Sunday Music: My Grown Up Christmas List

My Grown Up Christmas List

The Cost of War

This video will just make you shake your head in disgust or make you angry at the stupidity of unnecessary armed conflict.

Toy Soldiers

I originally entitled this post "Outrage of the Decade." I have since thought that the current title is more appropriate for the story.

Wounded Soldier: Military Wants Part Of Bonus Back:

PITTSBURGH (KDKA) ―

The U.S. Military is demanding that thousands of wounded service personnel give back signing bonuses because they are unable to serve out their commitments.

To get people to sign up, the military gives enlistment bonuses up to $30,000 in some cases.

Now men and women who have lost arms, legs, eyesight, hearing and can no longer serve are being ordered to pay some of that money back.

One of them is Jordan Fox, a young soldier from the South Hills.

He finds solace in the hundreds of boxes he loads onto a truck in Carnegie. In each box is a care package that will be sent to a man or woman serving in Iraq. It was in his name Operation Pittsburgh Pride was started.

Fox was seriously injured when a roadside bomb blew up his vehicle. He was knocked unconscious. His back was injured and lost all vision in his right eye.

A few months later Fox was sent home. His injuries prohibited him from fulfilling three months of his commitment. A few days ago, he received a letter from the military demanding nearly $3,000 of his signing bonus back.

"I tried to do my best and serve my country. I was unfortunately hurt in the process. Now they're telling me they want their money back," he explained.

It's a slap for Fox's mother, Susan Wardezak, who met with President Bush in Pittsburgh last May. He thanked her for starting Operation Pittsburgh Pride which has sent approximately 4,000 care packages.

He then sent her a letter expressing his concern over her son's injuries, so she cannot understand the U.S. Government's apparent lack of concern over injuries to countless U.S. Soldiers and demands that they return their bonuses.

If the Pentagon wants their money back, then give the soldiers their original limbs back. And their mental health back. And the time they lost with their families back.

I guess this is how the Bush Administration interprets "Supporting the Troops."

We're All Subprime Now

Today, blogger Tanta, who writes for Calculated Risk, today wrote about predatory practices in the mortgage industry in HMDA Data on High Priced Loans. A clip:

This whole dynamic may be hard for the WSJ and its fellows in the Big Paid Media, so let me explain this very clearly. In 1975, some folks accused lenders of redlining, which means not granting credit at all to some people. The lenders said they weren't doing that. Congress passed HMDA, and then there was actual data about geographic lending patterns to analyze instead of anecdotes. Once we got some HMDA data under our belts, the Community Reinvestment Act came into being (in 1977) precisely because it was clear that redlining had been going on. CRA in essence forces lenders to show that they are willing to make loans in neighborhoods in which they are willing to take deposits (i.e., those deposits need to be "reinvested" in the neighborhood they came from in the form of loans, not just mortgage loans, to that neighborhood. You can't extract deposits from poor people and use them exclusively to fund loans to rich people.) CRA does not mandate price levels, or even address the question of price levels.

You may be surprised to hear this, but over time accusations of discriminatory lending practices did not go away. In a number of cases, "mystery shopper" tests were performed, in which a white applicant and a black applicant each applied for credit at the same instutition with identical credentials (employment, income, credit history, loan terms), and the results showed that black applicants were more likely to be turned down. This cast some doubt on the lenders' claims that loan rates in minority neighborhoods were a function of the lower credit quality of those borrowers. That became a hypothesis in need of some testing, you see, not an accepted explanation.

So the 1989 revision to HMDA forced collection of demographic data, for the precise purpose of testing the assumption that poor and minority people are just always bad credit risks. This resulted, as you might expect, in conjunction with CRA and other fair lending laws, in much higher rates of home mortgage lending in those areas that were once redlined.

But were these poor and minority people happy, at last? Why no, they weren't. Turns out, anecdotal evidence began to emerge that while these good people were finally getting loans, they were getting them at much higher interest rates than higher-income folks and whites generally got, and that this could not be accounted for by the difference in creditworthiness of the borrowers or the quality of the collateral (the latter proxied by census tract).

...

The bottom line is, as [Calculated Risk] notes, that "high-risk" lending was everywhere in the boom years. Of course there is a desire to collapse it all into the easy category of "subprime." And there has for a long time been a lot of political pressure to keep the association of "subprime" and "urban minorities" in place, because it has functioned as a good excuse for the subprime lenders (they "help" the poor and minorities, remember?). My view is that a whole lot of parties are very interested in maintaining rather than seriously analyzing a lot of faulty assumptions about risk, rates, and borrower credit characteristics. If this ain't "just a subprime problem," then an entire debt-based economy in which even the middle and upper middle class cannot afford homes given [real estate] inflation and wage stagnation is suddenly in question. The last thing certain vested interests want to hear is that, basically, "we are all subprime now."

