Morning Music: The Supremes

The Supremes Produced and Arranged by Jimmy WebbIn 1972, the musical Pippin was produced on Broadway. It was Stephen Schwartz’s second hit in as many years, after Godspell, which ran for five straight years. When I was a kid, I loved Pippin. I saw it in 1979 at the SRJC Summer Repertory Theater. I’m not as sold on it now. “Corner of the Sky” struck me as near perfect then, but now it is almost unlistenable with its ponderous chorus. Still, many songs are quite good like “Magic to Do,” “No Time at All,” and “Spread a Little Sunshine.”

Another really strong song is, “I Guess I’ll Miss the Man.” What’s nice about it is that it is sweet while still maintaining a grasp on reality with its wry sense of humor. “Some men are heroes; Some men outshine the sun; Some men are simple, good men; This man wasn’t one.” The singer is far past the point of expecting perfection — or, it turns out, even one degree past adequacy.

I didn’t realize it, but the same year the musical appeared on Broadway, The Supremes released this song on their album, The Supremes Produced and Arranged by Jimmy Webb. In fact, they even had a minor hit with it. They manage to sap it of all its vitality and humor. But it’s still a pretty song — and highly attractive to men the world over!

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Anniversary Post: Time Itself

Solar EclipseOn this day in 585 BC, time began. No, really! Sorta. I mean dating happened. You see, Thales of Miletus was one of the greatest of the Greek philosophers — born in 624 BC. He was also, in a sense, the first Greek philosopher. He tried to explain the world without mythology. This is at a time when the Jews were wandering around the desert trying not to worship golden calves. (Just kidding! That’s all mythology — the Jews never wandered the desert for forty years.) Because of his early thinking, he is widely considered the father of science. And think about it: there are many people today who find Thales’ ideas threatening.

In addition to his many other accomplishments, Thales is known for predicting the 28 May 585 BC solar eclipse that apparently caused the two sides in the Battle of Halys to call a truce. As a result of this, ancient events can be dated, because we know when this one thing happened. Of course, nothing is ever that clear. For one thing, we only know about this prediction from Herodotus, who wasn’t born until a century after the eclipse. What’s more, there are some historians who claim that we are misreading Herodotus and that he really meant a lunar eclipse and that the time was anywhere from a couple of years to a couple of decades earlier.

Ain’t that always the way with time! And dates. And science. But it sounds really cool, “This is the date time started!” And there are far worse ways of determining the truth than basing it upon the Coolness Factor (CF). Take for example: ancient dogmas. Does stoning to death adulterers sound cool? No it doesn’t. The CF strikes again!

Happy anniversary time!

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Prison for Soccer Villains, Fines for Bank Villains

Soccer PenaltyIt has been amusing to watch this worldwide dust-up regarding the Fédération Internationale de Football Association or FIFA. Oh! My! God! There is corruption in world football! Something must be done to stop this because, God knows, society might fall apart if the people think that soccer isn’t on the up and up. But not to worry, Attorney General Loretta Lynch is on the case! People are being indicted. People are going to go to jail. She noted, “They corrupted the business of worldwide soccer to serve their interests and to enrich themselves.” At least, justice is done! Now that the evildoers are being punished, we can all rest safe at night knowing that soccer is clean.

Of course, this spectacle of “tough on soccer crime” comes just one week after it was announced that Citicorp, JPMorgan Chase , Barclays, and Royal Bank of Scotland were caught having “rigged foreign exchange prices” over the couse of six years. Loretta Lynch had strong words for these criminals: they had been involved in a “brazen display of collusion.” She added, “Starting as early as Dec 2007, currency traders at several multinational banks formed a group dubbed ‘The Cartel.’ It is perhaps fitting that those traders chose that name, as it aptly describes the brazenly illegal behavior they were engaging in on a near-daily basis.” Very bad stuff.

So if the US and EU are going to lock up people who have manipulated something as trivial as soccer, you can only imagine what happened to these bankers. What was it? Are they set to be hanged, drawn, and quartered? Or perhaps death by sawing? Burned at the stake?! What horrible end will come to these malefactors of great wealth? Well, if you read this website regularly — or if you have simply lived in the United States sometime in the last forty years — you already know: nothing.

That’s not how it is put in the press, of course. The Justice Department made a big deal out of the fact that the banks will have to pay $5.5 billion in fines. Also, the banks involved will have to plead guilty to some criminal charges. But you know the payoff:

No individual bank employees were hit with criminal charges as part of the settlements, though several authorities said investigations into foreign-exchange issues are continuing.

Don’t worry about that last part. That is always said. When banks agree to settlements, some claim is made to the effect of, “This does not rule out further prosecution.” But in fact there are never any further prosecutions because that is understood in the deal. Meanwhile, the whole thing allows the CEOs of the company to make public statements about how they are as appalled as anyone. Citigroup CEO Michael Corbat said, “The behavior that resulted in the settlements we announced today is an embarrassment to our firm, and stands in stark contrast to Citi’s values.” Citi’s values? I thought the thing about corporations was that their only moral duty was to make money for their stock holders. We’re now supposed to believe that (1) they care about anything but that; and (2) Corbat and the rest of the clan don’t actually know all the nefarious things that their companies do in order to “maximize shareholder value”?

