Saturday, November 30, 2013

Saturday Night Music

Always liked this version of She Bop. Cyndi live in Asia.

Happy Saturday.

How Does Income Inequality Happen? Here's One Way.

(I learned of this from friends safely tucked away in Geneva, Switzerland. Thanks.)

Let's buy a bunch of these and turn them into bonds! Brilliant!

I'd heard reports that banks were buying up foreclosed homes but hadn't heard, until now, that hedge funds were deep into residential real estate:
Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.
Wall Street's foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It's going to rent these foreclosed houses back to us. In the process, it's devised a new form of securitization that could cause this whole plan to blow up—again.
Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.
In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That's a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.
If this was it, it would be bad enough, but it's not. There's more:
But buying homes cheap and then waiting for them to appreciate in value isn't the only way Blackstone is making money on this deal. It wants your rental payment, too.

Wall Street's rental empire is entirely new. The single-family rental industry used to be the bailiwick of small-time mom-and-pop operations. But what makes this moment unprecedented is the financial alchemy that Blackstone added. In November, after many months of hype, Blackstone released history's first rated bond backed by securitized rental payments. And once investors tripped over themselves in a rush to get it, Blackstone's competitors announced that they, too, would develop similar securities as soon as possible.
Depending on whom you ask, the idea of bundling rental payments and selling them off to investors is either a natural evolution of the finance industry or a fire-breathing chimera.
"This is a new frontier," comments Ted Weinstein, a consultant in the real-estate-owned homes industry for 30 years. "It's something I never really would have dreamt of."
However, to anyone who went through the 2008 mortgage-backed-security crisis, this new territory will sound strangely familiar.
 For fun, read Michael Lewis' The Big Short to learn about how mortgage-backed securities and their evil twin, synthetic consolidated debt obligations, trashed our economy in 2008. Now they're into rental-backed securities? Holy crap. No need to regulate this industry!

Friday, November 29, 2013

What If the Republican Party Had Policy Initiatives to Offer?

I think things might be different. There would be a path to compromise. So agrees the Political Animal today (quoting Jonathan Bernstein):
The way these things happen when both parties are healthy is that the popular, high-priority policy preferences of one party are bundled with the popular, high-priority policy preferences of the other. However, what exactly do Republicans have that they need to pass and that Democrats could accept? The Republican policy cupboard is pretty much empty. There are some wild demands (balanced budgets, repealing Obamacare) that Democrats wouldn’t go along with for any price — ideas that wouldn’t really work anyway. Other than those, there’s just very little. I suppose Democrats could trade a solid increase in the minimum wage for cuts in food stamps, but it’s not clear that would be a deal liberals could support — and at any rate, it’s hardly a popular Republican demand, meaning that Democrats would be tempted to just run on the issue rather than accepting what they could get.
Bernstein calls today's Republicans "post-policy." An apt term, that. What are the Republicans for?
  • Cut spending, except on law enforcement, homeland security, and defense. Related to this is the Republican preference for war over diplomacy, which isn't cheap, by the way.
  • Cut taxes, while supporting oil and farm subsidies. Drill, baby, drill. Also, ethanol subsidies, even though the program has been a bust. Ethanol from corn costs more than gasoline to produce, actually has a high carbon footprint, and raises food prices (meat and dairy, corn products). But, uh, corn producers love it (higher demand and prices for corn).
  • Balanced budgets. Great, how are you going to do that without cutting our biggest expenditures like defense? Well, we could always cut Social Security, Medicare, Medicaid, food stamps, Meals on Wheels, WIC, and so forth.
  • Paul Ryan is pushing an initiative to fight poverty. Good for him. Is there a role for government? No, that would cost money. He wants to solve poverty with increased volunteerism. Great. Maybe we could all collect one extra can of green beans. That should do it.
  • We could adopt the Republican plan for healthcare. Wait. We already did. It's called Obamacare. Now the Republicans hate their own plan. What's their alternative? Letting insurance companies sell their products across state lines and, oh yeah, cracking down on medical malpractice lawsuits. Boy, that'll drive costs down.
Republicans have no new policy ideas, except voter ID laws and forced ultrasounds on women who want abortions.

Who votes for these people? Counter-intuitively, it's people who believe in limited government. But Republican initiatives cost money and intrude on people's lives. The Democratic Party does not want to force medical procedures on women or intrude into everyone's bedrooms or limit their choices for birth control. Republicans do. What's so limited-government about that? Defense costs a boatload of money. What's so limited-government about that? Republicans want to ban public unions (except police, fire, and corrections!). What's so limited-government about that?

You get the point. Democrats want to legislate ways to feed people and provide healthcare. Republicans want to legislate morality without confronting the moral implications of their policy choices that increase poverty and hunger in America.

To be fair, they do address those moral implications, by changing words. Poor people, in their lexicon, are "lazy people." And hungry people are people who like hammocks.

"Have these people ever thought about maybe getting a job?"

With this kind of talk, Newt Gingrich won the South Carolina primary, his only victory. Its key point was jobs for lazy black people, not food stamps. Whether you agree with him or not -- or Rush Limbaugh, for that matter -- it's clear that the pair of them represent mainstream Republican views on the issue.

And here's the thing: They have no actual policy prescription, only the notion that poor people should be working. Actually, they are. At Walmart, McDonald's, Olive Garden, and Chic Fil A. And they're still on food stamps.

Would a higher minimum wage reduce the amount of food stamp recipients. As a noted political philosopher once said, you betcha! Will the Republicans support a minimum wage increase. No! That's a job killer.


Thursday, November 28, 2013

Republicans' War on the Hungry

Here's a report on the effect of Republican policy (at this point effected through obstructionism) on food stamps:

Remember, though our economy is still sputtering along after the Great Recession, we are growing, we are building new jobs, and our federal deficits or sinking like a stone, so to say we must cut food stamps is determined by what? Living within our means? Tightening our belts? Stopping runaway spending? I don't think so.

This Fox News slant on the Republican food stamp cut is that it isn't so much, the program has grown out of control, there's rampant fraud and abuse, the Republicans aren't "heartless," Clinton's welfare cuts really, really worked, so let's do it again, etc.

Okay. The rate of fraud in the food stamp program has dropped from 4% to 1% over the last two decades, according to the Department of Agriculture. The error rate -- payments to ineligible households -- has fallen to 3.8% in 2011, a record low. Smash that GOP myth. By the way, cutting food stamp benefits wouldn't cut fraud and abuse, it just cuts the amount beneficiaries can receive.

I could go on. I'll save it and send you to this link to get the facts.

Here's the liberal argument:

Note that Bernie Sanders points out that the sequestration cuts slammed the Meals on Wheels program that feeds shut-ins, mostly elderly.

A final reminder: According to the USDA, almost 15% of American households were food insecure at some point during 2012. 15%. Is that acceptable in the "greatest country on Earth?"

Wednesday, November 27, 2013

Do Americans Have the Right to be Hungry?

Okay, the headline is meant to attract your attention, but it isn't silly. My real point is are Americans who are poor required morally to be food-insecure?

The answer, on one level, is simple. In a country with more than enough food to feed every citizen well -- by well I mean a nutritional diet sufficient to provide for required caloric intake for activities undertaken in a normal lifestyle -- you'd think the answer would be yes.

My memory harkens back to the Tea Party debate during the Republican primary season of the 2012 presidential election when in response to a Wolf Blitzer hypothetical question about an underinsured young adult -- "Should we just let him die?" -- to which members in the audience quickly and spontaneously screamed, before candidate Ron Paul could answer, "Yeah!!"

That answer articulated loud and clear that the personal-responsibility, libertarian, "why don't you just get a goddam job, loser!" crowd feels little empathy for the less fortunate. In fact, it's a clear statement that, in the context of hunger, basically tough shit, it's not my problem. And, yes, that position is properly identified with the more conservative members of our American body politic.

