Bacon's Rebellion

Democracy Thrives in Sunlight

RICH-PERSON, POOR-PERSON

—

by

James A. Bacon
in

WaPo

is full of good stuff today!

Lets start with the front page of Business:

Household Economics writer Michelle Singletary (The Color of Money) sketches out “What Sherrod was telling us” in a column with that subtitle. The money graf:

There is a disturbing and widening gulf between the rich and the poor in America. And it would be even wider except for the fact that so many middle-income families have borrowed their way to a comfortable lifestyle. They are just a paycheck, a divorce or a heath crisis away from financial ruin.

Read it all here: http://www.washingtonpost.com/wp-dyn/content/article/2010/07/24/AR2010072400146_pf.html
Just for you, Peter.

By the way the online version of the story is titled “Race isn’t the problem – economic inequality is.”

This was the theme of Jim Bacon’s post “Webb Shatters the Mold” on Friday.

No one had commented on Observer’s note at end of the comment section on the Webb post. EMR suspects no one saw it so here is a copy:

“Peter:

“You should not be so stern with Mr. Bacon or Senator Webb.

“They are both trying to face the reality of the widening Wealth Gap and the fact that ‘affirmative action’ is being gamed by those at the top of the food chain with out respect to race.

“The question they are both trying to answer is: How can wealth be redistributed equitably?

“As Joseph Pulitzer said: “The inherent vice of capitalism is the unequal sharing of the blessings.”

“And Jawaharlal Nehru noted: “The forces in a capitalist society, if left unchecked, tend to make the rich richer and the poor poorer.”

“Most of those who now have “a lot” got it by not paying their fair of the total cost and at the expense of either the less well to do or the environment.

“Give credit to Mr. Bacon for trying to find an answer.

“As Groveton says, it will be hard to do.

“Observer”

Perhaps it should have been:

“Give credit to Mr. Bacon for pointing out that Senator Webb is trying to find an answer.”

Item two from today’s WaPo:

On the same page as Singletary’s column there is one by Ezra Klein titled “Digging into finance’s pay dirt.” Klein argues that Broke, USA needs to be read along with The Big Short .

The later deals with what those at the top of the Ziggurat did to cause The Great Recession, Broke, USA documents what those in the middle and at the bottom did to provide the funds.

Same song, second verse: It is the little guy that is having to pay and, as someone said recently:

The Wealth Gap is not sustainable in a world with instantaneous communications, mass literacy and weapons of mass destruction.

EMR thought he had seen a second sentence for the Pulitzer quote cited by Observer. Sure enough it reads:

“The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.”

That is a perfect segue to a third item in today’s WaPo.

Check out this book review in the Outlook (Opinion) section: The review by Andrew Higgins is titled “China, a capitalist machine with a communist engine” about The Party: The Secret World of China’s Communist Rulers. (“China’s ruling party has disentangled itself from ideological chains.”)

Sounds like Pulitzer’s worst of all possible worlds.

Is it time to focus on Regional Resiliency, Import Replacement and DeGrowth?

EMR

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Comments

66 responses to “RICH-PERSON, POOR-PERSON”

  1. Larry G Avatar
    Larry G

    I often wonder how sustainable our current paradigm is – compare to Europe and Japan.

    I actually wonder why our fuel is $2.50 a gallon and theirs is $5 a gallon and our jobs are going away and our deficit exploding while Europe and Japan are not much better off.

    Where are the industrialized countries headed?

    Are ANY of the industrialized countries truly sustainable?

    Are we headed for systems like India where the middle class is a fragile commodity… ?

    but I do have a question.

    What makes an INDIVIDUAL a winner or loser?

    If you are a young guy and you do not aim to be a poor person.. how do you achieve rich person status?

  2. Hydra Avatar
    Hydra

    And it would be even wider except for the fact that so many middle-income families have borrowed their way to a comfortable lifestyle.

    If they have borrowed there way to a comfortable lifestyle they are no closer to being rich. everyone except the very rich is only a health crisis away from being poor. On the other hand, if you really have a health crisis, money matters very little.

    As for divorce, given the divorce rate, most people might as well plan on that. As someone said, "Don't get married, just find a woman you hate and buy her a house."

    Fuel in Europe is pretty much the same price as here, it is the taxes that are different. Youpay one price for fuel and an additional price for whatever else you are buying.

    ================================

    How can wealth be redistributed equitably/

    Isn't that like asking how you can steal fairly?

    I think it is the wrong question. A better question is how do you distribute power more equitably. Great wealth is ususally associated with an unequal distribution of power. The CEO of Bear stearns walked away from that with millions and the people he destroyed got nothing: he was in a position with more power and knowledge than they, and therefore his property was protected better than theirs.

    One way to equalize power is to equalize property rights, and property rights enforcement. Nehru was right, it is the FORCES in cociety that make the rich richer and the poor poorer. If we equalizes those FORCES, then the poor will have a better chance on a more equal playing field. There will still be rich and poor, of course, it is the essence of capitalism, but that does not mean the poor (or the rich) should be allowed to be stripped of what they have earned fairly.

    ==================================

    Most of those who now have “a lot” got it by not paying their fair of the total cost and at the expense of either the less well to do or the environment. .

    I'd agree if you change "Most" to some. Otherwise it is a gross generalism. Again, properly defined proerty rights and fair market trading would determine what is a "fair" cost to pay. Fair cost isn't something that gets allocated or decided by a third party.

    "The Wealth Gap is not sustainable in a world with instantaneous communications, mass literacy and weapons of mass destruction."

    We are a long way from mass literacy: most of China and India are still illiterate, but if we ever use the weapons of mass destruction, wealth won't matter much. But until we have mass litercy or use the weapons, expect teh wealth gap to persist. Even if it is unsustainable: the market can stay irrational longer than most people can stay solvent.

    There are a lot of thinkgs that ought to be different, but they are not. Until then we need to do the best with what we have.

    RH

  3. Larry G Avatar
    Larry G

    " How can wealth be redistributed equitably/

    Isn't that like asking how you can steal fairly?"

    how do we care for those who are unable to care for themselves.

    that implies a wealth redistribution when others pay to provide care, right?

    is it that virtually everyone supports this concept but differ on whether it should be done by the govt by a tax on the "unwilling"?

