Category: economics

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Oily Bears

I have no doubt that if the oil industry succeeds in wheedling another chunk of Alaskan wilderness from the government to drill and develop and exploit, that they will solemnly insist to everyone that they, more than we could ever imagine, are passionate about preserving some other part of Alaska’s remaining pristine wilderness for generations to come. And then, once they have sucked up all the oil they can, their pimps in the Alaskan state government will once again whine and whimper that it is so unreasonable to insist that this other pristine wilderness area be preserved.

There is no end of parts of the world that have been despoiled by the energy or lumber or mining industry, but there are precious few parts that remain pristine wilderness. And they will come after those parts, relentlessly, hurling millions dollars at politicians, begging and pleading, and lying through their teeth: we care about the environment.

If conservatives think liberals are fools for thinking that poor people can be improved with education or opportunities, or that negotiations can lead to peace, or that some black youths are not out to kill police officers, then liberals have a right to think conservatives are absolutely idiotic to think any energy company has the slightest interest in preserving the environment. Industries are driven by profit: they have no conscience. Their PR flacks will say and promise anything to increase profits. Money doesn’t weep: actors do, and the top executives of these corporations are primarily actors.

If you believe them, you seriously have to answer the question, why, do you think, they would keep those promises? What possible incentive do they have? Once they have fully exploited the mineral or energy resources of a given area, they can retire with untold riches. There are no real consequences for a corporation: they can pay any modest fines out of future profits– someone else’s problem.

It’s not like perjury. Standing in front of a TV camera and mellifluously praising the mountains and meadows and creatures of some distant land promising that never, in a million years, would you do anything to harm them, cost nothing. There are no consequences for lying.

In 1994 Verizon promised to lay fibre optic cable to every house in Pennsylvania in exchange for over $2 billion in tax breaks.

Were they laughing even then? 20 years later, they have done nothing to deliver on that promise. Refund the taxpayer’s money? Are you mad? Recall the politicians who made that deal? Can you even remember that they made that deal? Do you care that they sold you down the river? Not enough, apparently, to not re-elect them.

Verizon learned what the oil companies already know: they have immunity. They all know whose side the politicians are really on.

 

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Credit Shackles

It is quite amazing how the credit industry in the U.S. has convinced conservative and liberal legislators that extending easy credit to people without the means to pay off their loans is an act of kindness and generosity. As if they were not charging interest or demanding repayment.

That is what they will tell you if you bring up the fact that U.S. credit industry has essentially reintroduced indentured servanthood on the sly. The average American carries a balance of $5,000 to $8,000 (depending on your sources) on their credit cards, for which they are paying an interest rate that was regarded as illegal for most of American history– usually, about 28%.

Most of these credit card companies are headquartered in the state of Delaware (yes, Joe Biden’s home) because at one time it was illegal in most states to charge “usurious” interest rates on loans.

Why is this allowed? The cover story, as I stated, is that this is a service to people, especially people with low income who otherwise would not be able to buy the big-screen television or xBox or laptop, or lavish that trip to Disney World on their youngsters. It’s a clever ruse: they are only able to continue to consume until they have reached the limits of their credit; if their limits are extended, they go even deeper into debt, and are even less able to pay off the principal. In keeping with the Republican tradition of giving laws names that are the opposite of their real purpose, (like the “Clear Skies Act”, in 2005, Congress passed “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”. The BAPCPA should have been called “The Perpetual Credit Servitude Act” or the “Consumer Exploitation Act”. Some Democrats opposed it, some supported it. All Republicans supported it.  And that tells you a hell of a lot.

It is a tragedy that many otherwise sensible people take the attitude that if people are so stupid as to run up debts they can’t pay off quickly, they deserve what they get. To me, that is like asserting that a woman who goes to a party and drinks is asking to be raped. This attitude might make a little sense if most of the people you know are well-educated, have decent jobs and a decent income and an RRSP, and understand how they are being ripped off but do it anyway. But most people are not; they are drunk with consumer choice, bombarded by advertising, convinced by government and the media that they are entitled to enjoy the fruits of capitalism, lavishly.