And quite recently that position -- it's not our job to feed people -- was concretely demonstrated by the $40 billion cut to food stamps passed by Republican-controlled House and blocked by the Senate. The Senate attempted to compromise at a $4 billion cut, but the bill is stalled. Yes, Republicans want to severely cut food aid to the American poor.

The poor already have lost $5 billion with the expiration on Nov. 1st of the Recovery Act provision providing for a temporary boost to the food stamp program.
The 2009 Recovery Act’s temporary boost to Supplemental Nutrition Assistance Program (SNAP) benefits is scheduled to end on November 1, 2013, resulting in a benefit cut for every SNAP household.  For families of three, the cut will be $29 a month — a total of $319 for November 2013 through September 2014, the remaining months of fiscal year 2014. That’s a serious loss, especially in light of the very low amount of basic SNAP benefits.  Without the Recovery Act’s boost, SNAP benefits will average less than $1.40 per person per meal in 2014.  (See Table 2 for estimates of the size of the SNAP cut in each state in fiscal year 2014.)  Nationally, the total cut is estimated to be $5 billion in fiscal year 2014. 
It seems unlikely that Congress will enact legislation to remedy this problem, as President Obama and some members of Congress have proposed.
So we have a pitched battle in Congress, with Democrats seeking to protect the food safety net for the poor and the Republicans seeking to cut it severely. The USA Today article linked to above described the debate by saying the "Bill demonstrates a bitter philosophical divide between Democrats and Republicans over the social safety net."

This "bitter philosophical divide" positions the Republican stance as:
1. We should limit the government's ability to feed the poor.
2. We can't afford to feed the poor.
It's fair to say the Democrats' position is that we can maintain or expand the government's role in feeding the poor and that we can or must afford to do so.

All right, the battle lines are drawn. But I propose to go further with this philosophical divide and ask:
In a country in which we produce a vast surplus of every conceivable food product that would contribute to a healthy, balanced diet, do we or do we not have a moral obligation to make every effort to provide such a diet to every person?
My answer is yes, absolutely.

There are more aspects to this question and answer, such as:
  • If we have more than enough land in the U.S. to provide all families suffering from hunger some land on which to grow or produce adequate food -- but that this land is already owned by large commercial enterprises and a few remaining family farms and therefore not available to hungry citizens -- then don't the controlling corporations and land-owning entities have a moral obligation to share the bounty with those denied access to land for food production?
  • Since our free-enterprise system and evolved civilization that now allow specialization of labor leaving us no longer dependent on the food we can grow or hunt, and which means that access to land for food production is no longer required in order to have an abundant source of food available, don't those of us, whose opportunity for work and access to capital deprives them of an adequate source of food, deserve access to a healthy, adequate diet?
  • What is the moral justification for allowing any citizen to suffer from hunger and malnutrition?
  • Is a there a dividing line in our country between an obligation to feed our citizens and an obligation to feed any human being within our borders? In other words, should citizens be fed while non-citizens starve? Is that a moral dividing line?
  • If the answer is yes, all human beings within our borders, given our food abundance, deserve an adequate diet, what entity is best suited to carry out this enterprise? Government? Charities? Churches? All of them? Only Some of them?
If your answer to these questions resemble that stark moment in the Tea Party debate back in 2011 -- such that we could imagine:
Wolf Blitzer: "So if the person didn't have enough food to eat, should we just let him starve?"
Well then, shame on you.

Monday, November 25, 2013

Is Obama Playing the Iran Card?

I'm a Hillary admirer. But John Kerry is getting things done.

Nixon played the China Card, letting the Soviets contemplate an American ally on its southeastern border. Life became suddenly more complex for the Ruskies. To this day, when I think of Nixon, I think of Watergate quickly followed by how shrewd Nixon was to play the China Card.

Now, is Obama playing the Iran Card? Is Saudi Arabia all of a sudden going to say, "You're not our allies if you can make nice with a Shiite state?" And Israel is saying, "How can you make nice with the supporters of Hamas and Hezbollah? How can you do that and call yourself a friend of Israel?" And Syria is probably thinking, "Would Iran sell us out to make nice with the Devil?" Actually, I can also imagine Russia wondering, "What happens when Iran doesn't need us as a buffer or protector from America?" Also, "If Iran backs off helping Syria, do we lose our Middle-East client-state?"

I don't know. But the game is changing, and for now, I suspect for the better.

Sunday, November 24, 2013

A Reason Not to Hate Them

Here's one: They're beautiful.

I don't know on what side of the border these lovelies are, but for Heaven's sake, look at them.

Don't get me wrong. I believe in secure borders. We need to manage our society. But when these kids insinuate themselves into our society, I for one stop thinking about the law and start thinking about how to help them.

A Conversation Worth Listening To

I found this Bill Moyers Journal on YouTube, featuring author Henry Gioux talking about his book Zombie Politics and Culture in the Age of Casino Capitalism. Giroux tells it like it is, and I agree with his take on what we've become as a nation. This video is long (43 min.) but well worth it. You'll quickly get the gist in the first few minutes. Important stuff.

I suspect the book is really worth a read. Check it out on Amazon.

Saturday, November 23, 2013

Surprise: GOP Looking for New Ways to Obstruct

How can I obstruct thee, let me count the ways.

Okay, this is no longer about governing. In fact, the behavior of Republicans has long since been about stopping Barack Obama at all costs. So, a couple of days after the Democrats in the Senate, the majority party duly elected by the electorate, got so tired of the obstruction that they modified the rules surrounding certain uses of the filibuster to streamline new administration and non-Supreme-Court judicial nominees, the Republicans are looking at what's left in their toolbox they can use to continue to obstruct. WaPo:
Republicans in the minority, outraged by the Senate Democratic push to change the rules, could employ a number of procedural tactics to slow confirmations to a crawl.
In an early sign of ill feelings, Republicans on Thursday evening would not agree to confirm a slew of low-profile nominees by unanimous consent, as is customary in the Senate before an extended break, according to senior Democratic aides.
Other delaying tactics at the minority’s disposal include blocking committees from holding meetings or denying the quorum required to move nominations to the floor by refusing to attend committee meetings.
On the Senate floor, there is still an exceptionally cumbersome process to move nominees through to a final vote, eating up precious floor time.
Under the new rules, there can still be 30 hours of Senate debate on each appeals court and Cabinet-level nominee. Nominees below Cabinet level get eight hours, and district court nominees get two hours. That means the Senate floor could be locked up for an entire day — with no other business conducted — over a single nominee.
For judicial nominations, senators can hold up approval for nominees from their home states by refusing to submit a “blue slip” okaying the choice. Ten pending judicial nominees have not had a Senate hearing because their home-state Republican senators have not returned their blue slips, according to a White House official.
Republicans have not indicated which delaying tactics, if any, they might employ, but they signaled a desire to seek revenge after Thursday’s vote. Sen. John McCain (R-Ariz.) said Democrats will “have trouble in a lot of areas, because there’s going to be a lot of anger.”
McCain suggested that the change could spoil other efforts, such as to ratify a United Nations-backed disabilities treaty that would put most of the world on a par with U.S. policy. Ratification requires 67 votes, and attempts to pass the treaty fell short last year. Supporters had hoped that would change in coming months.
There's a long-standing notion that "politics ain't bean bag." That may be true, but don't mistake this for governing even vaguely for the common good. It's what I, as a teacher, became very familiar with: juvenile behavior. Let's take a look at one of the juveniles threatening to "get even":

Didn't this dude, who is warning the Democrats what the
Republicans might do, run for president or something?

Stay classy, Mr. Maverick.

The Filibuster Is Forever! Not!