    If one is truly opposed to this kind of wealth re-distribution, then start with EMTALA which basically says anyone who shows up at the ER will be served and that it's legal for the hospital to cost-shift the loss to paying patients.

    Much of what we disagree on it seems to me is to even agree with the facts as they are right now.

    EMTALA is a law signed into law by Ronald Reagan that legalizing taking from some folks to give to others.

    and yet I've yet to hear one complain about Mr. Reagan the racist socialist…..

    much less a suggestion from any on the right to START by getting rid of EMTALA.

    That tells me that the folks on the right who oppose Obomacare are either ignorant of the realities or they choose to ignore the realities and/or they really don't want to have a country where the ERs will turn people away.

    Any way you cut it – it's a pretty big compromise on their so-called principles about taking from some to give to others.

    If you really do believe that this is wrong – then start with a promise to get rid of EMTALA – something very specific rather than all this blather about repeal and replace.

  4. Larry G Avatar
    Larry G

    " More than half of all emergency room care in the U.S. now goes uncompensated. Hospitals write off such care as charity or bad debt for tax purposes. Increasing financial pressures on hospitals in the period since EMTALA's passage have caused consolidations and closures, so the number of emergency rooms is decreasing despite increasing demand for emergency care.[7] There is also debate about the extent to which EMTALA has led to cost-shifting and higher rates for insured or paying hospital patients, thereby contributing to the high overall rate of medical inflation in the U.S."

    http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act

    yet.. not a whimper from the Republicans nor their Tea Pot brethren on how to fix this problem much less how a free market solution might work.

    this is where the pedal meets the metal on the health care conundrum and the Republicans, as usual, as AWOL on fixes.

  5. Anonymous Avatar
    Anonymous

    Larry:

    Good questions and food for thought.

    I often wonder how sustainable our current paradigm is – compare to Europe and Japan.

    EU and Japan are in better shape because they have a population that is more willing to understand the need for Fundamental Transformation – especially Scandinavia.

    Here there are still far to many who are captured by the anger of ignorance and those who profit from stirring up anger.

    I actually wonder why our fuel is $2.50 a gallon and theirs is $5 a gallon and our jobs are going away and our deficit exploding while Europe and Japan are not much better off.

    Gas tax is just one part of the picture. Too many in the First World (industrialized world, post-industrialized world, developed world) are still living off Natural Capital and loans.

    Where are the industrialized countries headed?

    Further down unless the change trajectory. The question is when a majority realize the need for Fundamental Transformation will there be resources left to pay for the transformation. The longer the anger of ignorance and yapping about ‘big government’ rather than the ‘bad governance’ the smaller the margin.

    Are ANY of the industrialized countries truly sustainable?

    None. Scandinavia is the closest.

    Are we headed for systems like India where the middle class is a fragile commodity… ?

    At least India has lower per capita consumption, lower expectations and a falling birth rate.

    but I do have a question.

    What makes an INDIVIDUAL a winner or loser?

    If you are a young guy and you do not aim to be a poor person.. how do you achieve rich person status?

    Get an education. Move to or help evolve a Household, Dooryard, Cluster, Neighborhood, Village and Community where you can do something tangible and earn a living. Only invest in things you know about and can see / experience.

    Observer

  6. Hydra Avatar
    Hydra

    "How do we care for those who are unable to care for themselves? and "How do we redistribute wealth equitably? are not the same question.

    The first might be a subset of the second, but probably not even that. If we agree that you have the right to some minimum level of subsistence, for example, then it is not a matter of redistributing wealth, but of paying for basic obligations and protections.

    RH

    RH

  7. Hydra Avatar
    Hydra

    "….understand the need for Fundamental Transformation – especially Scandinavia."

    Really? Scandinavia? Doesn't Scandinavia depend on exploiting its natural capital for much of its wealth?

    RH

  8. Hydra Avatar
    Hydra

    "Modern economic growth in Sweden took off in the middle of the nineteenth century and in international comparative terms Sweden has been rather successful during the past 150 years. This is largely thanks to the transformation of the economy and society from agrarian to industrial. Sweden is a small economy that has been open to foreign influences and highly dependent upon the world economy.
    The century-long period from the 1870s to the 1970s comprises the most successful part of Swedish industrialization and growth. On a per capita basis the Japanese economy performed equally well. The neighboring Scandinavian countries also grew rapidly but at a somewhat slower rate than Sweden. Growth in the rest of industrial Europe and in the U.S. was clearly outpaced.
    In the mid-nineteenth century the Swedish average income level was close to the average global level (as measured by Maddison). In a European perspective Sweden was a rather poor country. By the 1970s, however, the Swedish income level was more than three times higher than the global average and among the highest in Europe.
    Scandinavian countries with resource bases such as Sweden and Finland had been rather disadvantaged as long as agriculture was the main source of income. The shift to industry expanded the resource base and industrial development – directed both to a growing domestic market but even more to a widening world market – became the main lever of growth from the late nineteenth century.
    During a century of fairly rapid growth new conditions have arisen that have required profound adaptation and a renewal of entrepreneurial activity as well as of economic policies. The slow down in Swedish growth from the 1970s may be considered in this perspective. While in most other countries growth from the 1970s fell only in relation to growth rates in the golden post-war ages, Swedish growth fell clearly below the historical long run growth trend. It also fell to a very low level internationally. The 1970s certainly meant the end to a number of successful growth trajectories in the industrial society.
    Total factor productivity growth has increased over time up to the 1970s, only to decrease to its long run level in the last decades. This deceleration in productivity growth may be looked upon either as a failure of the "Swedish Model" to accommodate new growth forces or as another case of the "productivity paradox" in lieu of the information technology revolution.
    During the 1980s some of the constituent components of the Swedish model were weakened or eliminated. Centralized negotiations and solidaristic wage policy disappeared. Regulations in the capital market were dismantled under the pressure of increasing international capital flows simultaneously with a forceful revival of the stock market. The expansion of public sector services came to an end and the taxation system was reformed with a reduction of marginal tax rates."

