global economy.
Joseph E. Stiglitz is University Professor at Columbia University and a Nobel laureate in Economics.
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