Hey, Rand, under the new rules we get to talk as long as we want. What's not to like?

Dana Milbank, on and off idiot, picks idiot today:
Reid was right that Republican obstruction has been intolerable; half of the 168 filibusters of executive and judicial nominations in the nation’s history, he noted, have come during the Obama presidency.
But Reid’s remedy — calling a simple- majority vote to undo more than two centuries of custom — has created a situation in which the minority leader, Mitch McConnell (Ky.), is expected to use the minority’s remaining powers to gum up the works, and to get revenge when Republicans regain the majority.
“If a Senate majority demonstrates it can make such a change once, there are no rules which binds a majority, and all future majorities will feel free to exercise the same power, not just on judges and executive appointments but on legislation,” Levin said Thursday. Quoting one of the Senate’s giants, Arthur Vandenberg, Levin said his fellow Democrats had sacrificed “vital principle for the sake of momentary convenience.”
If it was possible to make things even worse in Washington, Reid just did it. [emphasis mine.]
The modern filibuster, as practiced until last Thursday, did not have a two-hundred-year run. It was instituted in 1917. It was very, very rarely used until the past few presidencies, gathering speed during the Bush years and exploding during Obama's time, until the Republicans blew it up.

Milbanks says, "...the minority leader, Mitch McConnell (Ky.), is expected to use the minority’s remaining powers to gum up the works." What was he doing before?

Reid didn't end the filibuster. The Republicans did by giving Reid no other recourse but to lead.

Now the Obama administration can do its work. And that's, uh, "making things worse in Washington?" No. It'll return Washington to the days when an administration was allowed to fulfill its mandate, you know, before Newt Gingrich's 1994 temper tantrum.

By the way, I think the original filibuster -- talking until you drop or win -- is still in place. So, Ted Cruz and Rand Paul, you time is at hand. Bring it on! (Holy crap, they will.)

And that elder statesman, Republican Senator Chuck Grassley of Iowa, what's his reaction to the Dems' eliminating a portion of the filibuster, only for administration and judicial appointments sans the Supreme Court? Why, threaten to end them for the Supreme Court appointments, as well! I thought you liked the filibuster, guess I was wrong.

Real mature, Grassley.You end some filibusters, we'll end even more, so there!

Maybe Mr. Smith is coming back to Washington. And that's a good thing.

Senator Charles Grassley: We promise to be worse than you, nasty Dems!

Friday, November 22, 2013

For Now, It's Always About Jobs

Republicans are wrong about so many things for so many reasons -- you pick it, hate Obama! Tax cuts for the job creators! Obamacare is a jobs killer! Government's the problem! -- that we get almost dumbfounded on a daily basis.

What we also contemplate daily is the undeniable fact that very damned little is being done about jobs. Oh, there's something done around the periphery of society -- usually small, but not always nothing! -- in new approaches to job training, hopes that a housing boom will jumpstart construction jobs, etc. But basically, we're stuck at 7.3% unemployment.

In a Jared Bernstein/Dean Baker post in the NY Times, some really clear thinking was brought to bear on the question of just what level of unemployment is tolerable before it gets so low it will spur inflation. Those are the two points on the scales that the Fed is supposed to keep an eye on. Unemployment too low, the economy overheats, and wages put pressure on prices, leading to inflation. It's a sensible notion and is measured on the Phillips Curve with shows the inverse relationship between the two.

The Fed works by making money cheap by lowering interest rates. Low interest rates spur business investment, business investment spurs employment, employment drives demand, demand puts pressure on prices, prices drive wages up, which spurs demand, and before you know it, the economy is overheated and inflation can get out of control.

(A variety of economists I highly regard think that, with the economy up against the lower zero bound where lowering interest rates can no longer stimulate growth, normal monetary policy can do little to stimulate growth. So the usual routine described here can't work.)

The Fed raises interest rates, stifles investment, increases unemployment, and demand drops, and with it so do wages and prices. The Fed does this with an unparalleled religiosity. Paul Krugman calls it "taking away the punch bowl when the party really gets going." It's not a fiction that the Fed causes most recessions on purpose. Obviously if they could really tailor the medicine to the patient, we'd be able to put an end to recessions. We actually believed we had during the time known as the Great Moderation, under the direction of Maestro Alan Greenspan. (For fun, check out this blog post on the Great Moderation at about the peak of the financial bubble and a year and a half before the fall of Lehman Brothers precipitated the Huge Unbubbling -- wow, I think I coined a term! By the way, the blogger, Mark Thoma, is an ordinarily clearheaded economist.)

The Great Moderation turned out to be a fantasy, as was the deft touch of the Maestro. Thus we arrived at the Great Recession, having our asses handed to us by the housing bubble, or by the easy money party by which the banks and mortgage brokers built the bubble. Pick your poison. One thing is for certain, and that's that Maetro Alan Greenspan did not see it coming, and his easy money policy probably fueled the bubble, but good.

No one took away the punch bowl. People were swilling the stuff right up to the moment the whole house of cards collapsed around them.

We could tell a tale of high and mighty finance and its near-total collapse, but this is about jobs:

That's what a falling house of cards looks like. Add in a dose of "big government is the problem," and you have the bonus loss of government jobs just when the economy can least afford it. (That spike of positive public-sector job growth in 2010 were temps hired to take the Census, nothing more.)

Here's a thought experiment: Push all those red, negative values north of zero job growth and the jobs-per-month figures start to make a difference in GDP. Add a bunch of public-sector-driven infrastructure projects -- and the private-sector jobs making the material and equipment that are required by the infrastructure projects, plus all the food, healthcare, housing, and furniture the workers need and can once again afford -- and drive those positive bars higher and higher, spurring, yep, more demand. That's what's called a RECOVERY, not the limp, pathetic recovery we've instead experienced.

But Obama's a socialist, Obamacare's a job killer, government must be shrunk, no new taxes, no new budgets, no new spending, and did I say Obama's a Kenyan Marxist Muslim who eats jobs for breakfast?

So I was fascinated reading the wonderfully clear-minded and convincing explanation of why Jared Bernstein and Dean Baker figured out that the safe rate of unemployment without inflation pressures may in fact be as low as 4 %. I'm convinced, and I look forward to the day when we'll be able to put those mathematics to work, hopefully with a Fed who can stomach the experiment.

In the meantime, before you go, Ben Bernanke, can we have some actual helicopters dropping free money on the poor and middle-class neighborhoods, please? The rich don't need it and poor will spend it, but fast. It's not enough, but it would sure help.

Job-killin', big-government, winners-and-losers pickin', consumer-protectin', Wall-Street lovin', mean ole Muslim President Obama, who won't let us have our plan, as soon as we think of one.

Thursday, November 21, 2013

Restricting Doctor and Hospital Choice With Obamacare: Feature or a Bug?

Damn! It's not in my provider network! (Neither are its costs.)

It's a feature! Of course, in today's WaPo there's an article entitled, "Insurers restricting choice of doctors and hospitals to keep costs down," which is a tad bit misleading. It's full of mostly factual stuff but then pulls at the heartstrings with anecdotes like this:
But as a result, families like Jeffrey Blank’s, which has relied on Seattle Children’s since his daughter, Zoe, received a diagnosis of a rare bone disorder, face difficult decisions. Under some of the new law’s health plans, the family would no longer be able to take Zoe to Children’s for her routine checkups, or it could count as an “out-of-network” visit, saddling the family with huge bills.
“It just stresses me,” said Blank, 53, a self-employed massage therapist who is sorting through his options but readily admits that his family has benefited from other parts of the health law. “I hope things continue wonderfully for my daughter and that she doesn’t need the level of care she got after her diagnosis, but there’s this unknown.”
I feel for the Blanks, I really do, except I don't. I've kept my healthcare costs down for years by, one, getting a job that provided healthcare and, two, choosing Kaiser, which is as close to socialized medicine as one is likely to see in the U.S. I had a choice of, er, Kaiser hospitals, except when I didn't, like when I needed Mohs surgery and I had my choice of Kaiser Vacaville or Kaiser Vacaville. I'm cured, and even though the doc took a hunk the size of a nickel out of my cheek, nowadays I have to strain to see where it was, the unskilled bastard.