    Excerpted from :
    Sweden – Economic Growth and Structural Change, 1800-2000, provided by Economic History.net.

  9. Hydra Avatar
    Hydra

    How to make rich people and poor people:

    "Throughout the past decade, Texas has experienced far smaller house price increases than in California, Florida and many other states. During the bubble, California house prices increased at a rate 16 times those of Texas, while Florida house prices increased 7 times those of Texas. As a result, after the bubble burst, subsequent house price declines were far less severe or even non-existent in Texas."

    …….

    "Unlike Texas, all of the markets with steep house price escalation had more restrictive land use regulations. This association between more restrictive use regulation and higher house prices has been noted by a wide range economists, from left-leaning Nobel Laureate Paul Krugman to the conservative Hoover Institution’s Thomas Sowell. It is even conceded in The Costs of Sprawl —2000, the leading academic advocacy piece on more restrictive land use controls, which indicates the potential for higher house or land prices in 7 of its 10 recommended strategies."

    "Speculation is often blamed as having contributed to the higher house prices that developed in California and Florida. This is correct……Yet the speculators were not drawn to the metropolitan areas of Texas. This is because speculators or "flippers" are not drawn by plenty, but by perceived scarcity."

    http://www.newgeography.com/content/001680-how-texas-avoided-great-recession

  10. Larry G Avatar
    Larry G

    re: speculators

    well speculators are like cock roaches … I'm not sure what was different this go around than before.

    it seems like whether it's Tea Pot Dome or the Great Depression or the Savings and loan debacle or Enron that speculators have always been around looking for whatever they could take advantage of which usually requires someone else who has a greed motivation also.

    I don't think that housing restrictions played any more a role this time that saying that housing restriction caused Enron or the Savings & Loan scandal.

    Housing is but one commodity that speculators use for their activities.

    It wasn't that long ago that the price of gasoline was gyrating all over the place with no rhyme or reason to why other than apparently some folks were manipulating the market.

  11. Hydra Avatar
    Hydra

    "Housing is but one commodity that speculators use for their activities."

    The point is that it wasn't the housing but the artificial scaricity caused by restrictive regulation that ENABLED the speculators to strike harder in some places than others.

    I've said before that there is plenty of blame to go around in the housing bust. My favorite root cause candidate is the three ratings companies that were simply not doing their job. without their fraudulent complicity no inflated motgage backed securities could have been sold.

    Add overly restrictive zoning boards to that list of blame sharers. but regardless of the cause of the slump, it is going to be worse where prices are artifially inflated compared to places that have tangible value for th emoney like decks or chimneys.

    The situation with commodities was entirely different.

    RH

  12. Hydra Avatar
    Hydra

    "It wasn't that long ago that the price of gasoline was gyrating all over the place with no rhyme or reason to why other than apparently some folks were manipulating the market."

    It wasn't that long ago that people had jobs to go to. When demand dried up, scaricity dried up, and the speculators dried up.

    RH

  13. Hydra Avatar
    Hydra

    Oh yeah, and Texas isn;t feeling the loss of state revenues as much as other states either, due to fewer foreclosures and less job loss.

    RH

  14. Larry G Avatar
    Larry G

    " The point is that it wasn't the housing but the artificial scaricity caused by restrictive regulation that ENABLED the speculators to strike harder in some places than others."

    that's total bull hockey and you know it.

    Many of the meltdown homes were CONDOS…

    that does not sound like housing restrictions… that sounds a lot like DENSITY…

  15. Larry G Avatar
    Larry G

    if what you are saying had any semblance of truth to it – you'd be able to produce a rank list that showed the price collapse that was keyed to the land restrictions and you can't do that because it's simply not true.

    You're back again to constructing your own little world that you believe in and running away from the realities.

    it simply does not become you guy.

    stick to the truth and you'll be a happier person and I won't get near as agitated.

    we have too many folks already running around with their own constructed realties.

    We don't need no more.

  16. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    I don't know about where you live, but down here in Tidewater you couldn't touch a new condo for less than 300k or a house for less than 450k. The reason was the local governments wanted to recoup their expenses for provided services. There were few mid-level homes being built, just Mcmansions and their condo equivilent. This government inspired scarcity helped push overall prices, and their assessments, through the roof. Even though the house of cards has fallen, cities continue to reap a reward through slower revaluations, which is one more factor in the foreclosure equation.

  17. Larry G Avatar
    Larry G

    On a national basis – the big meltdown areas were Florida, Arizona Nevada and California.

    In Va, Spotsylvania and Stafford have been high in foreclosures and loss of value.

    We do charge proffers but that has not had much affect on how many units are available nor the demand for them because most of the folks that buy houses down this way are paying 100-200K and less for the same house up in NoVa and 1/2 the property taxes.

    Most of the folks who bought homes were not "poor" people nor were they buying homes in redlined neighborhoods.

    They were folks with above average incomes who paid the going price for the homes which was much more influenced by the price of homes in NoVa that the proffers on them.

    These folks just got caught when the values plummeted and quite a few were mobile workers.. some in or with the military and they just walked away when the prices dropped below their equity.

    I don't think anyone could legitimately accuse Spotsy and Stafford of "restricting" homes as we have doubled our population every 5 years from originally a county of 30,000 to a county of 250,000.

    We simply don't have the roads water/sewer to support much more and we're at our limit for debt for new infrastructure.

    More homes takes more than "allowing" them.

    You have to have schools, roads, water&sewer, fire and EMS, etc… all of those cost money to build and when you're at the limit of your borrowing ability – that all she wrote.

  18. Groveton Avatar
    Groveton

    The football gap.

    I was a pretty good high school football player. Sometimes I played linebacker, sometimes I played safety. As I went through my senior year I approached a number of colleges about getting a scholarships. I had worked hard. I lifted weights and was one of the strongest players on the team.

    Do you know what the big time football programs said?

    They said I wasn't fast enough to be a safety and I wasn't big enough to be a linebacker.

    How grossly unfair!!

