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Shoot first and ask questions later

Saturday, September 19, 2015

This is truly a sick country.

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Student Loan Madness

Wednesday, September 9, 2015

Apparently, according to standard economic theory, the source of money used to purchase something, or invest in something, should not affect the price of that something. That is, over time, the cost of a given item or service should not rise just because most of the funds used to purchase that item or service comes from borrowed funds rather than ready cash. Why is it that it is no surprise to find that at least in the case of student loans, standard economic theory is dead wrong?

Sometimes you hear something that sounds so much like common sense that you end up missing how it overturns everything you were actually thinking, and points in a far more interesting and disturbing direction. That’s how I’m feeling about the coverage of a recent paper on student loans and college tuition coming out of the New York Federal Reserve, “Credit Supply and the Rise in College Tuition: Evidence from the Expansion in Federal Student Aid Programs,” by David Lucca, Taylor Nadauld, and Karen Shen.

They find that “institutions more exposed to changes in the subsidized federal loan program increased their tuition,” or for every dollar in increased student loan availability colleges increased the sticker price of their tuition 65 cents. Crucially, they find that the effect is stronger for subsidized student loans than for Pell Grants. When they go further and control for additional variables, Pell Grants lose their significance in the study, while student loans become more important.

via Next New Deal

The blogger (Mike Konczal) at Next New Deal explains the economic theory, and has his own ideas about why they don’t appear to apply to the student loan situation:

This derives from something called the Modigliani-Miller Theorem (MM), the frustrating staple of corporate finance 101 courses. A quick way of understanding MM is that how much you value an asset or investment, be it a factory or higher education, should be independent of how you finance it. Whether you pay cash, a loan, your future equity, a complicated financial product, or some other means that doesn’t even exist yet, you ultimately value the asset by how profitable and productive it is. In this story, which requires abstract and complete markets, expanding credit supply won’t drive tuition higher.

Now what would change your valuation, according to this theorem, is getting subsidies, say in the form of Pell Grants. This would make you willing to buy more and pay a higher price. This is one of the reasons why so much of the economics research focuses on Pell Grants instead of student loans: the story about what is happening is clearer. But, again, extensions of the credit supply, not subsidies, are doing the work here.

So the actual practice stands things on their theoretical heads. Outright subsidies have little effect on the price of education, while access to relatively easy loans is what is driving increasing tuition costs. The effect is greatest at private colleges, including non-profits, but of course as the cost of private education goes up, increasingly underfunded public universities have more and more room to increase their tuition, given that almost nowhere in the United States do we think of higher education as not only a right, but a necessary investment in human capital. Not to belabor the point, but most of us know that most people are not truly in a position to sit down with a calculator and figure out what the ultimate value of a college education may be; we know only that such an education is practically a necessity, and the only way to get it is to borrow the money and pay what’s demanded. This dynamic is sure to put upward pressure on prices, particularly since the federal government seems supremely uninterested in making sure that it or the nation’s students get value for the buck.

Konczal goes on to discuss the latest right wing solution to the problem, and like all right wing solutions, it seems designed to comfort the comfortable and afflict the afflicted. The idea is for “investors” to fund a student’s education in return for a given percentage of that student’s future earnings. It’s called Income Sharing Agreements, or as Konczal calls them “human capital contracts”. It sounds like indentured servitude, and to boot, would require close government monitoring of each student to make sure that he or she makes the proper payment to their investors.

The way to stop the madness is fairly obvious. Public education should be free. That would put downward pressure on the private sphere. Student loans, if they must continue to exist, should be available only for attendance at truly non-profit colleges (not this sort of thing. If you want to run a for profit school, that’s fine, but why should we taxpayers subsidize an industry that has demonstrated beyond doubt that it is based on a fraudulent business plan. There is, by the way, only one presidential candidate making sense on this issue, though to give Martin O’Malley credit, he’s coming close. Guess who that one candidate is? Hint: His name is not “Hillary”.

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A simple question goes unasked

Friday, September 4, 2015

As I write, so far as I know, Kim Davis continues to rot in jail, and deservedly so.

Throughout the debate over her claim that she gets to opt out of doing her job, and in the process impose her religious views on others, one salient point, has gone largely unremarked, so far as I can see. This entire controversy has been covered as if it only involves gay marriage. The fact that it doesn't is no doubt the reason that even the present day Supreme Court, as stocked with reactionaries as it is, had no trouble turning down her appeal, without, so far as we know, a dissenting voice. Not even Scalia. Not even Thomas. Now why is that, do you suppose.