But the essence of good government regulation is to protect vulnerable people from being exploited and abused by other people or corporations without a sense of right and wrong. And a corporation never has a sense of right or wrong: it has profits. The fact that the average credit card balance in the U.S. is so high tells you that the average citizen doesn’t understand credit or credit cards and is vastly over optimistic about his or her ability to pay off debt. The average consumer is vulnerable. They don’t understand that being able to buy the big screen tv and xBox now on credit means they will be able to buy a lot less in the future when their credit card payments are $400-500 a month, and barely cover the interest, while they continue to add on debt. It makes perfect sense for the government to step and restrict the ability of banks and credit agencies to offer them loans.

It made more sense when the government allowed some of these consumers to declare bankruptcy and crawl out from under an unbearable debt load. That’s what the BAPCPA was all about: tightening the noose. It imposed new, vast restrictions on the ability of any person to declare bankruptcy.

Why? The banks will tell you that they have to charge 28% on credit cards because of the great risk they take that people won’t pay these loans back. The only escape for many people was to declare bankruptcy and start over: risk taken, Mr. Banker, sometimes you lose. That’s why you were allowed to charge 28%– why are you complaining?

The only way Congress should have tightened the restrictions on bankruptcy law should have been by forcing the banks to drop their interest rates to something like 7% at the same time, in the same legislation.

The banks and the conservatives and their lobbyists and toadies would have howled to high heaven. For good reason. It’s easy profit. If you are in the investor class, it’s a fantastic way to extract money from poor people. Like taking candy from a baby, and just as ethical.

The banks and credit card agencies insisted that consumers would benefit because the tighter regulations would increase their profits and then– get this — allow them to pass on the savings to consumers in the form of lower credit costs.

Of course it did increase their profits. And of course, credit costs to consumers went up, not down.

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Indentured Students

Did you know that the Government of Germany pays the full cost of post-secondary education for all of its students? Even for American students who speak German?

The student loans program  needs to be seen in a completely different light. Here we are now recruiting even younger people with even less knowledge or understanding of credit and pushing them to lock themselves into major debts so that immediately upon leaving college or university they begin making their perpetual payments to the banks.

The banks don’t care about he principal. They don’t need the principal. What they need and want is your perpetual payments to them, and you must not be allowed to escape until you are very old.

That’s when the medical bills kick in…

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Shill Shun

“I was regularly called a shill for the food industry”. Elizabeth Whelan, in NY Times Sep 18, 2014.

Why is this so inevitable? From the inside, it must look like something no one will really notice or pay attention to. Or maybe you just don’t care. Or maybe you are right: no one thinks that just because you take money from the industry that benefits from your “science” you would alter your findings.

And Elizabeth Whelan set out to establish a national organization that would battle what she called “junk science” and excessive government regulation protecting us from chemicals and substances which, she believed, were of marginal risk.

Why oh why oh why did she not resist the temptation? I thought there might be something to her point of view. I thought, it is likely that government bureaucrats would over-react to preliminary test results. It is possible that banning one substance will only increase different risks from the alternatives. I thought, let me read more.

And then, inevitably, it is discovered that the industry, delighted with her point of view, began to fund her organization.

And she accepted the money.

Among other things, American Council on Science and Health has endorsed saccharine, smokeless tobacco, pcbs, and fracking. She ridiculed Michael Bloomberg’s drive to ban sales of huge soft drinks in New York City.

Now, if I had been one of the corporations, I would have kept as far away from her organization as possible. I might even have attacked her for being too cautious, too reticent. I would have urged my fellow corporate buccaneers to lay off, stay back, restrain yourselves– because the minute a person like me finds out that Elizabeth Whelan is paid by the industry that benefits from her activism, her research loses all of it’s value and credibility.

Now, I shouldn’t have to respond to this hypothetical argument from the conservatives: activists from the other side also benefit from their cause– they have nice, paying jobs, junkets, expenses, and so on. But that is like saying that any married woman is the same as a whore because she offers sex to the man who feeds her and keeps her. It is not even remotely the same thing. The “benefit” corporations receive from Elizabeth Whelan’s advocacy is increased material profit for a small number of shareholders and owners. The benefit received by those who support Greenpeace is a healthier, more beautiful world for everyone– not just themselves.

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And I guess Dalton McGinty just couldn’t resist either, signing up with a company that makes software for schools– which it sells to the provincial government. I agree with the NDP on this one: MP’s should have to wait five years after retirement before they can take jobs like this. But I think it should be 10.

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Student Debt

In 1974 it cost me (a Canadian from Ontario) about $3,000 to go to a U.S. college for one year. That included tuition and room and board. I had a job cutting grass and plowing snow too, for spending money. So a poor boy like me could get a college degree and get a good job and do well.