    Those rotten football scouts and coaches obviously discriminated against me based on my lack of size and speed. Obviously, the guys big enough to play linebacker at elite programs had extra access to highly nutritional food which I could not get. Obviously, the guys fast enough to play safety had lighter, better cleats than I could afford.

    I was a victim of the football gap.

    In a fair world, the fast guys would be forced to wear weighted belts when they played. The weight would be increased until they were as slow as I am. And the big guys would have to lose weight until they were my size.

    I mean … I really wanted to play college football and then go on to the NFL. I should be in the Pro Football Hall of Fame by now.

    Have any of you guys ever considered the possibility that intelligence, motivation and talent are not any more evenly distributed than athletic skills? Maybe the wealth gap is simply a reflection of that uneven distribution.

    Life isn't always fair and it's not always society's fault or some complex scheme but those who end up on top.

    The players the colleges wanted were just better than I was.

    Sad but true.

  19. Larry G Avatar
    Larry G

    Well Groveton – you lacked the super duper premium genes…as well for the sort

    but without other others willing to pay for you education and your sports – you and many in worst circumstances than you may not have gotten the opportunity for an education or sports.

    That's the fundamental thing that separates us.

    I feel the same way about health care as I do about public education.

    I'm opposed to taxpayers paying for non-core academic education and think it all should be user fee but I would pay for those kids who cannot afford it.

    Health care and Education are fundamental to a health population and economy and all of of need both – and we need to pay for it.

    Using tax dollars to spend 10K a year, 120K per student to educate them while taking the position that they don't deserve tax dollars for their health care is inconsistent with the entire basis for education to begin with in my view.

    And it's especially poignant that what can keep an entire family from getting health insurance is a kid that we pay 120K to educate.

    Well.. if a kid has a pre-existing condition why don't you guys just write him off all together and deny him an education also?

  20. Groveton Avatar
    Groveton

    I consider an education a pre-requisite to "equal opportunity". However, not forever. You get through high school for free – then you have to borrow or earn enough to pay. You want a PhD in poetry? Great. Get out the checkbook.

    I feel the same way about health care. You should get until you are old enough to pay for it and then you should pay.

    Just curious – I took math through Calculus and two years of biology and chemistry in high school. All compliments of the Fairfax County taxpayers. I assume you would have wanted me to pay for the advanced courses? I find that very odd. As for the $12,000 per year ( in today's dollars) it cost to educate me…I have repaid that dozens of times over in state income and real estate taxes. Seems like those extra classes helped me do well in college, get a good job and pay way, way more than average in taxes. A pretty good deal for Fairfax County – no.

  21. Larry G Avatar
    Larry G

    Yes, I'd want you to pay for the advanced courses unless you were unable to financially.

    Schools have gotten out of hand.

    I'd fund the schools locally the same way that the State and Feds does and that is that they fund the basic reading or the at risk and disadvantaged and the State funds the SOLs.

    Right Now, we rank 15th in the world and we are behind in English, Science and Math Literacy – which is the ability to use these disciplines to solve real world problems.

    It' call critical thinking and we don't fund it adequately because we focus on extracurricular sports and what I call "amenity" courses that "poof up" your resume for college.

    Kids who graduate and don't go to college need these critical thinking skills and they do not get them.

    The schools have become fancy taxpayer-supported country clubs for the well off – at the expense of core academics – which is what taxpayer dollars are supposed to be for.

    Check out Virtual Virginia and tell me why those courses won't work for motivated students.

    Tax Dollars are SUPPOSED to go towards getting all kids educated to the point where they can graduate and go out and earn a living, pay taxes, not need entitlements, set aside for their retirement and medical care, etc.

    What we are doing is graduating college grads who we then propose to tax the dooda out of to pay for these kids who did not get an adequate education for non-college work.

    This is another area where the Europeans and Japanese are cleaning our clocks.

    and yes.. I'm totally in favor of firing the DC teachers and setting up a system where teachers are measured for performance ( as well as principles and Superintendents).

    We have corrupted our education system .. crippled it… so that it's basically designed as a resume builder for the college-bound while jettisoning them that don't go.

  22. Larry G Avatar
    Larry G

    Groveton – I know a man who has a million dollars set aside and he has taken way more out of Medicare than he paid into it – and has not touched his million.

    Given the basic premise behind Medicare – do you think he should be paying at least part of the costs that exceed what he paid into it?

    I see the Medicare conundrum the same way I see schools.

    I'll pay for those to get the basics and I'll pay for some of the extras if they are financially unable – but the folks who can afford to – should pay full boat.

    If you think that is redistributing wealth – you are correct – and we do it all the time right now with public schools – which are quite likely a much bigger chunk of tax dollars when you consider than each kid gets well over $100,000 of tax dollars.

    Again.. we pay 100K for the kids education but we'll toss him (and his family) overboard if he has a pre-existing condition.

    and to what beneficial outcome to society?

    That kid and his family will end up not getting the basic care they need – to save money – and then wait until their condition is so serious that they go to the ER where heroic and incredibly expensive treatment is needed and we then cost-shift that to your health insurance?

    does that make sense?

    If you REALLY wanted to stick to your guns on this – you would advocate that we not give free ER treatment to anyhow and that would end the problem …

  23. Hydra Avatar
    Hydra

    Gee, Larry, I don't know where to start. You have some screwed up ideas.

    Suppose a Guy like me pays into Medicare all his life and dies suddenly without ever using it? What happens to the money? Dedicated to his spouse and children? Are we going to create a new property right for your individual share of what you pay into government compared to what you get back?

  24. Groveton Avatar
    Groveton

    Larry:

    Your arguments are scary. Let's start with Advanced Placement. I didn't spend any more time in classes than anybody else at Groveton. We all showed up at the same time, we all had the same number of classes each day and we all were dismissed at the same time. The only difference is that I was taking math instead of shop and Chem II instead of study hall.

    There is no evidence which demonstrates that schools which don't offer AP classes do a better job of educating the students than schools which offer AP classes.