Well, the first thing that occurs to this well honed (okay, we can debate that point) legal mind is what should be a fairly obvious point. The principle for which Ms. Davis advocated cannot possibly be limited to opposition to gay marriage. At least not if we hope to preserve any vestige of rationality in our legal system. Confining ourselves to marriage licenses for the moment, what's to stop the next Kim Davis from denying a marriage license, due of course, to sincerely held religious views, because the couple have different skin colors; because one or both have been previously married; because the couple intends to solemnize their marriage before a JP instead of getting Jesus involved; or because one or both of them is a Republican and should not be allowed to breed. The latter, by the way, is my sincerely held religious belief. If you accept Davis's argument, you must allow every county clerk to impose their religious views. If you attempt to choose among them, by confining permissible bigotry to the anti-gay kind, for instance, you are violating the First Amendment in yet another way: you are establishing a religion. So you must grant clerks unfettered discretion to impose any religious doctrine they wish, or, you must do the rational thing and put people like Davis in jail. Even Scalia can see that.

Yet, the members of our press corps, so far as I've seen or heard, can't seem to grasp this simple point, or, if they can, they have yet to confront any of the Republican presidential candidates who have rushed to embrace Ms. Davis (who, is, by the way, and much to our embarrassment, a Democrat) with the logical implications of their position. Have any of them been asked if they think Ms. Davis could turn away an interracial couple, were that her sincerely held belief? Isn't that a rather obvious question? Since we can assume that even the bigots running for the Republican nomination wouldn't go that far (officially, anyway), we would surely like to hear how they would draw a line between racial bigotry and homophobia.

To stray from the point a bit, I'd certainly like to hear Jeb! try to articulate a distinction, given his recent pronouncement on the subject:

“It seems to me that there ought to be common ground, there ought to be a big enough space for her to act on her conscience, and for now that the law is the law of the land, for a gay couple to be married in whatever jurisdiction that is,” Bush told reporters after a town hall event in New Hampshire, according to Buzzfeed News. “I’m a little confused about why that can’t be done.”

via Daily Kos

I'm a little confused too. This sort of reminds me of the question posed by the Firesign Theatre: “How can you be two places at once, when you're not anywhere at all”. Jeb appears to be arguing for a two universe solution, in one of which the gay couple at issue gets married, while in the other universe Ms. Davis gets to impose her views on them. Anyway, imagine Jeb! trying to explain why discriminating against gays is religious freedom while discriminating against interracial couples is not. While we're on the subject, I'd sure like to see someone pose the question to Ben Carson.

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Village to Trump: You’re not welcome here

Friday, September 4, 2015

This brings back memories:

Megyn Kelly might be getting a bit of a break from being Donald Trump’s main nemesis, because he was just kind of roasted by a bunch of foreign policy questions from conservative radio host Hugh Hewitt.

At one point, Hewitt asked Trump if he was familiar with “General  Soleimani” and the “Quds Forces.” (He referred to Iranian Maj. Gen. Qasem Soleimani, commander of the elite Quds Force of the Revolutionary Guard Corps.) Trump said he was but then appeared to mistake the Quds for the Kurds, a Middle Eastern ethnic group.

“The Kurds, by the way, have been horribly mistreated by us,” said Trump.

Hewitt corrected him: “No, not the Kurds, the Quds Forces, the Iranian Revolutionary Guards Quds Forces.”

And after some more Qud/Kurd back and forth, Hewitt asserted that , and got classic Trump in return:

“Well, that is a gotcha question, though,” he said. “I mean, you know, when you’re asking me about who’s running this, this this, that’s not, that is not, I will be so good at the military, your head will spin.”

And out of that entire exchange, the only thing Trump supporters will hear is that last sentence.

via Daily Kos

I humbly submit that the diarist has it wrong here. Trump’s inability to answer the question proves virtually nothing about Trump, except that he’s incapable of admitting ignorance. Granted, that Trump knows very little about foreign policy, but the same applies to his fellow clowns on the Republican side. I would give odds that not a one of them would have been able to answer a similar question, and I can guarantee that Hewett would never ask them such a question, or assert in response to their ignorance that “these were standard things you should know if you want to be president”. To me, this is classic Village behavior, in the sense of that term used by digby over at Hullabaloo. Trump is invading their turf, and they are circling the wagons. His fellow clowns will be exempt from such treatment.

So, on to the memory that this story evoked. Back in 1988 Jesse Jackson was disturbing the Village from the left, and George Will was on the case:

Take Will’s 1988 interview of presidential candidate Rev. Jesse Jackson on ABC‘s This Week(1/17/88). In a series of questions apparently meant to expose Jackson as unqualified for office, Will asked: “As president, would you support measures such as the G-7 measures of the Louvre Accords?” (These accords were technical agreements employed the previous year to stabilize exchange rates.) As Will sneeringly recapped in a later column (Washington Post, 1/28/88), Jackson’s “answer to [that] question was, ‘Explain that.’”

via Fairness and Accuracy in Media

Yes, indeed. It was a question never posed to Michael Dukakis, who no doubt was as ignorant of such technicalities as Jackson. Jackson was honest enough to not try to bullshit his way through the question, but the basic tactic on the part of the questioner is the same in both cases. In fact, one can run for president and be qualified for the position without knowing anything about General Soleimani or the Louvre Accords. It’s far more important to articulate the principles that you would apply when dealing with the problems in the Middle East or economic policy than to demonstrate mastery of every detail. That’s what advisers are for. I’m not arguing for Trump, by the way. He would be a disaster as president, though no more a disaster than his competition. But he’s absolutely right that it was a “gotcha” question, perfectly illustrating Village behavior.

