For one reason or another I’ve had no time for blogging this week, so the links to various items of interest (to me, at least) have stacked up on my Pinboard, awaiting comment. So, this post will be devoted to various and disparate hobbyhorses of mine.
First up, the folks at Disney are following in the footsteps of other great American corporations by using H-1B visas to replace American workers with lower paid and probably exploited foreign workers. You may recall that such visas are available only when American workers lack the unique and special skills the foreign workers allegedly possess. As is usual in these situation, the American workers were required to train their allegedly highly skilled replacements before they were shown the door. Only in America would this not be considered conclusive evidence that the program was being abused. But putting that obvious point aside, I believe in olden times (prior to 1980, let’s say) if an American corporation lacked workers with the skills needed for a specific job, that corporation would train the local talent to do that job. In any event, as Dean Baker has pointed out endlessly on his blog, if there really were a skills gap in this country, the price for in-demand skilled labor would be rising, but it isn’t. As with everything else in our economy, this is all about transferring wealth to the already wealthy.
Speaking of transferring wealth to the wealthy, our private pension system is quite busy doing just that. Those of us who must decide for ourselves which offered fund should hold our 401k money can be forgiven for getting fleeced; it’s built into the system and most of us are too busy trying to survive to make really informed choices, and even if we make the attempt we have no bargaining power. The money managers make their money on outrageously high fees, which we can’t avoid. But you would think that CalPers, the agency that manages the Californian Pension system would have both the smarts and the bargaining power to at least know what it is paying in fees for its investments in private equity. You’d think, but you’d be totally wrong:
But surely limited partners like private equity investor heavyweight CalPERS know what they are paying in contractually specified fees, namely the annual management fee and the so-called carried interest fee, which is a profit share (usually 20%) which usually kicks in after a hurdle rate has been met (historically, 8%), right?
Think again. Private equity firms simply remit whatever they realize upon the sale of a company, net all those lovely fees and expenses (which include hefty legal fees) and any carry fee they think they are entitled to take.
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We’ve found it hard to convey how badly captured limited partners are, and this example hopefully provides a sufficiently vivid illustration. Here, CalPERS, supposedly the most seasoned and savvy investor in private equity, is flying blind on how much it pays in carry, while going through the empty exercise of meticulously tracking its woefully incomplete tally of visible charges. This is a garbage in, garbage out exercise as far as private equity is concerned. Moreover PE real (as opposed to visible) fees and costs are so high that it means that CalPERS claims about its fees and costs across its entire portfolio are rubbish.
via Naked Capitalism
So, the teachers and other public servants in California are slaving away to enrich private equity managers, who make money on their backs whether the underlying investments make money or not. People love to slam personal injury lawyers. But they only make money if the also make money for their clients. Not so with the people who are depriving American workers of a comfortable retirement. But then, as Jeb Bush would point out, who are we to think we should be able to retire.
Next up, religion. It seems that Hasidic Jews have become a majority of the citizens of Rockland County, New York. This may just be a sort of foretaste of what we have in store as a slightly different scenario plays itself out as the rent seekers suck the life out of the public school system:
There’s a scandalous division in the community between public schools and Orthodox Jewish and Hasidic schools (yeshivas). There are only 2 Catholic schools, and yeshivas outnumber Christian private schools about thirty to one. There are also four nonreligious private schools. When the Hasids were first building their community in the area there was some discontent that they were paying property taxes to fund public schools that their kids don’t attend– at the same time they were funding the yeshivas for their own kids. They started taking over the school board.
Harvey Katz, an Orthodox Jew who served as a school board member, said, “Just because my children are not in the public schools doesn’t mean I don’t care about all the children. Children are our future, wherever they may be.” The district was one of five districts in New York State where more students were enrolled in private school than in public school due to religious reasons. But events didn’t indicate that the religious extremists did care about the future of non-Orthodox/Hasidic children. By 2005, when they took over the school board, they began reducing the budget and lowering taxes, much to the chagrin of the non-Hasidic members of the community.
The reduced budgets, in fact, were draconian, forcing students to take five- and six-year graduation plans instead of four-year plans, and in 2010 the school board of the East Ramapo Central School District voted to sell its Hillcrest Elementary School, which they had forced it close with massive budget cuts, to the Hasidic Jewish congregation Yeshiva Avir Yakov of New Square. In an official response to an investigation of the sale, New York State Education Commissioner David Steiner stated that the East Ramapo board “abused its discretion by hastily approving the sale.” The 12-acre campus, assessed at $10.2 million (market value) by the Assessor’s Office of Clarkstown, was given only a $3.2 million appraisal by the school board’s own attorney, Albert D’Agostino. A year later, the State Education Commissioner halted the sale of the building, saying the board failed its fiduciary responsibility to the district when it approved the $3.2 million deal.
Give the otherwise loathsome Andrew Cuomo credit: he’s trying to put the brakes on this budding theocracy. Give the wider Jewish community credit as well, as there has been a lot of criticism of the East Ramapo situation by the Jewish community, such as the Orthodox Jewish publication, the Jewish Daily Forward. Not that it excuses this attempt at instituting a theocracy in New York, but nothing the Hasids are doing is much different than what prevails virtually unchallenged in our Southern School systems, where prayers to Jesus are said before football games and teachers are punished for teaching that evolution is scientific fact and Creationism is taught as science, despite the clear (until Scalia gets his hands on it) case law barring such teaching.
Finally, I have nothing against the choices Caitlyn Jenner has made, but I agree wholeheartedly with this:
End of rant. A weeks worth of blogging condensed into one post.
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