    Here's an interesting blog post:

    http://mjperry.blogspot.com/2010/02/dc-public-schools-129-trillion-28170.html

    Here's another (take a look at page 10):

    http://www.fairfaxcounty.gov/government/budget/county-schools-budget-presentation.pdf

    Here's another one for you Larry …

    Only thw 1998 data is free:

    http://www.psk12.com/rating/USthreeRsphp/STATE_VA_level_High_CountyID_0.html

    So, Fairfax County spends $10,000+ less per pupil that DC. Want to bet which school system has more AP classes and students? And … Fairfax County is in the middle of the Northern Virginia systems in terms of cost per student.

    Yet, Fairfax has 10 of the best 25 high schools in the state – rated by percentage of students who passed English and Algebra II SOL tests.

    Where is this mythical relationship between AP classes and undereducating non-AP students? Where is the relationship between lots of AP classes and higher cost / pupil.

    Maybe you should have skipped math less often in order to join the Future Democratis Voters Club meetings.

  25. Hydra Avatar
    Hydra

    Darrell is right, density and housing restrictions are not related. The information I have described is well documented. Of course a lot of foreclosures were townhomes and condos, there are a lot more of them. Speculators bought them to rent to people who could not afford sfh because of building restrictions.

    If you choose not to see the obvious, suit yourself. All I can tell you is that since housing prices collapsed, I have had four tenants who moved out and bought their own place.

  26. Hydra Avatar
    Hydra

    The best indicator of student performance is how much money their parents make. No wonder Fairfax does well.

    I had eight AP classes in high school. I don't think they cost any more than a regular class. What was high school supposed to do, kick me out?

    Why should I get less class hours than some industrial arts student?

    Then again some AP types could have used some more practical and useful mechanical skills.

    I was lucky. I worked during high school (and college) at jobs that transferred real skills.

    Despite my AP experience, and my higher education, I'd say most of it was irrelevant to my carreer(s).

    Public education is mostly a waste, and my father who was a teacher would agree.

  27. Larry G Avatar
    Larry G

    Groveton – I'm not talking about how efficient a school system is.

    I'm talking about the fundamental basis for why we as a society agree to wealth transfers for schools and I'm pointing out an equity issue about how those resources are made available to kids for their educations.

    We rank 15th in the world on academic rigor because our schools are not set up for their original intended purpose which is to produce and educated workforce – which is more than college bound kids and that is a key reason why Europe and Japan outrank us.

    If you think my ideas are scary you need to get yourself better educated because my words echo those that come from the likes of Bill Gates and a plethora of other CEOs who know that even the college graduates lack the academic rigor for today's jobs that require strong literacy in English, Math and Science to understand the modern world's technologies and how they function.

    We have way too much emphasis on extracurricular, sports, and college resume-padding courses.

    Because we spend our school money on these courses, we make the core academic courses compete against them and we were fat, dumb and happy with our system until NCLB came along and showed us what "real scary" really is – a 20% failure rate at graduation even among many of the so-called "best" schools.

    Our vaunted Va SOLs say that 60% of our kids that graduate are "proficient".

    Think about that – think about the 30%.

    If that is not bad enough, the NAEP – which is a much more objective – national appraisal says that only 30% of the Va kids are "proficient" and NAEP is how we compare to the International PISA standards where we rank 15th.

    So we do not spend money on the problems that need solving – which is pure academic basics while at the same time offering all manner of higher level "enrichment" classes that are paid for with the money not spent on core academics.

    this is why I say that the "extras" need to be paid for by the parents in part because it's those parents that are not satisfied with one sport, they want 8, not two foreign languages but 6, no advanced Calculate complete with those hated word problems – but AP branded for college resumes.

    You've called me a Liberal before, even an Obama Liberal even though I've take tough fiscally conservative stands… supported tolls roads, advocate cutting Medicare and extending the retirement age for SS, etc, etc.

    We cannot afford the schools we now have that are ineffective at producing an educated workforce.

    Most all of Europe and Japan spent less than we do at schools and outrank us yet we blithely continue and yammer on.

    Both education and health care need to be Universal – and both of them need to be focused on the basics and to hold people accountable for the add-ons.

    That's a fiscally conservative position guy.

    It's more fiscally conservative than your positions – and it gets to the nub of why we waste money with entitlements.

    My position used to be found in a particular wing of the Republican party that are now banned by the way.

  28. Larry G Avatar
    Larry G

    One AP course does not cost "more" than other classes.

    8 AP courses cost 8 times as much as one class though and that's the basic problem.

    It's not one AP course, or one Sport or one band – it's a plethora of them and they compete against the basic academic courses that teach what is known as critical thinking skills necessary to function in the real world.

    This is not me saying this. This is Bill Gates and quite a few CEOs that are saying that even out of college, that kids do not have basic literacy knowledge and have to have remedial education before they are useful.

  29. Larry G Avatar
    Larry G

    The urban schools are in a class by themselves.

    They are corrupt institutions that don't educate and basically are factories for those who will need entitlements and jail cells.

    It's not sustainable and despite all the blather about higher taxes – this is where the higher taxes come from.

    They come from entitlements – soup to nuts entitlements where we pay for housing, school lunches, food stamps, medical care etc.

    that's the GROWTH in entitlements that we can't seem to get under control.

    We can spit out more and more Fairfax graduates but what they end up as is tax cash cows for entitlements for those that did not get a workforce education.

    Sometimes I think we are among the more stupid in the world in how we view some of these problems.

    Our taxes are supposed to generated an educated workforce – not 1/2 that attend college who will then pay entitlements to keep the other 1/2 afloat.

  30. Larry G Avatar
    Larry G

    restrictive land policies did not cause the housing meltdown – what caused it was securitizing bad mortgages until Wall Street was so bloated with them that it had a hemmroidal blowout.

    The houses and condos that foreclosed were in all manner of new developments… new condos.. new subdivisions…

    do you get the word "new" – which strongly implies that they were approved to be built?

    Why do you guys choose to ignore the realities here?

    we have way, way too many people these days that want to believe what they want to believe – no matter what the facts and the realities are…

    the idea that stolen property rights led to the economic meltdown is ludicrous.

