Category: Government Failure

Morally Right and Just

On By southwerkIn ethics, Government Failure

(A republish of an old column.)

“What is morally just and right – that’s not my job,” he said.

If a rapist, a murderer, an embezzler, any kind of criminal, had said this, we wouldn’t be surprised. If a corporate CEO said it here in the age of Milton Friedman and the Chicago School, I would not be particularly surprised but to hear it from the Chief Justice of the United States Supreme Court is a tragedy and an abomination.

Every human being and, in particular, every American has a responsibility to do what is right and hold others to moral responsibility. That is even more critical in the field of law where what must be a primary concern is justice.

What is particularly bizarre is that he spoke these words in a speech where he repeatedly praised President Lincoln. He said this:

Like most attorneys of his day, Lincoln didn’t go to law school and learned it by reading and working for other lawyers, Roberts said. He was a generalist who studied many things and was continually learning. He understood human nature and had a strong internal compass that allowed him to excel when he believed he was right.

What did President Lincoln say about morality? This is from the his Second Inauguration.

With malice toward none, with charity for all, with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation’s wounds, to care for him who shall have borne the battle and for his widow and his orphan, to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations.

Let us as Americans, as believers in one religion or another, as believers in any philosophy in which good is considered more important than evil, struggle to make this land a better place. Let us always remember that we have an affirmative duty to fight evil and a responsibility to do what is right and honor justice whether we are the Chief Justice of the Supreme Court or a simple citizen of a great nation.

James Pilant

The Student Loan Crisis – Is It For Real? (via Go College)

On By southwerkIn Government Failure

Students now leave college with a debt of around $25,000 dollars a piece. When you choose a job after assuming that kind of debt, do you stay in places with generally low salaries like Oklahoma, Arkansas, Kansas, Missouri, or do you get out and head for the coast where the salaries often run double for the same job? What effect does this brain drain have on the economic development of these states, the viability of their communities and the kind of people elected to public office?

James Pilant

According to their data (Chronicle of Higher Education), of the student loans that entered repayment in 1995, one of every five has since gone into default. That’s correct, fully 20% of those who borrowed could not meet the expectations set forth in their repayment schedule.

Fast Forward to 2010

While one in five is truly scary, one needs to understand that the average student loan debt from that period was roughly $13,000. Today it is nearly double that figure, $23,000 plus.

One might suggest, using simple math, that fifteen years from now we might expect a doubling of the rate of default.

So no, the crisis isn’t hyperbole. According to the Wall Street Journal, “consumers now owe more on their student loans than their credit cards.” According to the June 2010 figures from the Federal Reserve, Americans owe some $826.5 billion in revolving credit. The total owed on student loans comes to $829.8 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.

Over at the Huffington Post, op ed writer Zac Bissonnette noted the Chronicle data and went on to note that defaults are only the tip of the iceberg when it comes to the impact of student loans. Many students who were not in default likely managed to stay in good standing only by accepting career options based on pay instead of goals and lifestyle choices based on debt as opposed to following their heart.

… Read More …

Student loans leave crushing debt burden (via MSNBC)

On By southwerkIn Government Failure

When will student loans reach such a size and ferocity in collection that a majority of American students no longer believe it is financially worthwhile to go to college?

Has the American dream simply disappeared for millions of Americans to whom a college education was the gateway to some form of economic security?

James Pilant

The cost of a college education is rising faster than the cost of medical care and as much as three times as fast as consumer prices in general. But that’s just the beginning of the price of admission.

This is the story of a debt crisis few are talking about.

Americans now owe more on their student loans than they do on their credit cards — a debt fast approaching $1 trillion with no end in sight.

Students borrow because they see little choice. A college education, after all, is a key to success. That, it seems, is an article of faith.

…Read More…

Opinion: The Looming Student Loan Crisis (via AOL News)

On By southwerkIn Government Failure

For many student loans are a continuing crisis in their lives. Is this kind of debt for millions of Americans sustainable? What are the social effects?

Does the student loan burden keep students away from running for public office, pursuing jobs valuable to society like police, fire and military?