My favorite comments:

At least then, when they say the problem is contained to subprime, they'd be correct.
daveNYC | 10.11.07 - 10:47 am |


What about the revelations coming forward that a lot of these sub-prime loans were to people who would/could /should have qualified for prime loans. My gut feeling is that the lending industry realized that there was more money to be had in the sub-prime market and rationalized the use of the product by telling borrowers your can always refinance. So while I can see the possibility that we are all becoming sub-prime candidates because of high LTV due to lack of down payments or low rates to buy the MacMansion, I cant help but feel it was the lenders looking to sack the borrower for higher fees and on top of that being bale to book unrealized profits from the fully adjusted loans. Now there is a racket!!
formerly known as... | 10.11.07 - 11:41 am | #


Down where the rubber met the road, '04-06 subprime was a broker-dominated and refinance-oriented business. Those brokers tend to chase after big fish. Which would you rather do? ONE loan for a cardiologist with a bunch of lates thanks to the ex-wife or TEN deals involving city bus drivers with gambling problems, immigrant cleaning ladies with thin credit files, single moms with three jobs, dancers with cash wages and voracious drug habits? - oh, wait, that's alt-a - anyhow, you get the gist. It's not that subprime was ever AIMED at low-income - quite the contrary - it's just that median income of those with impaired credit happens to lower.
Shnaps Parlor

The last paragraph raises an interesting point. We have been told that FICO scores are not related to race, sex or economic status. However, it is also true that women, minorities and lower-income individuals not only have less economic power as a group, but also are at a greater risk that the above examples and medical problems/debt are more likely to adversely affect their ability to pay their bills. Hence, lower credit scores.

The end result is that it contributes to the disparity between the wealthiest (who have the highest credit scores, due to the ability to weather unexpected expenses, and therefore who borrow at lower interest rates), and the poor (whose credit scores crash after one adverse event and have to borrow at higher interest rates). (BTW: I have been meaning to write about how banks charge fees on small balances that can quickly sap wealth from poor patrons.)

The answer is to provide social insurance on some costs (medical debt and education) and living wages that allow for even the poorest to save for the future. There are some costs which cannot be defrayed: rent, electricity and natural gas, food, transportation and personal hygiene. Even the lowest wage should be enough to cover these costs and provide enough to save for the future.

Rising Inequality

I found a statement made by Alan Greenspan recently quite disturbing. Greenspan Book Criticizes Bush And Republicans:

Greenspan worries that rising income inequality could undo “the cultural ties that bind our society” and even lead to “large-scale violence.”

His solution to remedy this situation is “not higher taxes on the rich but improved education”, which, he claims, “can be helped by paying math teachers more.”

It might help, though, if rich people paid at least comparable rates as working class people do.

Myanmar's Atrocities Exposed

Back in February, I wrote about human rights abuses against the Christian minority in Myanmar in my post Myanmar: The Other Killing Field. Now, according to reports on CNN, it appears that abuses are happening even to Buddhist monks.

Thankfully, Anderson Cooper with his 360° program has been bringing these activities to light (and CNN in general). He also has been reporting about abuses in this country by auto insurance companies against their insureds. This isn't the first time that Anderson Cooper has reported about hardball practices by auto insurance practices.

Thank you, Mr. Cooper, for bringing these issues to light.

The Shock Doctrine

Thanks to Charles Smith at Of Two Minds for bringing this to my attention.

The Shock Doctrine is a new short film by Alfonso Cuarón (the Director of Children of Men) based on the new book by Naomi Klein regarding how leaders in power use shock techniques to control entire populations.

"Only a crisis -- real or perceived -- produces real change." -- Milton Friedman

As the short film says: "Information is shock resistance. Arm yourself."

A Christian Argument Against Racism

You would think that in our day and age that such a statement would not have to be made.

The simplest explanation to understanding the Brotherhood of Mankind as a seminal Christian concept would be found in the most quoted verse in the Gospels:

John 3:16

For God loved the world so much that He gave his only Son so that anyone who believes in him shall not perish but have eternal life.

The Living Bible translation.

There are two words I want to focus on: world (kosmos) and anyone. These words indicated that the message presented by Jesus was meant to be universal. The fact that the effect of these words were not incorporated into Christian practice for much of its history does not vitiate the plain original meaning of what he said.

The Conversion of the Ethiopian Eunuch (Acts 8:26-40)

The fact that an Ethiopian Eunuch was one of the first to be converted tells me that people of an African heritage were never supposed to be treated as a lesser group. The concept of the Love of God was pointedly universal in its application. As Christians, the followers of Christ's teaching were to be an example for the whole world of this simple message.

I am sure there are many more examples that could be used, but these two stuck out at me as glaring examples of how Christians should never support any kind of discrimination or bigotry based on race, ethnicity or nationality (as well as other forms of discrimination and prejudice which can be found in the broader message of love and obedience to Christ's message).

In a day and age when certain political figures and groups try to divide us based on our racial, ethnic or national heritages, it is important for Christians in particular to reject any such attempts and to work against such divisive actions.

National Debt Madness

Paulson Asks Congress to Lift Debt Limit

WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday the government will hit the current debt ceiling on Oct. 1.