  31. Hydra Avatar
    Hydra

    "…restrictive land policies did not cause the housing meltdown – what caused it was securitizing bad mortgages …."

    I said there was plenty of blame to go around. In my view, securitizing bad mortgages was facilitated in the first place by the rating agencies that did not do their job and declare the securities as risky.

    Had that happened there would have been no market for the mortgages and no reason for brokers to push risky loans. Even without risky loans, even if only solid loans had been issued, the mortgage backed securities were more risky than they were preseted to be because the risks became untraceable.

    Second, a lot of mortgages that collapsed were not bad on the face of them. They turned bad after people lost their jobs as a result of the securities meltdown, an susbsequent economic collapse, which was a result of the ratings agency failures.

    Still more mortgages turned bad when even people who still had jobs went upside down as housing prices slid. I know one person who had substantial equity in his home. He refinanced and used cash to buy his retirement home outright. it was a perfectly reasonable loan, at the time. Later his value declined and he is now upside down on his principal residence.

    He is still employed, still making making the payments and still current, but if things get bad enough, what do you suppose will happen? He will retire scot free and let the bank hold the bag, and it will all be legal accroding to the terms of his loan contract.

    Unethical, maybe, but then Cayne left Bear Stearns ith million s in his pocket, too.

    One reason housing prices collapsed in some places was that they were artificially high due to housing restrictions. Those places with the highest restrictions had the greatest decrease in prices and the most foreclosures.

    I never said it was THE reason, only that it is a contributing reason. You choose to deny that, in spite of the evidence.

    In my experience, when you have a bad event and you want to prevent its recurrence, it is important to identify all of the causes, principal and partial and fix them ALL.

    RH

  32. Hydra Avatar
    Hydra

    "The houses and condos that foreclosed were in all manner of new developments… new condos.. new subdivisions…

    do you get the word "new" – which strongly implies that they were approved to be built?"

    ================================

    Of course they wee approved to be built. And investors/speculators snapped them up because they could be sold at inflated prices because of all the others that were NOT approved.

    RH

  33. Hydra Avatar
    Hydra

    "The urban schools are in a class by themselves."

    They are unsustainable because the land around them, and the occupants of that land, cannot afford to pay their full locational costs.

    The prediction is that if the parents (assuming they exist) don;t make good money thenn their children won't do well in school.

    Throwing money at the schools won't fix that problem, even if you can solve the problem of WHERE the money will come from and WHO will pay it.

    RH

  34. Hydra Avatar
    Hydra

    "…the idea that stolen property rights led to the economic meltdown is ludicrous."

    ============================

    Well, lets suppose that the proerty rights had not been stolen. Then they might have been sold and those transactions would have supported the economy. Those transactions would have created more competition, which would have helped prevent the bubble.

    RH

  35. Hydra Avatar
    Hydra

    "Our taxes are supposed to generated an educated workforce – not 1/2 that attend college who will then pay entitlements to keep the other 1/2 afloat."

    ================================

    You still assume that every has to work or should work.

    We have had massive increases in productivity that make that idea seem quaint. And if EMR is correct and we need LESS productivity to save the world, then we need even fewer people working or working fewer hours for shorter career lengths.

    If we stop looking at work as a requirement and stop looking at time off as an entitlement, then maybe we can figure out who gets what fairly from an entirely different baseline.

    People who have done well in the stock market like to think it is because of how smart they are, never mind that the whole market it sup. And when they do badly, they like to blame it on some conspiracy by others.

    Same goes for the work place.

    Suppose that instead of looking at "doing well" as some kind of personal achievement we view it as the result of an accidental augmentation as the result of the confluence of various "entitlements".

    So you are entitled to have your parents, but if they happen to be wealthy then your achievement in school is no big deal – it is expected. Therefore, nothing is being "taken away" if you are not rewarded for that.

    RH

  36. Larry G Avatar
    Larry G

    restrictive land policies is not even a contributing reason that can be demonstrated.. only conjecture from those who want to fervently believe.

  37. Larry G Avatar
    Larry G

    " You still assume that every has to work or should work."

    I assume that the ones that don't will be paid for by the ones that do and that we don't want any more not working than we can stand with higher taxes on everyone else to pay for them.

    "We have had massive increases in productivity that make that idea seem quaint. And if EMR is correct and we need LESS productivity to save the world, then we need even fewer people working or working fewer hours for shorter career lengths."

    Any society where some work to pay for others who don't work but are capable of it will fail.

    "If we stop looking at work as a requirement and stop looking at time off as an entitlement, then maybe we can figure out who gets what fairly from an entirely different baseline."

    It's not the time off that kills us. It's the food, shelter and medical care.

    So you are entitled to have your parents, but if they happen to be wealthy then your achievement in school is no big deal – it is expected. Therefore, nothing is being "taken away" if you are not rewarded for that.

    The fundamental purpose of public tax dollars for schools is to produce an educated workforce that can work to provide for their food, shelter and medical care with enough left over to pay taxes for those who don't "earn" a living.

    The people who need schools are not the ones who have rich parents but the ones that do not and how they learn and achieve is way different than how kids with parental and economic advantages learn.

    Our schools are not configured to teach the kids that do not have the demographic advantages that other kids have.

    We focus the schools on the kids who "have the most potential" and just let the others end up where ever they end up… usually needing entitlements to make it – even though the have equivalent IQs.

    So.. what we are doing is graduating college-bound – who will eventually be taxed to pay for the entitlements of those who "graduated" with crippled educations.

    that's a huge waste of tax dollars when we know these other kids can also be well educated.

  38. Hydra Avatar
    Hydra

    "I assume that the ones that don't will be paid for by the ones that do "

    ===============================

    You missed my point then.

    If you assume that those that don't work will be paid for by those that do, then you are assuming that the money actually belongs to those who did the work.

    But what if they got the money because of something that didn't cost them any thing, and that they did nothing for: like doing well in school as a result of having having wealthy parents.

    In that case, is it really their money? And if not, then how can you think that "they" are paying for someone else?

    In other words, what if the fact that they are rich has nothing to do with them, personally, but instead it is simply an accidental agglomeration of societal wealth on one person?