Is this the way, we as a nation should finance our children’s education when that education is so critical to national success and competition?

Read this article and see what you think.

James Pilant

Like home ownership, a college degree used to be perceived as one of the keys to success. Unfortunately, these days it’s starting to look like a gateway to financial ruin.

The Federal Reserve has confirmed that as of June 2010, consumers now owe more on their student loans than on their credit cards.

A separate report reveals that one in five people can’t make their monthly payments.

As a result, Sallie Mae and Citibank have become the arch nemesis of millions, and the country as a whole faces what some warn is America’s next “mortgage meltdown.”

..Read More …

Is Access to Social Networking a Measure of a Society’s Freedom? (via The Philosopher’s Eye)

On By southwerkIn Government Failure

Access to social networking is becoming a measure of freedom, certainly not the main or the only one, but a measure of freedom. And it will become more critical as time goes by.

Everywhere and particularly in the United States, the Internet and social networking are the only remaining avenues of citizen democracy as the rest of the media and the government settle into a single pointless monolith.

My heart goes out to people everywhere on this earth – who suffer the terrible pain to live in countries with the kind of leadership we have now.

James Pilant

Is Access to Social Networking a Measure of a Society's Freedom? In responding to the political demonstrations, the Egyptian government has disrupted internet service and mobile phone services, in the obvious hopes of (a) reducing the volume of testimonies and videos being communicated outside of the country and (b) to disrupt the capacity of the protesters to remain organised and to communicate their progress to the greater population. The BBC reports that both Facebook and Twitter— relied upon by protest org … Read More

via The Philosopher’s Eye

They Make A Wasteland and Call It Healthcare

On By southwerkIn Government Failure

The Individual Mandate.

President Obama took universal health care and converted it into an insurance company bonanza. The President claims a great victory and says he has accomplished what many Presidents failed to do. Quite a victory. It reminds me of a quote about a war “They take a wasteland and call it peace.” Well we have the wasteland.

We live in a country where you can at penalty of law be forced to buy medical insurance.

It’s a great precedent. Think of all the things Congress might decide you should buy. From the innocuous like an emergency medical kit to disaster insurance (only if you live on the coast) to forced retirement accounts only in Wall Street Investments (We wouldn’t want the Chinese to get American money). The government has the power to force Americans to make any business profitable.

Back in the days before the Civil War, many people called the new industrial workers, “wage slaves.” What does that make us, “insurance slaves?” Taxes are one thing. I understand that civilized societies need to do things, defense, education, etc. But when did business get to collect taxes? Because that’s essentially what this is. The government mandates that you buy a service whether or not you want it. Everyone has to pay out the money, no exceptions. That’s a tax.

Individual responsibility.

They always cry out this one phrase, whenever they take something from you. Now, they say, once you’re buying insurance, you’ll be compelled to act responsibly. No free riders (Brush those teeth, eat right). You’ll be part of the system. I don’t think I have to worry about you being fooled.

This is an insurance company mandate.

There is no universal health care here. Forced consumers are powerless consumers. What do you get when you have no bargaining power? Tell me, if you have a $4,000 deductible, how inclined are you to get medical problems looked after? Not having insurance is a set of problems. They are formidable problems. Having this kind of insurance is a set of problems. They have you like so many rats in a trap. Bewildering sets of rules, denials of insurance claims, endless games and financial penalties aimed at American citizens. There is indeed insurance here, the insurance companies are insured against loss. They are insured against their own incompetence, stupidity and failure.

They’re too big to fail. Could the government allow an insurance company to go under? Wouldn’t that interfere with the smooth delivery of services? What’s a few billion here or there to keep the system running. And the government will have new ways to make insurance companies on the backs of Americn taxpayers.

How about profit? Let’s have a look.

This is a superb post by one of my favorite bloggers, J.N. Nielson on his blog, Grand Strategy: The view from Oregon.

How about the money?