He sought quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.

The limit is $8.965 trillion. Unless Congress votes to raise it, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due.

Actually having tax rates reflect what government services we have decided we need would be such a terrible thing, don't you know. According to the neoconservatives, borrowing and spending (and paying interest on the resulting debt) is far preferable to, you know, actually paying for it responsibly. Now if we could just get the Democrats to get a spine and stand up to the fiscally irresponsible neoconservatives, maybe we could actually have real discussion on what this country can really afford.

The real reason the neoconservative Republicans want to keep raising the national debt is to eliminate social spending through the Starve the Beast plan.

It really comes down to a values question of "guns vs. butter." I am curious if anyone has ever studied the return on investment of foreign entanglements where we try to acquire natural resources through military engagement vs. taking that same money and plowing it into America's infrastructure and alleviation of social ills. I think that we promote too much conflict in this world. There is too much spending on "guns" and not enough on "butter."

Favoritism for the Wealthy

From Jonathan Chait at the TPM Book Club:

Class War and the Big Con

Some of the debate in the blogs last week focused on whether, or to what degree, leading Republicans actually believe the arguments they make on behalf of tax cuts, such as the common claim (made by leading Republicans everywhere, starting with President Bush) that tax cuts have caused revenues to grow. I think many of them do believe it. But the extent to which they believe it is fairly beside the point. The wealthy interests who favor tax cuts, and other pro-rich items, aren’t motivated by supply-side ideology. While they may believe that tax cuts help the economy, their deeper belief is that every dollar they have, including the dollars they inherited, is a reflection of their success and a measure of their virtue. So, in this sense, supply-side ideology simply plays the same role that Social Darwinism did a century ago and that economic orthodoxy did seventy years ago.

Or maybe they are just different justifications for the same mindset. I have argued before that we are starting to see a return of Social Darwinism as an accepted idea. I'm not convinced it has died out. I suspect it is more that Social Darwinism is being downplayed to some extent in favor of a new repackaged argument that rich=moral. Social Darwinism has at its core a belief that those who have attained wealth and status have done so due to their moral or genetic superiority.

It has even taken root in Christianity. If you look at the "Gospel of Wealth" being preached in conservative churches, you can see what I mean. I have seen people in conservative churches told that they are just not rich because they are not right with God.

I don't want to get too far off of the main subject, but certainly wealth does not equate in any way with moral superiority. "All great wealth starts with a crime" as we lawyers would say. In the Christian context, there is this from the Epistle of James:

2:1 My brethren, do not hold your faith in our Lord Jesus Christ, the Lord of glory, with partiality.
2:2 For if there comes into your assembly a man with a gold ring, in fine apparel, and there also comes in a poor man in shabby clothing,
2:3 And you pay special attention to him who wears the fine clothing, and say to him, Sit here in a good place; and say to the poor man, Stand there, or sit here beside my footstool:
2:4 Have you not then discriminated among yourselves, and become judges with evil thoughts?
2:5 Listen, my beloved brethren, Has not God chosen the poor of this world to be rich in faith, and heirs of the kingdom which he has promised to those who love him?
2:6 But you have despised the poor. Is it not the rich who oppress you, and drag you into court?
2:7 Is it not they who blaspheme the noble name by which you have been called?
2:8 If you fulfill the royal law, according to the scripture, You shall love your neighbour as yourself, you do well,
2:9 But if you show partiality, you commit sin, and are convicted by the law as transgressors.
2:10 For whoever shall keep the whole law, and yet stumble at one point, is guilty of breaking it all.

I think too many Christian leaders are skipping over these type of texts in both the Gospels and the other writings in the New Testament.

Anyway, back to the main subject: I found this quote at The New Republic's excerpt from Chait's book.

From 1947 to 1973, the U.S. economy grew at a rate of nearly 4 percent a year--a massive boom, fueling rapid growth in living standards across the board. During most of that period, from 1947 until 1964, the highest tax rate hovered around 91 percent. For the rest of the time, it was still a hefty 70 percent. Yet the economy flourished anyway. None of this is to say that those high tax rates caused the postwar boom. On the contrary, the economy probably expanded despite, rather than because of, those high rates. Almost no contemporary economist would endorse jacking up rates that high again. But the point is that, whatever negative effect such high tax rates have, it's relatively minor.

First, what needs to pointed out was that this referred, I think, to income tax rates. But the super-rich make much of their income from investments (i.e. passive income). Even if these were tax rates on capital gains, this would be taxation 1) only on the highest earners; and 2) on income not drawn from labor. The principle that we once had is that we want to encourage people to produce and contribute to the betterment of society and the economy. We don't want "trust fund babies" who don't have to work because their talents and abilities will have a tendency to go wasted. And as successive generations are born into wealth, they will have less appreciation for the benefits that their ancestor's labors brought to the betterment of their community.