Point is, I didn't need the Mayo or the Cleveland, and there are real costs savings in that. For instance, same WaPo article:
In Seattle, the region’s predominant insurer, Premera Blue Cross, decided not to include the children’s hospital as an in-network provider except in cases where the service sought cannot be obtained anywhere else. “Children’s non-unique services were too expensive given the goal of providing affordable coverage for consumers,” spokesman Eric Earl­ing said in an e-mail.
For example, a pediatric appendectomy at Children’s costs about $23,000, he said. At another community hospital, the cost is closer to $14,100. Melzer said his hospital often bills more than community hospitals for comparable procedures because the children it treats are often gravely ill, so even a routine tonsillectomy may be more complicated.
So, Obamacare is already at work saving us money. And, no, this isn't death panels. It's common-sense cost savings, the way it's supposed to be.

And don't forget that when it's one of the Republican talking points you'll be hearing ad nauseum the next several months as they go about trying to ruin the ACA.

John Boehner says "premiums are soaring." What do you expect he'd say?

Update. Let me slip in some graphs (via Krugman) from the Council of Economic Advisors that show more correlation between Obamacare and healthcare costs declining:

And one more that shows how reducing overpayments to Medicare can actually improve outcomes, as measured in hospital readmission rates:

Data aside, Obama is still out to destroy the world as we know it.

Update 2. If Medicare gets more cost-effective and the date certain in the future when it's going to go broke keeps receding, do we still have to slash entitlements? Of course! Obama didn't slash spending enough. He's a communist!

Are Poverty Wages Ever Justified?

The answer should be simply no. I imagine as I look into the issue I'll find some cases where a wage that would lead an individual, working full-time, to live below the poverty level might make sense -- part-time teenaged workers looking for some play money, for example -- but even such exceptions might be hard to justify.

My own experience -- paper boy, summer jobs at Jack in the Box and Tillie's Cafe in Long Beach in the high-school years -- actually makes a good case in point. All my co-workers were middle- and lower-middle-class youngsters looking for some money to supplement or replace the good old parents' allowance. But that's not who has those jobs anymore.

Papers are delivered these days by adults, mostly private contractors, often as a second job. Opinions about the pay vary.

Fast-food workers have long ago stopped being a job for teenagers to supplement their parents' allowance. The average age is now thirty, with many using the job to support, or help support, a family. Here in California, the vast majority of fast-food workers are Hispanic.

The Tillie's Cafe model, that of a greasy spoon serving a neighborhood, still exists. I assume this industry tracks the fast-food industry. Workers get minimum wage, again mostly Hispanic in my experience.

I've done a reasonable amount of traveling, and maids in motels and hotels across the county are women, almost exclusively Hispanic. By and large, the maids get minimum wage.

These poverty wage jobs I'm looking at are the visible ones. The invisible ones, the farm workers, the meat packers, the sweat shops, the places undocumented immigrants work, I don't know much about.

Then there are the retail jobs, the most visible of which are the ones in big-box stores like Walmart, Kmart, Target, etc. Again, minimum wage, or near-minimum wage, is the norm.

Considering just the categories listed above -- and leaving out newspaper delivery contractors -- is minimum-wage pay ever justified?

I quickly arrive at the simplest answer: no. I realize there may be factors that complicate the issue. Fine. But in an advanced, industrialized, developed nation there are few justifications for paying a full-time worker a wage that doesn't provide a basic, dignified living. What's more, setting up a system, like many industries do, where using a multitude of part-time workers simply to avoid having to pay benefits like healthcare is essentially an immoral act. It's done to exploit workers who have little control over their fate, due to lack of education or opportunity.

If a worker is doing his or her job properly, then exploiting them simply because they don't qualify for higher-skilled work is an immoral act, in my view.

What's wrong with the following assertion?

We don't have to pay them a living wage because they're unskilled.

Here's the answer: If they can work for you, they should make a living wage. After all, if they work full-time, they should be able to go home at the end of the day knowing they can pay for a safe, healthy place to live, a nutritional diet, and transportation necessary for an ordinary life. This ordinary life should also include, typically, a phone, a TV, and a computing device. These are necessities. Don't even try to say they're not. This is not the 12th century.

If a company splits up their full-time jobs so they can justify them as being "supplemental income," then that company is committing an immoral act. They do that to avoid taking responsibility for their employees' well-being. (I'm not talking about justified part-time work. Reasons exist for it. Paying part-time workers less than full-time workers for the same work is not justified.)

Let libertarians insist that we live in a capitalist, free-enterprise country, and the pursuit of profit is the name of the game. If someone can't make a living, don't blame the system. Go out and get a better job. They can say that all they want. It's bunk.

If a company creates a job -- assuming adding that job adds utility to the company's operation -- then allowing that job, in a moral, ethical country, to not provide a living wage can only mean that the company's purpose in doing so is to exploit a worker without any concern for that worker's well-being. And that's an immoral act.

The libertarian's answer? Immoral acts, if not illegal, are okay in pursuit of profits.

I don't want to live in that guy's country, if you don't mind. Do you? Think about it.

I don't like to use such a phrase -- since I don't believe it's true -- but if we're the "greatest country on the face of the Earth," then how on Earth can we justify shortchanging even one citizen?

Yeah, I'm an idealist, so I'm a sucker for a scene like the one above. Yet, expecting businesses in an advanced country -- one that, yes, is the greatest economy in the world -- to pay a living wage is not the act of an idealist. It's a reasonable expectation, indeed, a moral imperative.

Wednesday, November 20, 2013

What Good Are School Achievement Tests If Household Affluence Is As Good a Predictor of Outcomes?

If the affluent children are going to do well and the impoverished kids are going to do poorly on achievement tests, why waste the time? Seriously.

Oh, yeah, I know the answer: because we wouldn't have known that if we hadn't given a gazillion tests. So, uh, can we stop now?

Here's a reasoned argument against the importance of testing, this one in The Nation:
In fact, the work of the many researchers Brill approvingly cites—including Kane, Staiger and Stanford’s Eric Hanushek—shows that while teaching is the most important in-school factor affecting student achievement, family and neighborhood characteristics matter more. The research consensus has been clear and unchanging for more than a decade: at most, teaching accounts for about 15 percent of student achievement outcomes, while socioeconomic factors account for about 60 percent.
Here's a very good article from the Association for Supervision and Curriculum Development:
 One of the chief reasons that children's socioeconomic status is so highly correlated with standardized test scores is that many items on standardized achievement tests really focus on assessing knowledge and/or skills learned outside of school—knowledge and/or skills more likely to be learned in some socioeconomic settings than in others.
Back in the late 90s, while I was both a teacher and a weekly technology columnist, I discovered that student test scores were just then starting to be posted online. I anxiously started to browse through the results of test scores at various schools and districts around the San Fransisco Bay Area and closer to home in the Napa Valley. It didn't take long to notice a strong correlation between affluence and test scores.

The first column I wrote on the subject was titled, "Understanding Student Test Scores: Follow the Money."