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Reflections from Fantasy Island

Wednesday, September 2, 2015

Scott Walker, who has held elective office since he was 25, is not a “career politician”. Let Scottie explain:

“A career politician, in my mind, is somebody who’s been in Congress for 25 years,” Walker said.

via Madison.com

Some people have laughed at Scottie about this, but I fully understand where he’s coming from.

You see, in my mind, I am a career politician. In fact, I’m president of the United States, granted extraordinary powers due to a national emergency, and I’ve solved all our nation’s problems. (If you read this blog regularly, you can see how I would do it). I’ve dealt successfully with climate change, income inequality, and annoying ATM fees, and I’ve put Jamie Dimon in jail, among scores of other accomplishments. In my mind, the United States is a virtual paradise, living at peace with all people everywhere, all because of me.

Also, in my mind, I am 25 years old (the constitutional age requirements having been waived in my case) and members of the opposite sex are falling all over themselves just to get near me. Outside of my mind, they appear to employ extraordinary self restraint, to the point where most of the time they don’t even seem to see me, but inside my mind, they let themselves loose. Also, in my mind, I’ve won an Olympic gold medal, have led the Red Sox to multiple World Series victories, and was invited to join the Beatles, but passed that up because they weren’t as musically inventive as me.

So I get it. When things outside of your mind aren’t going your way, it’s always pleasant to go inside your mind, where things can go pretty much as you’d like. Like me, Scottie must go there fairly often, because in his mind, he’s fit to be president. I’m betting that Scottie will be spending a lot of time in his mind in the near future, because outside of his mind, things aren’t going so well for him.

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A Connecticut grifter gets his reward

Saturday, August 29, 2015

I’ve written several times about the fact that grifters have a natural home in the Republican party. There are grifter politicians, like Rick Santorum, who is always hopelessly running for president, thereby keeping his brand alive for those lucrative red meat speaking fees, and there are grifter political operatives, who siphon money away from the causes they allegedly promote into their own pockets, thereby doing our side a favor by seriously diluting the effectiveness of every dime contributed by the rubes, and that includes the billionaires, whose money is siphoned into the pockets of high priced grifters like Karl Rove. More thoughts on the subject, here, here and here.

So, I was pleased to read today that we in Connecticut have our grifters too. (I know I should have known about this already, but truth to tell, I’m not that interested in Connecticut politics):

Former House Republican Chief of Staff George Gallo was sentenced to a year and a day in federal prison Thursday in federal court in Hartford for steering Republican candidates to a direct mail company in Florida in exchange for kickbacks.

The federal government told the court that from 2008 to December 2013, Direct Mail Systems Inc. of Clearwater, Fla. paid Gallo, of East Hampton, $117,617 in exchange for steering candidates to their firm.

Federal prosecutors asked the court to sentence Gallo, a first-time offender, to 15 months. But although U.S. District Court Judge Vanessa L. Bryant did sentence Gallo to about five months less than the federal government requested, she said she imposed prison time to stem the tide of political corruption in Connecticut. She said Gallo only offered a “tepid” level of responsibility for his actions.

via CT News Junkie

That’s $117,000 that state Republicans were unable to spend trying to get themselves elected, so on behalf of all Democrats I would like to thank Mr. Gallo, and I’d really suggest that the Democratic party should send him a going away present of some sort.

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A tax by any other name

Tuesday, August 25, 2015

For some reason, I’m fascinated by the concept of “rent-seeking”, which explains so much about the way our economy works, but is so little noted by our media or our politicians, even those we normally style progressives. Here’s the latest egregious example I’ve come across, courtesy of Atrios:

H&R Block’s entire business model is premised on taxes being confusing and hard to file. So, naturally, the tax preparation company has become — along with Intuit, the company behind TurboTax — one of the loudest voices on Capitol Hill arguing against measures that make it easier to pay taxes. For example, the Obama administration has pushed for automatic tax filing, in which the IRS uses income information it already has to fill out your tax return for you. That would save millions of Americans considerable time and energy every year, but the idea has gone nowhere. The main reason? Lobbying from H&R Block and Intuit.