I ended up with about $10,000 in student loans. A house, at that time, would have cost me about $80,000, in Chatham, Ontario.

Now of course there has been some inflation since 1974 and everything costs more and people earn more money, but the rate of increase in college tuition has been nothing short of astronomical. It is now, typically, $35-50,000 for a year in college. In the U.S., a graduating senior typically owes about $50,000.

What happened? Did it suddenly cost ten times as much to hire a professor? To build a lecture hall? That $80,000 house is now $175,000. Why is that $3000 education now ten times as much?

Part of the reason is that State governments cut back on the amount they contributed to the cost of higher education. In Washington State, for example, in 1991, the state’s contribution to the costs of colleges and university education was (inflation adjusted) $96 for each person in the state. Today it is $31. All while politicians of every stripe whine and kvetch about the low achievement of American students on international tests and their unpreparedness for work after they receive their diplomas!

The other reason college costs rose astronomically is quite simple: the money available to pay for it increased; the colleges knew how to get that money flowing by facilitating access to government-sponsored loan programs and young students with poor judgment about the relative advantages and disadvantages of massive debt signed up in droves believing that high-paying, secure jobs awaited them upon graduation.

There was, in short collusion. The government offered student loans thinking they would be applied to 1974 tuitions in a 1974 job market. College Presidents rewarded themselves for increasing student debt by paying themselves $500,000 a year or more, with lavish benefits. Athletic departments received more money for stadiums, dressing rooms, uniforms, and coaches. When tuitions skyrocketed and the job market tanked, you suddenly had a huge population of deeply indebted under-employed young people. It’s almost as if the fast food industry’s wettest and juiciest dream came true: a large population of macjob candidates, desperate for any kind of income.

I think what most people don’t get about the economics in the United States, and elsewhere, is that the system is largely controlled by the banks and large corporations and the purpose of the system to keep the vast majority of people in perpetual debt, continuously streaming vast sums of money into the coffers of the investor class. The government is utterly complicit with this process, allowing banks to offer money to people who clearly cannot afford to pay it back, at unconscionable interest rates which serve to trap them the way the giant insect alien in “Aliens” traps it’s victims, with gooey slabs of useless consumer goods and mortgages and degrees. Unable to move or free themselves or escape the massive interest payments.

And the emblematic moment of this relationship, in 2008, after the banks got too greedy– an almost incomprehensible development– more greedy than before?!– and the mortgage securities markets collapsed and the economy was threatened with disaster, the government bailed out the banks. The consumers were strung out to dry with continuing liabilities for houses that had lost half or more of their value or cars they could no longer drive or educations that no longer produced jobs.

There were no consequences to the investors or managers of these banks. In fact, most of them were lavishly rewarded for their greed, their ruthlessness, their incompetence, their monumental callousness towards the home-owners who held their mortgages, and their ability to bribe politicians effectively.

A few of them must have a sleepless moment or two imagining what it would be like to live in a world in which there are consequences for psychotic behavior on a grand scale– a moment or two. But such anxieties will vanish quickly when they meditate on the poetry, the operatic grandeur, the delightful, soaring arias of the capitalists, the Republicans singing in harmony praises every day to a system, they insist, that is going to benefit the average working guy as much or more than those who are already rich.

I found an article in Forbes online addressing the issue.  If this represents the caliber of debate, we are in big trouble.

A much better article on debt forgiveness.

It doesn’t: a much better, more informative article at the Seattle Times.

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It’s Fun to Stay at the NCAA

It’s rather quaint the way university administrators and NCAA officials declare just how wonderful and pure is the devotion of their students to athletics. They play for the love of the sport; they aspire to greatness. They want to improve themselves. They want to be true to their school. They want to learn about leadership and team-building and self-sacrifice and self-denial and goal-setting and how to give everything you’ve got, for a higher purpose.

That kind of sentiment is for saps, of course, and the administrators and coaches and NCAA officials know it. If they claim otherwise, let’s make it simple for them.  Prove that you believe in the values you insist your students must believe in:  you now work for nothing. You are volunteers. You get no money, no limos, no first-class flights, no 4-star hotel suites, no dinners at the top restaurants. You too can express your purity and join in this ethereal expression of scholastic piety.