Kids that come from wealthy homes already have lots of assets to draw from. Taking from the wealthy to help provide an equal access in the areas of health care and education -- just to name two services -- is only fair...especially given how beneficial those services are for the advancement of the economy and social well-being. There is a certain point where having too much wealth has a detrimental effect on productivity and social progress (political conservatives certainly never talk about this aspect of the acquisition of wealth). Proper use of the tax code can encourage talented and capable people to keep producing and innovating precisely because they want more.

Now, I'll grant -- for the sake of argument -- Arthur Laffer's central argument that there is a point where tax rates become so confiscatory that tax revenues will start to drop due to the negative effects it has on investment and labor; but we're certainly not there now. Furthermore, deficit spending (read: national government credit card) will crimp investment just as much; as the national debt (and its concomitant interest payments) is simply deferred taxation. Having the federal government file bankruptcy is just unthinkable. And lack of access to health care will lead to less productivity due to untreated illnesses or injuries (and, specifically, illnesses can sometimes spread due to their non-treatment -- leading to further drops in productivity). So exactly how do we benefit from denying access to health care based on ability to pay again?

To sum up, higher tax rates (than what we have currently) and implemented in the right places, can actually have a beneficial effect for society.

Moral Hazard Hypocrisy

Conservatives love to argue against national healthcare on moral hazard grounds; but somehow we taxpayers and the Federal Reserve are supposed supposed to bail out educated, smart, wealthy and powerful people when they take they know -- or should know -- are excessively risky financial instruments.

Here is a snippet from Robert Reich's excellent post:

When it comes to risky behavior in the market, America has a double standard. We’re told that economic risk-taking as the key to entrepreneurial success, but when big entrepreneurs take big risks that fail it’s amazing how often they get bailed out. Indeed, the history of modern American business is littered with federal bailouts, loan guarantees, and no-questions-asked reorganizations. Some are well known, such as the Chrylser bailout of 1979, the savings and loan bailout of 1989, and the airline bailout of 2001. Most occur in the relative dark, such as the 1998 bailout of giant hedge fund Long-Term Capital Management (courtesy of former Fed chair Alan Greenspan), the not infrequent bailouts of under-funded corporate pension plans by the government’s Pension Benefit Guarantee Corporation, price supports for big agribusinesses facing market downturns, or the current bailout of Wall Street being engineered by Ben Bernanke’s Fed. Behind every one of these bailouts are CEOs or financial executives who were rescued from their bad bets.

Mr. Reich has a new book out called Supercapitalism.

Countrywide

Hat tip to Calculated Risk

Read this story from the Chicago Tribune and see if you don't agree that that there is some serious need of judicial and congressional intervention to prevent these types of abuses. Here is part of it:

PITTSBURGH - For Donna and Steve Love, the plan seemed perfect.

Priced out of the Boston-area housing market, where 2-bedroom homes can cost about $500,000, the working-class couple thought it was time to head to a more affordable market.

They chose Pittsburgh. They liked the city, thought they could get jobs there and were sure they could afford a home without having to win the lottery.

After finding their home -- a $59,000, 3-bedroom, brick row house near the city's downtown that they paid for with a subprime loan -- they moved in June of 2006 and tried to settle into their new life.

But within a year, they were facing foreclosure, their relationship was strained to the near-breaking point and their emotions were in tatters as they tried to hold onto their home.

"Sometimes I feel like I have post-traumatic stress disorder," said Donna Love, 46.

Their story has been repeated thousands of times this year alone, as the subprime mortgage market, made up of loans to consumers with a higher default risk, continues its dramatic collapse.

...

The Loves qualified as subprime candidates because of their income level and because Steve Love, 30, had so little prior credit history.

"I believe in paying in cash," said Steve, who worked as a night manager at a CVS pharmacy near Boston, a job he expected to replicate by transferring to a Pittsburgh CVS store.

...

In March 2006, they reached what they thought were final terms for the loan: $5,000 down, a 7.75 percent interest rate, fixed for two years and then adjustable for the remaining 28 years, with a cap of 14.75 percent.

The $429 mortgage payments would be higher than they expected, but still within their budget -- equal to less than one week of Steve's salary with CVS. Plus, it was still cheaper than their $700-a-month rent in a suburb of Boston.

Then, on April 20, two weeks before the May 3 closing date, they said they got mortgage documents in the mail with a letter that said they should sign all the papers and return them as soon as possible.

But they quickly noticed the final contract listed a higher interest rate of 12.125 percent, with a cap of 19.125 percent. That pushed the monthly mortgage payments up more than $200 to $692 a month.

"We both said, 'Oh my God!' and started reading page by page," recalled Steve Love.

They called Countrywide and talked to several representatives who told them "that the fluctuating market went up and investors had asked for a higher percentage rate on the loans, and this was the best they could do," he said.

Other problems surface

"We weren't sure if we would ever find another property we'd agree on. We'd already rented our apartment. We'd resigned our jobs. We were afraid of losing our $1,000 deposit [on the home]. There was just a huge fear factor there," Donna Love said.

The couple decided to go ahead with the loan, figuring they could refinance in six months.