Now we have a brand new type of controversy over student test scores. Apparently, the new test scores due out in August of this past year were "embargoed," meaning they weren't released because something was wrong. Here's a few paragraphs from a Diane Ravitch blog explaining why. In the words of a New York teacher, Katie Zahedi:
Days before the release of embargoed New York Common Core test scores, laced within comments/double talk about “higher standards”, Secretary of Education Arne Duncan joined Commissioner John King in assuring New Yorkers that lower scores on the Math and English Assessments were expected.  The NYSED claims to have formulas to account for all sorts of nuanced variables so maybe they will produce one for the testing fiasco called the Bunkum Conversion Table!
What the public may not understand in the midst of today’s controversy is that when a test yields 80% (of a particular cohort) of students passing over a 5 year span, and scores suddenly drop to below a 35% passing rate, that the problem is probably unrelated to student performance. In fact, the last two years of tests produced by the NYSED have been rife with mistakes, missing tables needed for computation, and confusing and misleading questions.
The failure rates on the NYSED site are dissimilar to reported numbers in the 8/6/13 New York Times, leaving principals unsure how the data is being or will be manipulated for public reporting.  What is immediately clear is that the NYSED is out on a limb with its political machinations of student test data.
Historically, up to 15% of my students have been scheduled for Academic Intervention Services (AIS) for remedial help. Now, thanks to “higher standards”, those students’ needs are obfuscated by the new facts that nearly 70% of my students have been identified (by a state test) to be in need of remedial math.
Whoa! This a brand new slant on a slow-boiling problem, in this case as a result of imposing the new Common Core standards, which some claim are not developmentally appropriate at certain grade levels. These test scores seem to highlight that suggestion. It also seems that New York aligned its new standards to NAEP, explained here. No wonder things got out of whack.

Now enters Secretary of Education Arne Duncan into the fray. Recently, he angered parents (white parents, it seems) when he said:
It’s fascinating to me that some of the pushback is coming from, sort of, white suburban moms who — all of a sudden — their child isn’t as brilliant as they thought they were and their school isn’t quite as good as they thought they were, and that’s pretty scary. You've bet your house and where you live and everything on, ‘My child’s going to be prepared.’ That can be a punch in the gut.
 Oh, snap! He walked that back pretty fast:
Duncan walked back his bumbling remark on Monday, saying in a statement that his comments had been “clumsy.” But he insisted that he wants to have honest conversations about the challenges of the new Common Core standards. “I want to encourage a difficult conversation and challenge the underlying assumption that when we talk about the need to improve our nation’s schools, we are talking only about poor minority students in inner cities,” he said.
Here's a bit of video about reaction:

This parent looks very much like that kind of parent whose kids would do well in any properly developed achievement test. She even says her child is "thriving" in a school that already uses the Common Core standards. Still, she's upset by what the tests based on these standards can potentially do to her child, or anybody's children, for that matter. Her prescription -- keep corporations and the federal government out of local education -- is something I've supported since No Child Left Behind and Obama/Duncan's Race to the Top. I call them No Art or Music Program Left Intact and Race to Reject Electives. I don't like it.

My New Tablet

I've been limping along -- and enjoying hacking it into an Android -- with my Nook Color. Great fun, but I'm relegating it to my Jetta as my nav system. (I really did hack it, with the help of XDA developers. Get yourself a cheap used one and hack it, too. It's better as an Android than a Nook, though you can create the Android on an SD card and keep the Nook installed internally. Cool.)

My new toy, happened upon at Amazon, is an ASUS MeMO Pad Smart ME301T 10.1-Inch 16 GB Tablet. Okay, not a state-of-the-art tablet, but it's just the way I like it: a little bit behind the curve, reduced in price to my price point. I even shopped through the choices and found a demo version, still with the original box and warranty. Turned out to be flawless for about 2 bills. Check it out.

Oh, got a cover for it, too.

Paul Ryan, A Man for All Seasons -- With New Ideas!

I've got some ideas on how to save the poor. First, cut food stamps. Second,
cut Social Security. Third, cut taxes. Fourth, shut down the government. Fifth,...

It bears repeating: Paul Ryan has only two ideas, and that's to cut programs for the poor and cut taxes for the rich. Anything else attributed to him is nonsense. So, Washington Post's Lori Montgomery decided to write a really long article that really, really got very specific in explaining just what Paul Ryan has to offer. Here's the money quote:
So far, Ryan’s speeches have been light on specifics.
Okay, then. I was worried for a while that I'd misjudged him.

Tuesday, November 19, 2013

America and the Great Recession

Likely new Fed chair, Janet Yellen

Although we've done better than Europe during our excruciating recovery, we've suffered a lot of self-inflicted wounds, some perpetrated at the state level but largely at the hands of our dysfunctional Congress. Janet Yellen managed to highlight that during her Senate confirmation hearings -- apparently without raising Republican ire. I guess she's already adept at FedSpeak, which is not necessarily a bad thing, in this case. From the Huffington Post:
"Fiscal policy has been working at cross purposes to monetary policy," Yellen said. "Some of the near-term reductions in spending that we have seen have certainly detracted from the momentum of the economy and from demand, making it harder for the Fed to get the economy moving, making our task more difficult.
"We are worried about a fragile recovery, and a more supportive fiscal policy, or one that at least had less drag, that did no harm, would make life easier," she added later.
Yellen was referring to the austerity that has come out of a rolling series of debt crises instigated by Republicans in the past few years, including the deep budget cuts known as sequestration and this year's payroll-tax increase. Under pressure from Republicans, the federal government has cut spending at the fastest pace since the end of the Vietnam War. Government investment has tumbled to its lowest level as a percentage of GDP since 1948.
This belt-tightening has probably cost the economy nearly 2.5 million jobs, according to a recent study by the Center For American Progress, a liberal think tank -- one huge reason this has been the slowest job-market recovery since World War II. Economists on the right and left agree austerity has hurt economic growth, employment and consumer spending, with executives from Walmart and Cisco among the most recent capitalists to complain about it.
The sluggish recovery is also making income inequality worse, Yellen pointed out, depriving poor and middle-class Americans of more and better job opportunities.
"This is an extremely difficult and to my mind very worrisome problem," Yellen said of inequality.
See the video. I tried to embed it with no luck. It shows what a soft tone Yellen can take while delivering a rather scathing critique.

I hope Congress was listening. Fat chance.

Paul Krugman Hated Larry Summers for the Fed Chair. What Does He Think Now?

Larry Summers
Krugman still probably doesn't like Larry Summers for the Fed chair, likely for dispositional reasons.
Krugman might fear that Summers would end up pissing a lot of people off, and whether or not Summers got monetary policy right, he'd muck things up politically. Janey Yellen, on the other hand, has a defter touch, as Bernanke had, while being more dovish on the deficit than Ben was.

Whatever. From my distant vantage point, I might not have a clear view, but my gut says I'm right. It hardly matters on that score. Yellen is in -- and sure to be confirmed -- and Summers is out.

Yet this past week was a time in which Larry Summers not only said the right things in an important speech but, using slightly different language to get there, ended up largely supporting Paul Krugman's position on the liquidity trap. This delighted Krugman, though a little professional jealousy flared -- "Curse you, Larry Summers!" -- because Summers stated the case so well, so succinctly.

I watched the 16-minute speech with great interest. Summers seemed to be working without a written speech, likely with notes he rarely looked at. He had this stuff down cold.

The key phrase was "secular stagnation," which is hard for a non-economist to grok, but it might be better understood as "longer-term stagnation."