    Society isn't taking anything from that one person if they are only getting their own rightful wealth back.

  39. Anonymous Avatar
    Anonymous

    "restrictive land policies is not even a contributing reason that can be demonstrated.. only conjecture from those who want to fervently believe."

    =================================

    We know that restrictive land policies cause higher prices. That much has been shown and is even conceded by those that favor more restrictive regulations.

    We know that areas with the most restrictive regulations and therfore higher prices had the greates decrease in value and the most foreclosures.

    Are you saying that there is no cause and effect or that one of those statements is not true? If so, which one?

  40. Hydra Avatar
    Hydra

    "The fundamental purpose of public tax dollars for schools is to produce an educated workforce …."

    You are still stuck on that.

    What if we don;t need an educated work force anymore, or only a very small one?

  41. Larry G Avatar
    Larry G

    you mean like they own land they did not deserve to own?

    and the property rights really don't belong to them?

  42. Larry G Avatar
    Larry G

    " Are you saying that there is no cause and effect or that one of those statements is not true? If so, which one?"

    I'm saying there is no cause and effect to the meltdown. None. Ziltch.

  43. Larry G Avatar
    Larry G

    " You are still stuck on that."

    not me. Bill Gates and his fellow CEOS including those who send jobs overseas and depend on H visas.

  44. Hydra Avatar
    Hydra

    "…you mean like they own land they did not deserve to own?"

    ===============================

    How do you get that from what I said?

    No, it would be like when they are occupying and using land that wasn't theirs to begin with.

    It would be like making profit by dumping waste on public land.

  45. Larry G Avatar
    Larry G

    you didn't say this:

    " You missed my point then.

    If you assume that those that don't work will be paid for by those that do, then you are assuming that the money actually belongs to those who did the work.

    But what if they got the money because of something that didn't cost them any thing, and that they did nothing for: like doing well in school as a result of having having wealthy parents."

    wealthy parents who own land and pass it on to those who don't deserve it?

  46. Hydra Avatar
    Hydra

    "" You are still stuck on that."

    not me. Bill Gates and his fellow CEOS including those who send jobs overseas and depend on H visas."

    ================================

    I don't see the connection to the previous conversation at all.

    The question I'm asking you is what if productivity goes so high that we discover not everyone has to work in order to produce all that we need.?

    Or, from EMRs perspective, what if we discover that not everyone has to work in order to produce all that we (and the earth) can afford to consume?

    What if we get away from the idea that people who don't work are lazy nonporductive ne'er-do-wells who are the bloodsuckers of productive society?

  47. Larry G Avatar
    Larry G

    " The question I'm asking you is what if productivity goes so high that we discover not everyone has to work in order to produce all that we need.?"

    that would mean that there would be no wailing and gnashing of teeth over universal health care – that we can easily pay for it for everyone without breaking a sweat?

  48. Hydra Avatar
    Hydra

    "wealthy parents who own land and pass it on to those who don't deserve it?"

    ===============================

    If you own something, land or anything else, then you have the right to exclude others from it and the right to sell, or rent it.

    You can sell your something to anyone you like for zero dollars if you choose. That person then owns it, and whether they "deserve" it or not isn't part of the question. The only issue is whether the original owner actually owned it or not.

    This would not be an issue if strong property rights are in place, because such things would be defined, and deeded.

    Consider the current i-phone flap. The court has held that it is your phone and you can do what you want with it.

    ———————————

    The question I'm asing has to do with those things that people control but they never actually owned in the first place. I control my education, but I never paid for most of it: do I still own it? Or is it that it is still justifiably mine even though others owned it and sold it to me cheap?

    Or how about Cayne and Madoff? They both controlled money that wasn't theirs. Madoff is in jail and Cayne is living comfortably on millions that he took out of Bear Stearns for good performance, before we learned there was no performance.

    How about Enron Chairman Ken Lay? His family got to keep millions of his unearned earnings because he died conveniently.

  49. Hydra Avatar
    Hydra

    "I'm saying there is no cause and effect to the meltdown. None. Ziltch."

    ==============================

    OK, so no causation between the two statements, but you don't disagree with the statements.

    Post hoc doesn;t mean propter hoc, is that it?

  50. Larry G Avatar
    Larry G

    questions about Madoff and other slimeballs are above my pay grade.

    Lucky for me that I never had enough money that some scum like Madoff would be interested in but even then other slime on Wall Street managed to steal about 20% of what I had saved in a 401 and about 1/3 the value of my house.

  51. Larry G Avatar
    Larry G

    I don't believe that land "restrictions" result in economic meltdowns that themselves were involved with securitization of bad investments.

    no more or less than land restrictions have anything to do with speculating in gasoline or pork bellies.

  52. Hydra Avatar
    Hydra

    "…all that we need.?"

    that would mean that there would be no wailing and gnashing of teeth over universal health care…"

    The wailing and gnashing of teeth over HCR is primarily a matter of deciding how much "all that we need" is, precisely.

    Rationing is what conservatives call it, as if doing without is not rationing.

    (Let's not call it Universal Health Care, because we are a long way from there.)

  53. Larry G Avatar
    Larry G

    "all that we need"

    let's call it highways, or armies big enough to do what we need done or enough money for NUKES and SOLAR Panels…

    pick your poison.

    we're a long, long way from productivity nirvana…guy.

  54. Hydra Avatar
    Hydra

    Land restrictions resulted in elevated prices in some areas. Speculators are attracted to scarcity and elevated prices. those areas that had the most elevated prices collapsed the farthest and had the most foreclosures.

    That risk, along with others (nontraceability), was not properly evaluated by the ratings agencies concerned with risk assessment.

    There were other factors in hand, but this was almost certainly one of them. Different schools of thought have come to the same conclusion based on data from different locations.

    There are other factors, sure. But if enough housing had been produced to keep prices at rock bottom to beginn with, then prices would not have crashed so far and fewer mortgages woud have been upside down.

    The funny part of this is that so many arguments for building restrictions are ostensibly based on environmental concerns. The recession did far more damage to the environment than building a few houses would have done.