The lenders do this because of these people's commitments, they are without adequate bargaining power. This problem is playing out (pardon the pun) countrywide. We need to get some serious oversight and remedies and quick.

Bankruptcy Dichotomies

Elizabeth Warren has written about the dichotomy (i.e. hypocrisy) of protections for corporations and large debtors in bankruptcy with the protections (or lack thereof) for consumer debtors in the same situation in her post The Onion Plan.

Bankruptcy law is the final arbiter of debtor-creditor rights, but here's an interesting asymmetry in the law: If a corporation can no longer afford the mortgage on its factory, it has powerful tools to rewrite the mortgage in bankruptcy. But if a homeowner is in exactly the same trouble following an interest rate hike, those same tools are unavailable.

More details: A company that cannot pay its mortgage can declare Chapter 11 and do two things: 1) separate the mortgage into its secured and unsecured portions (called bifurcation), and 2) pay the secured portion at current market rates under a new mortgage and discharge the unsecured portion. So, for example, a $1.2 million mortgage at 12% on a factory worth only $1 million will be bifurcated into a $1 million secured mortgage at, say, 7% interest, and the remaining $.2 million can be discharged. The economic insight behind permitting this move is that the mortgage company will get 100% of the value of the property paid over time, which is a LOT better than the much lower amount it would get in foreclosure. The second insight is that this is precisely the risk the lender took: that the property would decline in value and the debtor couldn't pay. The Chapter 11 bankruptcy forces the lender to revalue the mortgage to the actual market value of the collateral.

But notice: If a homeowner can no longer afford her mortgage, the homeowner can declare bankruptcy and get rid of the credit card debt and doctor bills, but she cannot force the lender to write down the mortgage to the value of the home or to accept payments at the current market rate. All the homeowner gets is the right to make up past-due payments--in full, with interest. So, for example, a $120,000 mortgage at 12% on a home worth only $100,000 must be paid in full at 12%. In other words, homeowners get a lot less protection in bankruptcy than do businesses.

There are a lot of "asymmetries" in Chapter 11 bankruptcies and other chapters of the bankruptcy code. I have written about it before in regards to "retention bonuses" paid to corporate executives immediately before bankruptcy and consumer debtors who attempt to give assets to their relatives within a year of filing bankruptcy. These are but two examples of how the bankruptcy code works for the benefit of the wealthy in inconsistent ways to the detriment of the poor and middle-class. It shows in a glaring way why we need to change government regulation to bring more consistentcy and equality in the law's treatment of persons with disparities in income and wealth. In theory, that is always supposed to be true for persons who come before the Court. Obviously it's not.

The End of the Innocence

These are becoming turbulent times. We are constantly at war. And it's a war financed not by shared sacrifice, but by a massive debt that will be heaped upon an American populace already burdened by personal and consumer debt (at outrageous interest rates and fees). Americans feel like they are running faster but falling farther behind because of all their debt.

Things that used to be staples of the American dream are becoming out of reach. The college degree -- even a graduate degree -- no longer guarantees financial success. Schooling that used to be paid through tax dollars and scholarships have been replaced by student loans that are not dischargeable in bankruptcy if things go horribly wrong. The student loan payments become a house -- or at least a car -- payment. Such debt payments starting out in life increase the risk of failure. As I have said before, it creates a barrier to entry to American college graduates. Pensions that were part of the benefits promised by businesses to the workers can be paid to executives in bankruptcy proceedings. Health insurance that used to have some semblance of protection is now a sieve that helps almost no one, as Michael Moore's new movie SiCKO has shown.

There is a general feeling of malaise in the country. Everything is just out of whack. Our leaders, who have held themselves out to be paragons of virtue are turning out to be boors of vice. They often talk about "values," but they live lives that are the antithesis of those values. They oppose taxation to support programs to help their fellow man at their weakest, in favor of "private charities" which they do not support with their own wealth.

Frankly, I am tired of the hypocrisy. It is the very message that Jesus tried to convey in the Good Samaritan story. The Samaritans were considered a heretical group by other Jews, so by using a Samaritan for the parable, Jesus conveyed the idea that the most ungodly people could be more righteous than those who proclaimed themselves pious. Do you ever get the idea that God is trying to teach us this very same lesson all over again?

It makes me think of a song from the 1980s: Don Henley's The End of the Innocence. Some of the lines -- which I have bolded below -- have particular significance for us today. The song, originally written during the Reagan Administration, has come full circle -- although under somewhat different circumstances.