Paul Krugman
What worries Krugman and Summers is that we're in for a long period of stagnation with few options to get out of it without a bubble of some kind. That's the takeaway from Summers' speech, as well as an older blog post of Krugman's that clearly presages Summers' new points:
Our current episode of deleveraging will eventually end, which will shift the IS curve back to the right. But if we have effective financial regulation, as we should, it won’t shift all the way back to where it was before the crisis. Or to put it in plainer English, during the good old days demand was supported by an ever-growing burden of private debt, which we neither can nor should expect to resume; as a result, demand is going to be lower even once the crisis fades.
And here’s the worrisome thing: what if it turns out that we need ever-growing debt to stay out of a liquidity trap? What if the economy looks like Figure 4 even after deleveraging is over? Then what?
This is not a new fear: worries about secular stagnation, about a persistent shortfall of demand even at low interest rates, were very widespread just after World War II. At the time, those fears proved unfounded. But they weren’t irrational, and second time could be the charm.
Bear in mind that interest rates were actually pretty low even during the era of rising leverage, and got worryingly close to zero after the 2001 recession and even, you might say, after the 90-91 recession (there was talk of a liquidity trap even then). It’s not hard to believe that liquidity traps could become common, if not the norm, in an economy in which prudential action, public and private, has brought the era of rising leverage to an end.
And in that case, then what?
We might try to figure out why we seem to need leverage and bubbles to have full employment, and try to fix it. More thoughts on that on another day. But what if that isn’t an option?
One answer could be a higher inflation target, so that the real interest rate can go more negative. I’m for it! But you do have to wonder how effective that low real interest rate can be if we’re simultaneously limiting leverage.
Another answer could be sustained, deficit-financed fiscal stimulus. But, you say, this would lead to exploding public debt! Actually, no – not if the real interest rate is persistently below the economy’s growth rate, which it will certainly be if it’s persistently negative. In that case the government can run a primary deficit even while keeping the debt-GDP ratio constant – and the higher the level of debt, the higher the allowable deficit.
 Back to the more recent Krugman post on Summers' radical-but-right ideas:
Currently, even policymakers who are willing to concede that the liquidity trap makes nonsense of conventional notions of policy prudence are busy preparing for the time when normality returns. This means that they are preoccupied with the idea that they must act now to head off future crises. Yet this crisis isn’t over – and as Larry says, “Most of what would be done under the aegis of preventing a future crisis would be counterproductive.”
He goes on to say that the officially respectable policy agenda involves “doing less with monetary policy than was done before and doing less with fiscal policy than was done before,” even though the economy remains deeply depressed. And he says, a bit fuzzily but bravely all the same, that even improved financial regulation is not necessarily a good thing – that it may discourage irresponsible lending and borrowing at a time when more spending of any kind is good for the economy.
What seems obvious is that Krugman is drawing from Summers' remarks a new manifesto for looser fiscal policy: We're just not doing as much as we did in the beginning of the Great Depression. We're obsessed with the deficit trimming in 1937 that reignited the slump, just as the deficit obsession -- with our clumsy sequestration, government shutdowns, and debt-ceiling repeat debacles -- has stifled all opportunities to grow our economy without requiring new bubbles. What's next, another stock-market bubble caused by QE? That's already happening, but it's doing nothing for middle-class consumption. So it's not very bubblicious and won't do much for longer-term real economic growth. Also, it's not clear how and when we responsibly back out of it, or "taper."

What's left? I know my favorite responses to today's apparent secular stagnation: large fiscal stimulus programs in building infrastructure, greater education spending, radically raising the minimum wage to $15 an hour, higher taxes on the rich to pay for expanding Social Security and Medicare (for all!), and a guaranteed income paid by, for example, a carbon-footprint tax: the more carbon you use, the higher your taxes, the less you use, the potential for a substantial tax credit, which is certainly one way to provide a minimum income while likely spurring energy innovation, which in turn would stimulate the economy. It could help fight global warming, as well.

Yes, solve income inequality through income redistribution. If that's radical, let's get radical. After all, Paul Krugman has been calling for it, and now Larry Summers is getting on the bandwagon. I read his remarks as calling for a return to Keynesian principles. With a bubble economy -- without a bubble in sight -- we may have no choice.

More than four years after the end of the recession, still not enough jobs? Not good.

Monday, November 18, 2013

The 401(k) Failed as the New Pension Scheme. What Could Take Its Place?

Elizabeth Warren: I get an idea she means business.
An expanded Social Security, that's what! Could we also have private accounts? Sure! They're called IRAs.

Imagine an America in which the notion of securing the future of our senior citizens was a vital goal, and we wanted to pursue that goal not at the expense of later generations, you know, without "stealing from our kids and grandkids." And one would think pursuing such a goal would be a very conservative goal, appealing to all political classes, even the tea partiers.

Just today, Elizabeth Warren joined a growing rank of economists, journalists, and Congresspeople who are supporting just such a notion. I applaud her, just as I applaud Senator Tom Harkin, Bernie Sanders, and others who are already fighting an uphill battle to pass a bill that raises current and future Social Security levels by removing the cap on contributions above the current $130,000 limit.

I'd also suggest increasing benefits even more by raising the employee FICA contribution by another two percent. I'd also raise the employer contribution by two percent, with the stipulation that half that would go as matching-fund contributions to employee IRAs. The employee's matching contribution would be automatically deducted from their paychecks.

Employees would not be able to withdraw from these IRAs until they applied to receive Social Security, effectively tying the two funds together at retirement, though they would be able to control how the money in the IRA is invested. Employees, of course, could have other IRA accounts over which they'd have total control.

As long as I'm living the liberal la vida loca, I might add another wacky idea to my wish list. Just found this in Slate today (cross-posted from Business Insider):
A simple idea for eliminating poverty is garnering greater attention in recent weeks: automatically have the government give every adult a basic income.
The Atlantic's Matt Bruenig and Elizabeth Stoker brought up the idea a few weeks ago when they contemplated cutting poverty in half, and Annie Lowrey revisited it in today's issue of the New York Times Magazine.
Real wages have been stagnant in America for decades now and income inequality has grown immensely. In the aftermath of the Great Recession, it’s only gotten worse. The Census Bureau reported in September that the 15 percent of Americans (46.5 million) live below the poverty line. Government benefits like food stamps and TANF help lift some of them above the line, but millions still live below it.
The author, David Vinik, goes on to explain how it would work -- it would, among other things eliminate the need for all federal and state aid, as all aid programs would be subsumed by the basic income payment -- and how it would be paid for -- the savings from all those other programs, plus other sources such as a carbon tax or an end to farm and energy subsidies. BTW, the amount of the payment would be tied to the official poverty level. Other benefits?
The clear one is that no American would live below the poverty line. The U.S. has been waging the War on Poverty for a generation now and still nearly 50 million Americans are below the line. This would end that war with a decisive victory.
There are knock on effects as well. Americans would have greater leverage to demand higher wages and better working conditions from their employer thanks to the increased income security. Families could allow one parent to take time off to raise their kids. Eliminating the numerous different government welfare programs would also lead to efficiency gains as adults would simply receive their check in the mail and not have to waste time filling out paperwork at numerous different offices.
I like it. We could eliminate whole bureaucracies on the state and federal level and let the IRS manage this one automatic payment. The War on Poverty has been a colossal failure, just as the War on Drugs has (OK, add an end to that war to this la-vida-loca wish list, too).

Switzerland is currently toying with the idea, albeit on a bigger scale -- they're voting on a $2800 a month guaranteed income.

Imagine: spreading the wealth around so no one was poor. It would be fun watching Rush Limbaugh's head explode when he hears about this. Somebody call him!

How dare you even suggest ending poverty?!

Krugman on Summers: The Middle Class Is Screwed, Unless...

...somebody does something. Duh.