Don’t be too quick to dismiss the idea. I mean, it is not likely at all that it’s going to happen, but not because it makes sense to do it the way we do it now. It will not happen because of simple, unencumbered ruthless human greed. There is no body or institution or person who is in a position to prevent the NCAA from  perpetuating their positions of privilege indefinitely. There is a symbiotic relationship between college administrators, sponsors, coaches, and politicians, and they will all circle the wagons and roll out the big guns if anyone threatens the status quo.

The athletes, as you know, are pure and devoted and selfless. They play for nothing. In fact, if they do accept money or gifts, they can be fined and suspended and expelled. But their coaches are among the highest paid state employees in the nation. The head of the NCAA famously drives a Porsche and lives in luxury.

What’s my problem with NCAA sports in America? Nothing. Just drop the pretense and make it what it really is: a professional league. And pay your players and provide them with decent insurance and other benefits, and cut out all the bullshit. Strip all of the Universities and Colleges of all the professional sports– let them go back to amateur athletics organized purely, solely, and exclusively by and for amateurs.

And athletic scholarships should be terminated, period. The entire idea is stupid. What is an institution of higher learning doing paying for people to come play football or basketball or to swim for them? Who says they should? Who says it wouldn’t be a better world if Universities went back to the business of education?

Let’s get rid of the vampires and pimps. And let’s have a string of institutions that are actually dedicated to higher learning: to producing smart people of strong character. Let’s value them on the basis of how good they are at doing that. And let’s put cost controls on them so that the incredibly obscene rise in tuition costs (fueled by perverse application of federal student loan guarantees) stops.

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The Circuitous Life of Johnson’s Folly

If President Johnson had decided in January 1964 that the U.S. would not win the war in Viet Nam and should withdraw it’s troops and let the chips fall where they may, what would have been different?

About 45,000 American men would be alive today instead of buried in graveyards all over America. Most of them would have married. They would have had children– another 100,000 citizens– who would, by now, be having children of their own.

Johnson would have run again in 1968 and he probably would have won, being the incumbent, and credited with the Civil Rights Act, and his anti-poverty programs and the general prosperity of the expanding consumer society. The war protests, of course, would have ended. The younger generation would have lost their identity. No Chicago riots, no Kent State. One great song “Ohio” by Neil Young, would not have been written or sung. We would have never learned who Abbie Hoffman or Jerry Rubin were, or cared. Nixon would probably never have been elected and U.S. relations with China might today be a lot worse.

Who knows– maybe Reagan would have won in 1972. Maybe Vice-President Hubert Humphrey. Bobby Kennedy would not have been assassinated, because he would not have run in 1968, because Eugene McCarthy would not have run (proving that an antiwar candidate could win), because there would have been no war.

There are threads that can never be traced because everything else would have been different.

The inflation of the 1970’s would have been stopped dead in it’s tracks because, don’t you know, the Viet Nam war ate up a HUGE chunk of American government spending and purchasing. Maybe there would not have been a budget deficit. Or– even better– perhaps that deficit would have been run up by spending on social programs and infrastructure instead, which would actually have improved the economy even more.

U.S. credibility abroad would have been immeasurably higher. Except for the fact that they had engineered coups in other Third World countries like The Congo and Iran and El Salvador. Well, imagine, if you will, that they hadn’t. Imagine the U.S. as an emblem of freedom and democracy and justice, in the 1970’s, instead of a cynical, manipulative, oil-mad behemoth?

Viet Nam would still have gone communist, of course, just as the Republicans feared, and just as they did anyway, but with a less extreme leadership. (The moderates were all driven out by the war.)  Significantly, Cambodia would not have been destabilized by U.S. bombing likely sparing the world one of the great atrocities of the 20th Century committed by the Khmer Rouge, which came to power as a result of the illegal U.S. bombing in the border regions with Viet Nam.

I’m saying all this because, in 40 years, we may be asking ourselves what would have happened if the U.S. had just walked away from Iraq in 2014.

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Corporate Welfare Bums

The phrase “Corporate Welfare Bums” was coined by Canadian NDP Leader David Lewis in 1972.

J. P. Morgan just got a gift of $225 million from the local government to locate an office in Jersey City. Corporate welfare. Somewhere in Jersey City a single mom with two kids is thinking, I should ask the government for some money if I agree to locate my ass at the McDonald’s drive-thru window.