But H&R Block’s latest lobbying effort is even more loathsome than its opposition to automatic filing. At the company’s instigation, the Senate Appropriations Committee has passed a funding bill covering the IRS whose accompanying report instructs the agency to at least quadruple the length of the form that taxpayers fill out to get the Earned Income Tax Credit.

via Vox

H&R Block justifies its lobbying as a public spirited effort to reduce improper payments, but apparently the actual facts, which count little in this country, show that people who prepare their own returns, or have them prepared by unpaid volunteers, make fewer errors than paid preparers like H&R Block. So, this is an extremely good example of rent seeking, getting the government to craft laws or regulations that force people to pay money to private entities in return for which they get nothing, or in return for which they get far less than they would get if the government provided the service directly or it was subject to market forces, or, in this case, it was rendered unnecessary by reasonable regulation.

Here’s the definition of the word “tax” from the unabridged American Heritage Dictionary:

a usually pecuniary charge imposed by legislative or other public authority upon persons or property for public purposes : a forced contribution of wealth to meet the public needs of a government

I’d submit that this congressional action is the functional equivalent of a tax, except rather than meeting the needs of the government or the public at large, it is designed to meet the needs of corporate interests. But from the point of view of the person making the payment, there’s not a heck of a lot of difference; the government is forcing that person to spend money in a certain way, leaving him or her with less money to spend as they would otherwise spend it. In this particular case they are not absolutely required to pay tribute to H&R Block, but they are being pushed that way rather forcefully. In any event, I call it a tax: a payment that the government forces one to make.

It is often remarked that the tax burden in this country is lower than in horrible socialist countries like Sweden, where people are cursed with universal health care and other nasty things. But those calculations don’t, I’m sure, classify payments to rent-seekers as taxes. It would be interesting to know how we compare with Sweden if payments to rent-seekers were added into the mix. It should also be noted that, if we were to properly classify actions such as this gift to H&R Block as tax increases, Republicans would be, by far, the party of “tax and spend”.

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It’s a miracle!

Tuesday, August 25, 2015

Donald Trump has joined Jesus and the Virgin Mary and has appeared to the faithful in edible fashion, the Donald appearing as a tub of fat, which seems right.

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Batman speaks

Friday, August 21, 2015

My wife passed this on to me from one of her Vermont Facebook friends.

  

Filed in Presidential Politics | | Comments (1)

And you thought the term “Happy Republican” was an oxymoron

Tuesday, August 18, 2015

Umm, there are times when it appears that our “liberal media” bends over backwards to be “fair and balanced” to our red state brethren. A good example in today’s Times, in which David Leonhardt gives a boost to what we in the legal biz would call “results oriented” research by a sociology professor at the University of Virginia. The article begins:

W. Bradford Wilcox, a sociologist, has written two recent papers noting that children in conservative parts of the country are more likely to grow up with both parents than in liberal ones. In both articles, he challenged the view that blue states are more conducive to stable family life than red states.

Now Mr. Wilcox, a professor at the University of Virginia, has published an analysis of data about individual families rather than geographical areas. And he argues this data continues to support his case that the so-called blue-state family model is overrated.

Professor Wilcox bases his latest conclusions on self reports by self-identified Republicans and Democrats. Given the rather uneasy relationship between Republicans and the truth (great example here) one must question the methodology. Of course it is always possible that the high rate of divorce (which must, of necessity, translate into one parent households) in red states (see here, where researchers concluded that the rabid religiosity of the folks in the red states is to blame) and teen pregnancy in red states is confined to the minority Democratic population in said states, while the Republicans in said states live happy, contented lives characterized by two parent families with children born only in wedlock. That doesn’t explain the low rates of divorce and teen pregnancy in blue states though, since if it’s Democrats causing the high stats in the red states, we here in the blue would presumably be packed to bursting with precisely the kind of people that are producing one parent households and pregnant teens in the low IQ states.

And as for being happier, that seems improbable for another reason. You see, Republicans are different than you and me:

Peering inside the brain with MRI scans, researchers at University College London found that self-described conservative students had a larger amygdala (link is external) than liberals. The amygdala is an almond-shaped structure deep in the brain that is active during states of fear and anxiety. Liberals had more gray matter at least in the anterior cingulate cortex, a region of the brain that helps people cope with complexity.

The results are not that surprising as they fit in with conclusions from other studies. Just a year ago, researchers from Harvard and UCLA San Diego reported finding a “liberal” gene. This gene had a tiny effect, however, and worked only for adolescents having many friends. The results also mesh with psychological studies on conflict monitoring.

Yes, fear and loathing certainly seems to characterize Republicans better than happy, “optimistic” or “charitable” (believe it or not, Wilcox uses the latter two words to describe Republicans). There are 16 Republicans running for president. Not a one of them is running a campaign that can be objectively characterized as “optimistic”, “charitable” or particularly designed to appeal to people who are happy. These politicians don’t know much, but they know their audience better than Wilcox.

Filed in Red States/Blue States | | Comments (0)