Don Henley - The End of the Innocence


Lyrics:

Remember when the days were long
And rolled beneath a deep blue sky
Didn't have a care in the world
With mommy and daddy standin' by
But "happily ever after" fails
And we've been poisoned by these fairy tales
The lawyers dwell on small details
Since daddy had to fly

But I know a place where we can go
That's still untouched by men
We'll sit and watch the clouds roll by
And the tall grass wave in the wind
You can lay your head back on the ground
And let your hair fall all around me
Offer up your best defense
But this is the end
This is the end of the innocence

O' beautiful, for spacious skies
But now those skies are threatening
They're beating plowshares into swords
For this tired old man that we elected king
Armchair warriors often fail
And we've been poisoned by these fairy tales
The lawyers clean up all details
Since daddy had to lie

But I know a place where we can go
And wash away this sin
We'll sit and watch the clouds roll by
And the tall grass wave in the wind
Just lay your head back on the ground
And let your hair spill all around me
Offer up your best defense
But this is the end
This is the end of the innocence

Who knows how long this will last
Now we've come so far, so fast
But, somewhere back there in the dust
That same small town in each of us
I need to remember this
So baby give me just one kiss
And let me take a long last look
Before we say goodbye

Just lay your head back on the ground
And let your hair fall all around me
Offer up your best defense
But this is the end
This is the end of the innocence

Intergenerational Poverty

The Organization for Economic Cooperation and Development recently conducted a study on the causes of intergenerational poverty. The study found that socioeconomic mobility (i.e. the ability to move up from the lower classes to the middle or even upper classes) is lower in the United States than many other Western Democratic countries including Denmark, Austria, Norway, Finland, Canada, Sweden, Germany, Spain and France.

I mentioned a similar report in a blog entry about this before.

Here are a couple of the conclusions from the report:

The level of wealth and education of parents are two crucial determinants of children’s future life-chances. For example, the evidence suggests that parental characteristics are reflected in educational outcomes, and that greater public intervention in the accumulation of human capital might reduce intergenerational transmission of advantage and disadvantage. Moreover, parents who are capital constrained – facing tighter liquidity constrains – cannot invest as much as rich parents in education although these constraints seem less important than other family background characteristics. The effects of such liquidity constraints are also likely to vary considerably accordingly to the ability of the child: they are likely to be tighter for low-income parents of high-ability children.

Growing up in low-income households seems to affect heavily children's future life-chances. In fact, parental poverty is related to lower levels of good health, nutrition and housing, all of which affect child development and future incomes. Furthermore, the home and social environment is where beliefs, attitudes and values are shaped (for example welfare dependency of parents is correlated with future
welfare receipt of children, even after adjusting for income, in part reflecting the role-model that parents provide). High parental income is correlated with a better quality of education because good schools are generally in good neighbourhoods, where in addition, networks useful in later life may be more present, and crime is less prevalent. It is further correlated with transmission of verbal ability, and non-cognitive skills, including self-discipline, which improve life chances (Heckman and Carneiro, 2003). Reducing poverty, and especially childhood poverty, might therefore contribute to reduce intergenerational inequality.

The language is highly technical; but basically it is saying that where a child starts out in life based on his parent's income and educational status has a great correlation to where they will end up. If governments would tax the wealthy more, it would go a long way to alleviating the problem of poor parents who don't have the spending power to get their children the best possible education.

The second paragraph says that children who live in better, lower-crime neighborhoods not only benefit from a better quality education, but also benefit from the social and business contacts who will be able to give them better job and entrepreneurial opportunities. Furthermore, going to those better schools improves language skills, interpersonal relationship skills (among them dispute resolution skills) and the principles of delayed gratification and other self-control skills that will help them avoid trouble. Therefore reducing poverty can lead to greater opportunities because it would alleviate the problems associated with stress brought on by fear of crime, which impedes learning.

There. Clear as mud?

I remember many years ago attending a short seminar put on by a local non-profit group that rated a child's chances of success based on some 30+ factors called "assets." The more assets a child had, the greater their chance of success in life. I can't remember if poverty was one of the factors. However, this study indicates that until we alleviate the problems associated with inequality in society, it needs to be a factor in evaluating a child's opportunity.

Real Class Envy

A new blog has just been started by a woman who left a comment to my post Seven Years of Bad Luck. Her blog is called Classism, Unearned Privilege and the Ruling Class.

Here is a quote from her first entry The Real Class Envy:

... Taking money from those who worked for it to give to others by using the strong arm of government is downright Communist. That's just un-American, right?

Well, not exactly. On the contrary, getting to skate while making others pick up the tab is indeed very American. You see, there was very little outcry back in the 1980's -- the "greed is good" era -- over wealthy owners of corporations who got much bigger hand-outs than any welfare recipient ever got. Wealthy owners of corporations and venture capitalist firms benefited immensely from a little-known IRS loophole that enabled them to use leveraged debt (other people's money) to buy and then liquidate other companies while the tax bill for the profits from such transactions got picked up and paid for by the tax-paying middle class: Leveraged corporate buy-outs, a nice "welfare" hand-out for the rich. But very few people noticed that fig newton folly, much less got angry about it. Isn't taking money from the supporting classes and giving it to the leisured class taking from the producers and giving to the slackers? Why isn't that Communist and un-American? Do I hear the silence of apathy ... or the white noise of hypocrisy?