J.P. Morgan had profits of $18 billion last year. The government had evidence that J. P. Morgan was complicit with the Bernie Madoff ponzi scheme: while claiming the trust of investors and partners they did nothing to ensure that their money was being handled in a legal and responsible manner. To forestall more serious criminal proceedings they agreed to pay out about $2 billion in fines. They would have you believe that they didn’t really do anything wrong, and the agreement with the government allows them to claim that they didn’t really do anything wrong– they just like to hand over $2 billion dollars to the government occasionally, because it makes them feel good.

If you were a bank robber or a burglar, wouldn’t you wish that you had the option of paying a large fine every time you were threated with imprisonment? J. P. Morgan’s President and CEO and Board Members can phone almost any politician and arrange lunch. You can’t. So pick up your mop and get back to work.

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And Now, My Fee

It should be absolutely, irrevocably, unconditionally illegal for any agent, lawyer, manager, or service provider of any kind to deduct his or her fees directly from any property owned by the person for whom they are performing a service. And that goes triple for lawyers. And agents. And managers.

Lawyers, and bankers, you see, are not like you and me.

If you hire a lawyer to manage your purchase of a home, they do not do the work for you like a plumber, a dentist, a doctor, a mechanic, or a carpenter, and then, once you have agreed that the work has been performed in a satisfactory way, submit his or her bill for you to pay, with approval. (I grant that it would not be unreasonable for them to ask for a fair “up front” fee to begin the work). No. The lawyer decides how much to pay him or herself and then takes it right out of your bank account. If you, later on, realize that the lawyer made up imaginery services and imaginary expertise and charged you large sums of money for them, and you did not ever agree to pay these surprise fees and charges– good luck getting your money back. You will never see a penny. Unless you hire …. a lawyer.

Yes, this happened to me. A lawyer added close to $800 to my bill for certain services. I demanded to know what the charge was for and he could not tell me. He just muttered something about something that was “required” and how impertinent of you to question a lawyer about whether or not you need to pay him lots of money.

Other businesses would love to be in on this arrangement, which is why I am always a bit leery of providing my credit card data to places like my domain registrar, or the New York Times website.

Just imagine your plumber came in to do some work. Instead of giving you a quote and then doing the work and then showing you a bill and then accepting your payment– once you are sure he did the work he promised to do– suppose he just demanded your bank card and your pin number. And when he was done, he just went down to the bank and withdraw as much money as he thought he deserved.”

I fully expect that a lawyer reading this would say that I have no idea how many people would hire a lawyer, make use of his services, and then not pay for the services. It would be intolerable for a professional to have to put up with that kind of rip-off. In other words, it would be intolerable for lawyers to have to live in the same real world as plumbers and mechanics and carpenters.

I believe it should be enshrined in law: any professional who deducts his or her own fees from any transaction is committing theft– even if they say they were owed the fees. If they are really owed the fees and the customer refused to pay them, let them hire lawyers and try to obtain their money through the courts like everyone else.

It is absolutely epidemic in the world of entertainment and sports. Agents and managers receive the money, deduct their own fees and expenses, and the let the rest go into the athlete or performer’s bank account. And we hear, over and over and over again, how some incredibly successful star athlete or musician is now bankrupt because they didn’t pay attention and their managers bled them dry while charging every expense, no matter how minor, to the performers’ accounts.

Not good enough for you? Not easy enough? Not convenient? Suck it up: that’s why everyone else expects to have to do if there is a dispute over fees and services and you are not entitled to magical powers just because you say so.

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Stupid Government

Americans will probably never admit it but their system of government is really kind of stupid. Yes, yes we all know that the fathers of the nation intended to weaken central government forever by providing counterweights to each branch. This design served them well in an era of Kings and Emperors. That era is long, long past.

Anyone who would prefer a paralyzed government to a powerful government– like Canada’s– prefers no government at all. We Canadians enjoy the spectacle of parties running for election, winning, and then having absolutely no excuse for not carrying out their platform. It’s easy: you campaign on your policies, you write the legislation, you propose it in the House of Commons, you analyze it in committee for a while, then you bring it back and pass it. Americans will tell you that this process is terrible and leads to oppression and dictatorship. They much prefer their process of running on a platform, proposing legislation, having it dismembered and appended to death in various committees of the House and then the Senate, having it stall for years in a second or third round of committees and negotiations, and then, finally, having a spectral mostly useless shadow of itself pass just before summer recess.

I think most Canadians would tell you in a flash that they would rather have the government do something and occasionally fail, than have the government do nothing and always fail.