How much cash flow are we talking about as a result of the individual mandate? I did some very rough calculations — literally on the back of an old envelope — and if we take the frequently cited figure of 47 million Americans without health insurance, and divide this by average household size of 2.59, we get more than 18 million uninsured households. I found figures cited between $46,000 and $50,000 as the median US household income in 2010. I took the lower number of $46,000, and found estimates between 7.5 and 12.8 percent of household income to be spent on healthcare (the Urban Institute’s report cited above gives a rate of 2.5 percent, but this is not to be taken seriously). If we pick a number between the two percentages cited, between the high and the low figure, we get about $4,650.00 annually for health insurance per household. This is an unrealistically low number, but I’m doing a conservative calculation. With these conservative numbers, we find that the individual mandate would funnel another 83.7 billion dollars into the coffers of the insurance industry annually. This is cash flow that they can leverage even if they have to pay out a little more than 83 billion in claims.

83.7 billion dollars. Pretty good chunk of change, courtesy of the United States government.

Economic Inequality and Global Elites

On By southwerkIn Government Failure2 Comments

What do the global elites think about the issue of inequality (economic disparity)? One clue might be the Global Risks 2011, Sixth Edition. This report is issued by the World Economic Forum –

From Wikipedia –

The World Economic Forum (WEF) is a Geneva-based non-profit foundation best known for its annual meeting in Davos, Switzerland, which brings together top business leaders, international political leaders, selected intellectuals and journalists to discuss the most pressing issues facing the world, including health and the environment. Beside meetings, the WEF produces a series of research reports and engages its members in sector specific initiatives

 James Ledbetter writing for Reuters has some thoughts on the subject –

This year’s report makes a big deal about “economic disparity,” which it helpfully defines as “wealth and income disparities, both within countries and between countries.” We used to call this “inequality.” The WEF report rightly points to OECD data indicating real income growth of the top income quintiles in wealthy countries (Finland, Sweden, the United Kingdom, Germany, Italy and the United States) was twice as large as that of the bottom quintiles between the mid-1980s to mid-2000s. The poor may not be getting poorer, but the rich are getting richer at a much faster pace than everyone else. That situation is not only immoral, but dangerous, as it can lead to open conflict between nations and internal political turmoil.

But wait — why is this happening? The WEF report cites “the erosion of employment culture, the decline of organized labor, and failures of education systems to keep pace with the increasing demands of the workplace.” That all sounds plausible, but the time frame cited marks the heyday of the very global governance institutions the WEF seeks to support. You don’t have to accept a causal relationship — though it certainly suggests itself — but at a minimum, global governance institutions have been demonstrably ineffective in addressing the economic structural issues that the WEF now worries about.

I have to disagree on one point. Mr. Ledbetter points out that “the poor may not be getting poorer.” While in these other countries, finland, etc., the poor, the lower classes have kept pace with their previous income. That is not the case in the United States. The middle class here has lost ground, their wages stagnant for three decades and their manufacturing jobs being outsourced as a deliberate policy of the United States government.

I am aware that in an article of that length, he hardly has an opportunity to break it down by country. But I am more local.

To summarize, James Ledbetter’s conclusion, they don’t know what to do about inequality and institutions like theirs do not have the influence to make changes should they suddenly discover the secret of income equality.

When you erode national sovereignty to build international trade and finance, there is no one to deal with issues like income distribution. Now, you might argue that international organizations like the United Nations or the World Economic Forum might fill in the gap. It’s a weak argument. The huge international corporate and financial combines have no intention of yeilding one iota of money or authority to anyone anywhere. And I am cynical enough to believe that military and judicial power trumps economic. If you want to take on an international organization be it organized crime or another kind of organization, use real power, not moral persuasion, not an argument that they should honor stakeholders, you put them in prison, you take their buildings and facilities, you confiscate their money, you leave them no where to hide and you never ever stop chasing them.

Of course, I am not referring to any American corporation.

James Pilant

P.S. The World Economic Forum’s report has been downloaded about 6,000 times. Considering the number of people online, that is not a large number. So I am flying in a high intellectual circles today.

Honesty/Ethics in Professions (via Ethics Sage)

On By southwerkIn Government Failure1 Comment

From Professor Steven Mintz, The Ethics Sage taken from his post, Honesty/Ethics in Professions.