And what became of the skilled, capable and educated middle-management professionals in such acquired companies? They were downsized out of their jobs. If they fell into poverty because they were unable to get re-employed elsewhere due to age discrimination despite their most ambitious efforts and Pollyanna-ist attitudes, it was all their own fault, according to the wealthy. These folks who did "all the right things" and got educations simply "should have planned better" according to the "haves" and "have-mores." It was the fault of the unemployed for not being educated enough, not having "marketable skills" in order to compete, and not having positive attitudes, thus spoke the ruling class.

Corporate welfare far exceeded any miserly welfare entitlement begrudgingly given to America's least privileged. Apparently, getting a "free ride" and a hand-out for [doing and producing nothing] of any tangible value for society is perfectly acceptable -- when you're rich.

Modern Day Romans

A web page was sent to me via e-mail. I have thought for some time that we seem to have become modern Romans. The founding fathers of our country tried to set up a system of government that would prevent a repeat of history, but maybe some things just cannot be prevented. Maybe human nature is just too strong.

The web page is called How the Selfish Class Gains Power and Wealth. Here is a quote from that page:

The [Roman] Senators were so wealthy that there was little they could do to squander their wealth; there was also little they could do beyond enjoying it, getting even wealthier by the year, and holding public office. Of course public office also gave them the means and the information necessary to gain even more wealth and to avoid paying most taxes. There was one tax, specifically levied on the senatorial class, which they did not avoid, since it confirmed their class status, but it was insignificant. Public office also gave them the means to take advantage of any government spending when possible. In fact it was the best investment they could make.

Are our contemporary would-be "Senators" at all similar?

In the United States we have a founding myth of the "self-made" man, but social mobility is actually declining rapidly, especially at the highest levels of our society. The top one percent of income earners, and even more, the top one-tenth of one percent of income earners are gaining wealth at a rapid rate, while the bottom 90% of Americans are losing wealth in relative terms. The creation of a senatorial class, that is a wealthy class based on inheritance, connections and the power that goes with it, is progressing rapidly.

Does the existence of a dominant selfish class increase society's wealth? Free market apologists would have you think so, but if you look at the example of the Senators in the Fifth Century, the answer would have to be a resounding "No!"

The Senators couldn't help but be wealthy by the accidents of their births. Unless they were intentionally improvident they couldn’t help but become wealthier, and yet their wealth did subtract from the wealth of society as a whole. How did this work? Wasn't it true that if you did business with a Senator that you would gain wealth and that you in turn would create additional wealth when you did business with others? Wouldn't it also be true that since Senators had large amounts of wealth, their wealth would create little (or large) industries to service them? Didn't that add to total wealth? So goes economic doctrine, but it didn't work that way in the Fifth Century, and it probably doesn't work that way now.

The article is somewhat long, but it sets out the argument well. Here is the main page where you can find links to even more information.

Sunday Music: Woody Guthrie

Sorry about the late posting, but I have not been able to sign into Blogger all day. I don't what it is, but it gets like that sometimes.

This week starting Wednesday there will be a Woody Guthrie Folk Festival in Okemah, Oklahoma, which is Woody Guthrie's birthplace. Okemah is one hour due east of Oklahoma City on I-40. Saturday, July 14 is Woody's birthday. So in honor of his birthday, Arlo Guthrie will be performing at the folk festival (at about 11pm according to the website). Here is a video from YouTube where Arlo, who is Woody Guthrie's son, sings This Land Is Your Land:



And for good measure, here is a link to Arlo's most famous song, Alice's Restaurant, that they play every Thanksgiving here in Oklahoma around noon on one of the rock stations (I think it is 107.7).

I found a video on YouTube where a teacher took video clips from his summer vacation and put them to the song This Land Is Your Land by Woody Guthrie in his original voice. It's a nice application of the song as you see some of America's most famous sites.

This Land Is Your Land


Sunday, July 15, 2007 at 2pm at the Oklahoma City Museum of Art, the movie The Grapes of Wrath will be shown. Guthrie's song Tom Joad was based on the Steinbeck's novel. A movie based on the life of Woody Guthrie, Bound For Glory, will be shown at the Oklahoma City Museum of Art on August 5, 2007 at 2pm.

Reduce Stress, Lose Weight

A new study on mice has led to a theory on why Americans are becoming increasingly obese:

Previous studies have indicated that whereas acute stress can make some people lose weight, chronic stress, such as long-term job insecurity, might cause some to put on pounds.

To explore this, Zukowska and her colleagues subjected mice to chronic stress -- either standing in cold water an hour a day or being caged with a more aggressive alpha mouse for 10 minutes a day -- and then gave them standard feed or a high-fat, high-sugar diet similar to the junk-food fare many consume.

After two weeks, only the mice that were both stressed and fed the junk-food diet gained a significant amount of weight. They accumulated about twice as much fat in their bellies as non-stressed mice that consumed the same diet.

"This tells me it's not just the stress. It's the combination of stress and the high-fat, high-sugary rich diet -- that is the humongous combo. There is some kind of interaction going on," Zukowska said.