  55. Hydra Avatar
    Hydra

    "…let's call it highways, or armies big enough to do what we need done or enough money for NUKES and SOLAR Panels…"

    =============================

    Oh, you mean all those poverty stricken public projects that cannot support themselves. that's different from people who cannot support themselves.

    Lets kill two birds with one stone then: hire all those unemployed people with public money to work on roads and Afghnistan.

    Are you sure you wouldn't rather pay them to do nothing? It is public money taken from the wealthy either way, but it is proably cheaper to have them do nothing.

    If we are so far away from productivity nirvana, then why is EMR so exercised about mass overconsumption??

  56. Hydra Avatar
    Hydra

    "Any society where some work to pay for others who don't work but are capable of it will fail."

    Fine. Spread the unemployment around. I work to run a farm when farms are in gross oversupply. I'll be happy to share my nonexistent profits with any unemployed farmer who wants to work the place, if he'll share the time off and the unemployment check.

  57. Larry G Avatar
    Larry G

    land restrictions…

    do you ever spend time in NoVa?

    what more would you do there to "unrestrict"?

    Starter homes are 500K… tell me you have a plan for NoVa to create 200K homes by lessening restrictions.

  58. Larry G Avatar
    Larry G

    work and productivity. Each person needs to produce what is necessary to take care of themselves and their family.

    When we get to the point where we don't need any more productivity, we'll know it.

  59. Hydra Avatar
    Hydra

    "…even then other slime on Wall Street managed to steal about 20% of what I had saved in a 401 and about 1/3 the value of my house…."

    Is that what you think?

    Who has the other third of the value in your house, and how can he sell it? You had that value at one time, and you could have cashed in by selling out, or even refinancing?

    Do you have the slightest inkling that if more buildig permits had been issued your house value would not have been artificially inflated?

    The price of everything went down, your home and 401 being only two examples.

    Cheer up, gas is only $2.55 now. I don't hear anyone complaining about the profits of oil companies being stolen by low prices.

    But tlet the value of th estock in that oil company affect your 401 and then it is a giant conspiracy at work to deprive you of your property.

    You should be rooting for stronger property rights, which would have helped protect you.

  60. Hydra Avatar
    Hydra

    Each person needs to produce what is necessary…"

    Why?

    Aside from "How much is necessary?"

    What if I pay for health care and never get to use it? Why should someone else have to pay for all the health care they need while mine goes to waste?

  61. Hydra Avatar
    Hydra

    The home that I built in Nova in 1989 would not be allowed to be built today,due to new land restrictions passed since then. That is one reason homes are so expensive there.

    My home cost $90,000 brand new in 1989. I could build it brand new today for $220,000.

    It is valued at over $500,000,partly because people in the same situation today as I was in 1989 are shut out of the market by idiots who think they are saving money for their constituents.

  62. Hydra Avatar
    Hydra

    Sorry for the delay in response. I had to go out and put up a couple of tons of hay before I lose it to the rain.

  63. Hydra Avatar
    Hydra

    Fewer people moving to where jobs are because of the housing crisis

    "In the past, people tended to move to where the jobs are," said Assistant Treasury Secretary Alan B. Krueger, who oversees economic policy for the department. "Now it is necessary to have more of a strategy to move the jobs — and create new jobs — in areas where the people are."

  64. Anonymous Avatar
    Anonymous

    Some quick notes on these comments before moving back to the original subject that is the subject of Professor Risse’s most recent post:

    Poor Larry G!

    Someone needs to find him a place he can post and have his ideas be given serious thought.

    He gets silly non-sequiturs from Groveton and spam.

    Groveton did go to college, right? He was just was not able to get into as good a college as he could have if he had been a bigger linebacker or a faster safety – places like The U, USC or Ohio State maybe?

    Groveton’s attempts to justify Enterprise greed are better than the endless selfish drivel from the multi-snakehead (aka, ‘hydra’).

    Larry holds his own in every round but the spammer comes back like a cheap pop-up punching bag.

    We have to agree RH that must be paid. No one takes that abuse ‘for nothing.’

    If Filibuster knew anything about Scandinavia he / she would know we were referring to nation-state-wide indications of Institutional Capacity such as ‘The Natural Step’ in Sweden and would not bother copying irrelevant spam off the Internet. Those that pay him must believe that just distracting those concerned with a sustainable trajectory of civilization is worth their money.

    The commentor “blog advisor” suggested that Larry (26 comments on this string) and multi-snakehead (32 comments on this string) get their own site.

    multi-snakehead's response was that there would be a lot of empty space without his filibustering.

    Some folks would like the quite.

    Many others might chip in if they were not afraid of being ridiculed and snowed under with tripe.

    Observer

  65. Anonymous Avatar
    Anonymous

    “Multi-Snakehead” I like that!

    Multi-Snakehead’s best effort in these comments was to suggest that rather than figuring out how to create a safety net it would be easier to figure out a how to equitably distribute ‘power.’

    How is redistributing ‘power’ different from redistributing excess wealth which is the result of excess use of power or use of excess power?

    It would make more sense to focus on the distribution of “opportunity.’

    But a sustainable society still needs a safety net for those that do not accept the challenge of ‘opportunity’

    There are different levels of competency. It does not matter of how much ‘opportunity’ (or power) is available, some cannot take advantage of opportunity or avoid abuse of power.

    What is the safety net for those citizens – a safety net that provides a sense of self-worth and creates happiness as well as safety?

    Or does a 50.5 percent majority just invoke Darwin by just allowing obesity / diabetes and cell phone radiation to kill off the excess?

  66. Hydra Avatar
    Hydra

    Yesterday (Sept 1 2010) , police shot to death a man who believed that the US economy was dangerous, that we must reduce global population, that civilization as it stands is all wrong, that if you don’t agree with him you should leave the planet, that human growth, immigration and breeding pollution generating babies must be stopped, that automotive, factory, and housing pollution must be stopped, that increased food production leads to overpopulation, that we must protect wildlife areas from encroaching agriculture, and (oh yeah) find solutions to unemployment and housing.

    No doubt the police thought this individual was a dangerous lunatic.

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