Of course, Krugman's latest column speaks to our dilemma:
More broadly, if our economy has a persistent tendency toward depression, we’re going to be living under the looking-glass rules of depression economics — in which virtue is vice and prudence is folly, in which attempts to save more (including attempts to reduce budget deficits) make everyone worse off — for a long time.
I know that many people just hate this kind of talk. It offends their sense of rightness, indeed their sense of morality. Economics is supposed to be about making hard choices (at other people’s expense, naturally). It’s not supposed to be about persuading people to spend more.
But as Mr. Summers said, the crisis “is not over until it is over” — and economic reality is what it is. And what that reality appears to be right now is one in which depression rules will apply for a very long time.
And Summers' speech, in which he says:
It is not over until it is over…. We may well need, in the years ahead, to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back, below their potential…
Watch the whole thing if you like:

Some commenters on Krugman's column were surprised he didn't mention stagnant wages or income inequality as causes of this ongoing and potentially permanent slump. Those of us who read him regularly know that those issues are always on his mind. He also doesn't mention the lack of any current fiscal stimulus programs, either, but he does that for the same reason: Those familiar with him know how much he continues to promote such efforts. What he does stress is trade deficits -- which all can translate to manufacturing jobs moving overseas -- and a favorite of his, the paradox of thrift, that is, the practice of saving money when times are tough, thus reducing demand, which then makes the times even tougher.\

 Individuals, the private sector, and the public sector are all currently guilty of this.

I'm used to some pretty nasty commenters on Krugman's blog or below his columns, but generally the predominant theme is that our permanent slump is due to accumulation of wealth at the top, with corporations able to undo any good that may come from fiscal stimulus or monetary policy simply by maximizing profits at the expense of workers they're doing everything they can to avoid rehiring. The wealthy just hang on to the money that continues to flow to the top. And, by and large, I agree with the commenters, especially with those calling for more progressive tax rates and so on. I favor, as blogger Atrios does, widespread helicopter drops of money on one and all. That'll increase demand, by god!

Fat chance of any of that. At least it's good to see these ideas bandied about more than usual.

Let's assume Krugman, as a dyed-in-the-wool New Keynesian, favors all of the above. It well may be the only way out of our current "permanent" slump. It doesn't have to be this way, but the current conservative/libertarian crowd that have hijacked our government wouldn't have it any other way. So, too, with the austerity mavens of Europe.

The beatings will continue until morale improves!

Walmart Collecting Food Donations -- for Its Employees

Now they definitely won't be needing that pay raise...

Yes, we knew Ron Paul was right. Let private charity take care of the poor:
CLEVELAND, Ohio -- The storage containers are attractively displayed at the Walmart on Atlantic Boulevard in Canton. The bins are lined up in alternating colors of purple and orange. Some sit on tables covered with golden yellow tablecloths. Others peer out from under the tables.
This isn't a merchandise display. It's a food drive - not for the community, but for needy workers.
"Please Donate Food Items Here, so Associates in Need Can Enjoy Thanksgiving Dinner," read signs affixed to the tablecloths.
The food drive tables are tucked away in an employees-only area. They are another element in the backdrop of the public debate about salaries for cashiers, stock clerks and other low-wage positions at Walmart, as workers in Cincinnati and Dayton are scheduled to go on strike Monday.
Happy Thanksgiving, Walmart shoppers! Walmart workers, not so much.

Holy Crap! I Want Some of That Money!

Or give it to the poor. But let this keep going on?
LETTERKENNY ARMY DEPOT, Chambersburg, Pennsylvania - Linda Woodford spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense’s accounts.
Every month until she retired in 2011, she says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio, office of the Defense Finance and Accounting Service, the Pentagon’s main accounting agency. Using the data they received, Woodford and her fellow DFAS accountants there set about preparing monthly reports to square the Navy’s books with the U.S. Treasury’s - a balancing-the-checkbook maneuver required of all the military services and other Pentagon agencies.
And every month, they encountered the same problem. Numbers were missing. Numbers were clearly wrong. Numbers came with no explanation of how the money had been spent or which congressional appropriation it came from. “A lot of times there were issues of numbers being inaccurate,” Woodford says. “We didn’t have the detail … for a lot of it.”
The data flooded in just two days before deadline. As the clock ticked down, Woodford says, staff were able to resolve a lot of the false entries through hurried calls and emails to Navy personnel, but many mystery numbers remained. For those, Woodford and her colleagues were told by superiors to take “unsubstantiated change actions” - in other words, enter false numbers, commonly called “plugs,” to make the Navy’s totals match the Treasury’s.
Read it and weep.

Here We Go Again: Tesla Model S Under Fire

Not long ago, the Tesla Model S got about the best reviews possible. Here's the Huffington Post report:

Here's Consumer Reports' review of the Tesla Model S:
Here's Consumer Reports' review of the Tesla Model S:

Here's a report of Tesla cars on fire:

Here's Elon Musk's response:

Now George Clooney gets into the act:

Elon Musk fires back:

This has been another edition of people with too much time on their hands. (Not meaning to disparage Elon Musk. I think he and his company are getting a bad rap. Note: George Clooney had a Tesla Roadster, a discontinued model.)

Footnote. Remember the hundreds of thousands of Toyota and Lexus cars recalled by Toyota and the estimated $2 billion in losses suffered over problems with brakes on various models? Here's the outcome of the NHTSA and NASA studies:
In February 2011 the findings of a 10-month-long study conducted by the National Highway Traffic Safety Administration (NHTSA) and the National Aeronautics and Space Administration (NASA), aimed to identify the main cause of sudden acceleration in Toyota and Lexus models. The study was requested by the US Congress and "enlisted NASA engineers with expertise in areas such as computer controlled electronic systems, electromagnetic interference and software integrity". The most common problem was drivers hitting the gas when they thought they were hitting the brake, which the NHTSA called "pedal misapplication.” Of the 58 cases reported, 18 were dismissed out of hand. Of the remaining 40, 39 of them were found to have no cause; the remainder being an instance of “pedal entrapment.” One investigator says most of the cases involved “pedal misapplication” – that is, “the driver stepped on the gas rather than the brake or in addition to the brake.”
 Remember the problems with the Audi 5000 back in the 80s? Another one involving a NHTSA investigation:
A 60 Minutes report aired 23 November 1986, featuring interviews with six people who had sued Audi after reporting unintended acceleration, showing an Audi 5000 ostensibly suffering a problem when the brake pedal was pushed. Subsequent investigation revealed that 60 Minutes had engineered the failure – fitting a canister of compressed air on the passenger-side floor, linked via a hose to a hole drilled into the transmission.
Audi contended, prior to findings by outside investigators, that the problems were caused by driver error, specifically pedal misapplication. Subsequently, the National Highway Traffic Safety Administration (NHTSA) concluded that the majority of unintended acceleration cases, including all the ones that prompted the 60 Minutes report, were caused by driver error such as confusion of pedals. CBS did not acknowledge the test results of involved government agencies, but did acknowledge the similar results of another study.
Good luck, Tesla.

Sunday, November 17, 2013

Our Punishment-Oriented Society: Can We Change?

I spent five weeks in Europe this fall and another week in New York City, and during that time I was able to see a number of cultures and find the groove, if you will, of their societies. You'd think you couldn't learn much about a society by whirling through, say Vienna, for three days, visiting museums, palaces, marketplaces, and sitting in cafes, but if you take the time to chat with the Muslim woman that works the bakery, or the entrepreneur with a new cafe in the Jewish Quarter, or the architect who rented you the room during your stay, and so on, you can get a pretty good idea of the way the Viennese Austrians do it and why. And so it was with the dozen or so countries I visited.

To say that, by and large, European countries manage their populations far better than we do here in the U.S. is an understatement to say the least. But what would you expect from me, an avowed progressive for whom socialism is not a dirty word?