Moreover, the stressed-out junk-food eaters put on the worst kind of fat -- deposited around the abdomen and laced with hormones and other chemical signals that promote illness. After three months, the animals became obese and developed the constellation of health problems that obese humans often get -- high blood pressure, early diabetes, high cholesterol -- an increasingly common condition known as metabolic syndrome.

"By treating the mice the way humans are treated, which is introducing a chronic stress from which they cannot escape and introducing this abundance of food, we mimicked what happens in American society," Zukowska said.

I have had a suspicion for a long time that a certain segment of society is vulnerable to obesity due to stress and our fast-food diet (documented in the Morgan Spurlock movie Supersize Me). We have always had fat and skinny people, and I have never believed that you could only pin the obesity problem in America to one cause (eating too much, not exercising enough, etc); genetics plays a part.

Now we have another factor to look at: chronic stress. Americans spend all their time working to pay off debt and buying stuff that they think will make them happy. We take too little time off for vacations to enjoy life (and employers don't offer it). I think that the health problems that Americans suffer from are related to the factors of working too much, being too concerned with the acquisition of material goods, lack of proper medical attention (because of a lack of access to medical care) and an unhealthy sedentary lifestyle (partly fueled by too much stress from overwork).

A group called Take Back Your Time is trying to bring an awareness to this problem. Their website lists some factors:

Millions of Americans are overworked, over-scheduled and just plain stressed out.

* We're putting in longer hours on the job now than we did in the 1950s, despite promises of a coming age of leisure before the year 2000.

* In fact, we're working more than medieval peasants did, and more than the citizens of any other industrial country.

* Mandatory overtime is at near record levels, in spite of a recession.

* On average, we work nearly nine full weeks (350 hours) LONGER per year than our peers in Western Europe do.

* Working Americans average a little over two weeks of vacation per year, while Europeans average five to six weeks. Many of us (including 37% of women earning less than $40,000 per year) get no paid vacation at all.

Contemporary Americans complain of unprecedented levels of busyness in everyday life. They worry about frenetic schedules, hurried children, couples with no time together, families who rarely eat meals together, and an onslaught of "hidden work" from proliferating emails, junk mail, and telemarketing calls.

Michael Moore also touched on this in SiCKO.

The problems that Americans are facing are related to our values. We need to become more concerned with living the good life than acquiring possessions. That will require a complete reorganizing of our business and working priorities.

The bankruptcy epidemic in America can be traced to these two main causes: lack of a taxpayer-financed health care system and a value system that tells us to work to acquire possessions rather than working to enjoy the time we have on this earth. If we can find the will to change our priorities, we can solve both the health and financial problems in this country.

Movie Review: SiCKO

I drove up to Tulsa yesterday because SiCKO is not showing in Oklahoma City until July 6 (and it will only be shown at the AMC 24 theater at Quail Springs Mall according to Michael Moore's website).

Most of the ideas have been shown in clips, but he goes into detail on how much better things are for ordinary working class people in other countries in regards to health care and other benefits that people have in other countries. He even debunks the canard that Canadians want to abolish their Medicare system and the argument that they have to wait weeks to get emergency medical care.

The movie clearly demonstrates the madness that is the American private, for-profit health care and health insurance industry. Americans spend more money and get less care than anyone else in the western world.

I am reminded of a stanza from Mark Heard's song Orphans of God:

But they have packaged our virtue in cellulose dreams
And sold us the remnants 'til our pockets are clean
Til our hopes fall 'round our feet
Like the dust and dead leaves
And we end up looking like what we believe

And the politicians sound like another stanza:

We have bought from the brokers who have broken their oaths
And we're out on the streets with a lump in our throats


Michael Moore is right and I have written about this before: the moneyed interests and the politicians want to keep us scared, sick and broke. They try to keep us in fear so that we will not pay attention to their misdeeds. And they want us to stay heavily in debt so that we will be afraid to lose our jobs (and our health care and pensions). That way, we won't be able to afford to march in the streets to protest our treatment.

Michael Moore points out how having a national health care system empowers the working class. He shows how often the French people march in the streets when they see a failure of their leaders to respond to their needs. Nicholas Kristof makes the same point in another way. Here is a passage from a book review that I have written about before:

Even when middle-class or wealthy families were displaced in, say, New Orleans, they mostly figured out how to get what they needed. For a start, they demanded it. Loudly. Insistently. But the people stuck in the shelters, black and white, were typically not only poorer but also less demanding, less assertive, less skilled in negotiating their way through the system. Poor families in the shelters were neglected precisely because they were suffering so patiently. After that experience, I caught myself thinking that the problem is not that the poor riot, but that they don't riot enough.

It makes you wonder why we don't have national health care. Maybe the reason is because we don't complain enough. Loudly. Insistently. At least Michael Moore's new movie is a good start. Go see it. The movie will make you mad. Maybe even mad enough that you will start complaining and vote for change. To turn a phrase that Jack Nicholson said as the Joker in Batman: this country needs an enema.