What should we make of such rankings? I think it reflects the fact that the public is smarter than politicians seem to believe. Bankers, for example, went from a ranking of 37% for high or very high ethics in 2006 down to 23% in 2010. Bankers are now tied with TV reporters. That seems about right. Each group seems to want to put their spin on a story whether it’s the supportability and relative safety of mortgage loans that led to the financial crisis or how one side of the political spectrum portrays the other as the evil incarnate.

The bottom line is the public has lost all respect for the political process that is driven by lobbyists who cozy up to members of Congress by acting as used car salespeople to promote their cause all the while advertising that that they are trying to help the public.

Professor Mintz argues that these poll numbers indicate that the public has lost all respect for the political process. I agree.

However, I would like to add that the public has virtually no way of taking any effective action whatever their feelings.

There is little chance of being elected to office in the United States without money usually a great deal of it. Most Americans cannot make the kind of contributions that makes them a player in political campaigns. Those few that can give that kind of money have different interests than most Americans. So, what most Americans want done will not be done while what a minority of Americans want will be done.

It seems hopeless to even try to think of how to change the system.

The influence of money in elections is not decreasing, it is increasing. The total costs of the 2006 congressional campaigns were about two and one half billion dollars. The 1998 races were a billion dollars less.

The two party system makes it difficult to run as a candidate with non-traditional views. Look at it as a consumer. Essentially we have two flavors of political thought that no one really likes and the way the system is set up we can’t have another flavor. Political thought is homogenized into a form non-threatening to major donors. You can only make one of two choices in an election both of whose party organizations are devoted to fund raising.

If that wasn’t bad enough, political thought is also marketed by the enormous media empires. Their influence is manifested in a common political view expressed by pundits in print or on television. Overwhelmingly the most influential are concentrated around a New York – Washington zone of media coverage. Sometimes referred to as the beltway, this small group generally determines what is politically acceptable and politically possible.

Another factor in public dissatisfaction is the power of international finance and global corporations. Although corruption and a casino mentality produced a financial cataclysm in 2007, a disaster that leaves us with ten percent unemployment even now, these giant organizations were never called to account but in fact rewarded with hundreds of billions of dollars in loans, trillions in financial guarantees and the privilege of borrowing from the Federal Reserve at zero percent interest. There have been no criminal prosecutions and their profits (and bonuses) have increased.

Because influence is concentrated with those who make large campaign contributions, most Americans have negligible influence in the government. Their concerns and needs do not appear important either to the government or media.

Day after day goes by with the government acting on issues critical to the interests of the donating classes and beltway philosophy.

This day by day continuous grinding repetition of political powerlessness creates a majority of Americans who hate the political system and consider the participants to be marginally better than criminals.

James Pilant

President Obama Finds New Chief Of Staff At JP Morgan Chase & Co

On By southwerkIn Government Failure

From CBS News –

U.S. Chamber of Commerce President Thomas Donohue, who has had a contentious relationship with the Obama White House, praised the appointment.

“Bill Daley is a man of stature and extraordinary experience in government, business, trade negotiations, and global affairs,” Donohue said. “He’s an accomplished manager and strong leader. We look forward to working with him to accelerate our recovery, grow the economy, create jobs, and tackle America’s global challenges.”

Some liberal activists and pundits, however, are wary of Daley’s ties to Wall Street, as well as his moderate views. Daley has expressed disapproval for the president’s health care reforms and reportedly for Wall Street reform as well.

This story says everything without any need for my comment.

James Pilant

“Comcast Owns the Internet” (via Chasing Fat Tails)

On By southwerkIn Government Failure

At the moment, a great deal of weeping over the defeat of net neutrality is justified. Unfortunately the war for the internet can be lost on more than one front at a time. So, “Chasing Fat Tails” explains.

James Pilant

h/t ars technica Net neutrality has long been the goal of people who care about keeping the Internet free from corporate influence.  The Internet has tremendous potential, but it can only be realized if all users have access to fast speeds that deliver all content at the same rate.  Otherwise Internet Service Providers will be able to privilege some content and users over others, the Internet will balkanize, and the tremendous benefits of a wired … Read More

via Chasing Fat Tails