Having said that, what caught my attention this morning was an article my wife, a preschool director and teacher, discovered in the New York Times, entitled "Schools That Separate the Child From the Trauma." What was contained in it was so profound -- and from my own experience as an educator, it rang so true -- that I immediately leapt beyond it to the implications for our greater society. First, consider this:
Recently, I reported on the damaging effects that prolonged stress can have on young children who lack adequate protection from adults. Over the past 15 years, researchers have learned that highly stressful — and potentially traumatic — childhood experiences are more prevalent than previously understood. Now scientists are shedding light on the mechanisms by which they change the brain and body. These insights have far-reaching implications for schools, where it’s still standard practice to punish children for misbehavior that they often do not know how to control. This is comparable to punishing a child for having a seizure; it adds to the suffering and makes matters worse.
Thankfully, some places are getting smarter. “The hot spots in education are Massachusetts and Washington State,” explains Jane Stevens, a health and science journalist who edits ACES Too High, an excellent website containing a wealth of information about “adverse childhood experiences” (ACEs) and the effects of stress and trauma on children. “Educators understand that the behavior of children who act out is not willful or defiant, but is in fact a normal response to toxic stress. And the way to help children is to create an environment in which they feel safe and can build resilience.”

This is not a small issue in education. A great many students come to school with emotional and behavioral difficulties that pose serious barriers to their learning. In a study (pdf) of 2,100 elementary students in 10 schools in Spokane, Wash., for example, researchers from Washington State University found that more than 20 percent had two or more ACEs (experiences that include having been homeless, witnessing domestic violence or having a parent who uses drugs or is incarcerated). Compared with children with no known stresses, these kids are two to four times more likely to have problems with attendance, behavior, academics and health. As the number of ACEs increase, the students fare considerably worse on all counts.
“When kids have undergone a lot of adversity, it changes how they respond to people and challenges in their environment, including very simple things that we might not think about — like how many transitions you ask them to do before lunch,” explains Chris Blodgett, a clinical psychologist who directs the CLEAR Trauma Center at Washington State University(pdf). “For traumatized people, changes are encoded largely as danger.”
When a child violates rules or expectations, the standard response is to try to reason with the child or use punishment, he added. “What the science tells us about how stressed brains react to change, loss or threat is that children will often violate rules because they feel profoundly out of control. It’s a survival reaction and it may actually be intended to control the situation.”
The lessons learned here are clear and recommend strongly that we reform the way we deal with the behavioral issues of our most at-risk children. The implications for our greater society are profound indeed, which led me to think about key failures in our culture and compare and contrast them with what I've seen in both Europe and Japan recently and much earlier when I lived in the Netherlands and Japan.

Those societies are much less violent, incarcerate fewer citizens, have superior health outcomes for much less expenditures while having extremely vibrant economies. Americans should wonder why.

It's illuminating to view how we choose to "try to reason with the child or use punishment" when dealing with behavioral issues. And further on in the article I was struck by this passage:

One big thing is to help children become aware of their bodies, said Emily Cooley, a special-education teacher who works with Powers at his new position as principal of the Mary E. Baker Elementary School in Brockton. “One of my students has three pictures on his desk: a mail box, a snack and a bean bag chair. If this boy is not feeling in his body that he can be in class, he knows he can pick up one of the pictures and go get my mail in the office, get a crunchy snack, or take a break in the bean bag chair.” (Bean bag chairs and bubbles seem to be particularly helpful to young kids.)
“It’s not to avoid tasks,” she added. “It’s so he can calm himself and be here physically and mentally — so we can work on the academics. Little things like this can really have a big impact on children.” [emphasis mine]
 The point I draw from this is the parallel between "spare the rod, spoil the child" and the conservative/libertarian notion of what welfare does to people, as Paul Ryan so tellingly explained when he said, "...we don't want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives."

From Ryan's point of view, there is virtue in our punishment society. For conservatives, especially religious ones, it's a question of character. To let the child who misbehaves off the hook is to "spoil the child." To let people who lead stress-filled lives mired in poverty off the hook with food stamps, WIC, housing and home-heating credits, and unemployment insurance is to "lull able-bodied people into lives of dependency and complacency."

Obviously, Paul Ryan didn't grow up in the Bedford-Stuyvesant neighborhood of Brooklyn, or east Oakland, California. He has no idea of the stress caused by poverty, just as many Americans can't imagine how these and other realities in the lives of children leave them at risk of being unreachable without special accommodations.

In my view, we turn our society into prisoner factories, allowing children who grow up in the stress of poverty and crime to end up under-educated, with little to no opportunity, and thus turning to a life of crime that feeds our prison system. Yet have we made an effort to offer preschool nationwide? No. Do we offer, as a right of citizenship, universal access to healthcare? No. Do we allow, according to the 2010 Census, 23 percent of American children to suffer from food insecurity? Yes. Have we allowed college tuition to rise to levels that place a college education out of reach for an increasing segment of our society? Yes. Do we instead declare this to be a character issue in which those who are born into or end up in poverty deserve their fate? Yes, as our society as a whole has done so far, with conservatives and libertarians in the lead.

How might our society do things differently? Look to the social democracies of Europe and East Asia for answers. These societies, with their universal preschool, maternity/paternity support, universal healthcare, and social safety nets, have low crime and general healthy, productive populations with stable economies. Is this an accident? No.

If there is a place to start, it would be with our children. Establish universal preschool and at all levels adopt teaching and behavior methods reflected in the NYT article quoted above. Eliminate malnutrition, especially among our our children. Good, stable, successful societies are no accident, nor are dysfunctional, failing ones. It's time to make better choices.

Remember this example of how tea partiers view what to do with the unfortunates among us?

Or what conventional conservatives think of those who end up in the "hammock" of welfare:

Finally, let's look at what the budget chief of the Republican Party thinks about his country:

I've no choice but to parse that statement because of how almost comically wrongheaded it is. First, uncomically, Ryan frames his whole statement with "The point is we are reaching a fiscal tipping point, the moral tipping point is even worse." Since he goes on to talk about takers versus makers, the only conclusion one can draw is that makers are moral and takers are immoral.

Then, he says that "We can become a society in which the net majority are takers not makers." What the hell is a "net majority?" That implies that the group of people, American society, is not a whole but a net amount. Of what? The only conclusion I can come to is that Ryan throws the "net" in there to sound wonkish. Jeez.

So, he establishes a fiscal and moral tipping point, which he considers one and the same: Certain fiscal choices must, then, be immoral. Which fiscal choices are we making or about to make that are immoral? Good question. How does he answer it?

What's this "net majority" of "takers?"  "Seventy percent of Americans get back in dollar value more than they pay in taxes." Ah ha! The takers! Are these the conservatives or the liberals? You'd think because he's a conservative he'd be talking about the liberals, since the moral divide by his rhetoric would dictate that the moral people would be conservatives who aspire to be makers and the liberals who either aspire to be takers or to be the enablers of the takers.

In the course of the next few sentences, unfortunately for Ryan, he gets it all jumbled up:

"The good news is that survey after survey, poll after poll, still show that we're a center-right country, seventy-thirty."

"Seventy percent of Americans want the American Dream."

"Only thirty percent want the welfare state."

For a policy wonk (those who've looked at his budget proposals, none of which has ever added up, know better), his math really, really doesn't work. And if his math doesn't work, then what is he really trying to say? Here's his math:

Seventy percent of Americans are takers. Thirty-seventy is the makers-versus-takers split.

Our center-right country is seventy-thirty, with seventy percent believing in the American Dream, by which he must mean the responsible, hardworking conservatives.

By Paul Ryan's math, however, forty percent of the conservatives are takers, which surpasses the thirty percent of takers that are liberal. Who knew?? Certainly not Paul Ryan.

Here's Paul Ryan's real math: When you combine his "hammock" statement with his "moral tipping point" statement it adds up to this: It's the poor's fault that the rest of us can't have more shiny new objects, and it's the liberals' fault that forty percent of conservatives are takers.

What is he really talking about? What are these shiny new objects? What are Ron Paul, Mitt Romney, Paul Ryan, any conservative or libertarian for that matter, talking about? Certainly not universal preschool, or universal healthcare, or unfettered access to higher education. That's for the makers, not the takers.