But what is accountability in the financial sector compared to making sure that Brazil doesn’t unfairly get to host the World Cup? This is the kind of disconnect that is common in the law enforcement community. The cronies at the top of FIFA are rich. But they aren’t rich like Michael Corbat or Jamie Dimon. And so it is okay to hold those “low level” criminals accountable. People who work in banks are the “right kind of people.” And as a result, they aren’t the kind of people who go to jail. It’s disgusting.

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Bob Woodward: Still Hacky After All These Years

Charles PierceThe latest entrant in the Mistakes Were Made sweepstakes regarding C-Plus Augustus‘ blundering in Iraq is journalistic giant — and stenographer to the powerful — Bob Woodward, who stopped by Fox News Sunday this weekend because he is a big-time Beltway ‘ho who doesn’t care what kind of riff-raff leaves the money on the dresser these days. Anyway, Bob wants to assure us that the leadership of the late Avignon Presidency were babes in the woods.

Woodward: “I spent 18 months looking at how Bush decided to invade Iraq. And lots of mistakes, but it was Bush telling George Tenet, the CIA director, don’t let anyone stretch the case on WMD. And he was the one who was skeptical. And if you try to summarize why we went into Iraq, it was momentum. The war plan kept getting better and easier, and finally at the end, people were saying, hey, look, it will only take a week or two. And early on it looked like it was going to take a year or 18 months. And so Bush pulled the trigger. A mistake certainly can be argued, and there is an abundance of evidence. But there was no lying in this that I could find.” …

The fact remains that a lot of people inside and outside government — in fact, most of the actual military and diplomatic experts in the field — told the neocon fantasts in the administration exactly what was going to happen if it decided to “kick over the hornet’s nest” in Iraq. These people were ignored (The Future of Iraq project at State), marginalized (Hans Blix), or actively destroyed (Eric Shinseki). There was a reason for this. The reason was that the people who were talking to Bob Woodward wanted to deceive the nation to get what they wanted.

On 7 October 2002, C-Plus Augustus gave a speech in Cincinnati. In that speech, he laid out his fanciful case for war in some detail. Because Bob seems to be floundering a bit in the swamps of history these days, let’s lend him a hand, “The evidence indicates that Iraq is reconstituting its nuclear weapons program… Iraq has attempted to purchase high-strength aluminum tubes and other equipment needed for gas centrifuges, which are used to enrich uranium for nuclear weapons.”

Uh, no. The great body of evidence “indicated” no such thing. This was simply the story they fed to Judith Miller, who then returned the serve to them so Dick Cheney could nail the putaway in front of a gullible Tim Russert on TV. Bob seems to believe that a campaign of deception and trimming is not a “lie.” I had nuns who would have beheaded him with a window pole for that kind of “purpose of evasion.”

—Charlie Pierce
Jive Talking: Bob Woodward’s Credibility Finally Hits The Ocean Floor

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The Obamacare Challenge Is Just Plain Silly

We Heart ObamacareJonathan Chait wrote yet another article pointing out what should be obvious, Former Senate Republicans Admit Obamacare Lawsuit Is Crazy. This is in reference to King v Burwell, where four little words that contradict many other passages in the Obamacare text are supposed to be read out of context and used to deprive people of subsidies with they are buying insurance on federally run exchanges. The argument that the plaintiff is making is that the intent of the law was to twist the arms of the states and make them set up their own exchanges by disallowing subsidies on federal exchanges.

It turns out that no one in power actually thought this. Instead, Congress had just assumed that the states would set up their own exchanges — well into the drafting of the bill. Later on, someone realized that there would be some states that for whatever reasons wouldn’t set up their own exchanges. Thus the federal exchanges were born. So the infamous four words — “established by the State” — was just a drafting error. Everyone knows that. But it is a common conservative tactic to pretend to be more ignorant than anyone in history. It is often the only way that they can argue in favor of their own screwed up policies. See, for example, supply side economics.

The law on this seems very clear, and the fact that three justices (Scalia, Thomas, and Alito) are almost certain to side with the plaintiff should disturb the whole country. During the hearing, Antonin Scalia noted that it didn’t matter what the intent of the framers was; what mattered was what the law said. Fair enough. But in previous arguments, Scalia (along with the rest of the Supreme Court) has argued that a law doesn’t become unconstitutional just because it isn’t written well. The law has to be seen in total. But I’m sure for the Ideological Three, that’s only true when doing so would bring about the decision they want. In this case, they badly want to destroy Obamacare.

What I think is amazing is that whether or not a state set up an exchange is a minor thing. It certainly isn’t something important enough to take such a draconian approach to. Brian Beutler made a great point when he wrote:

What were the framers of the Affordable Care Act trying to do? Were they trying to stitch together a harmonious system across all state borders, with subsidies available everywhere? Or were they trying to coerce states into setting up their own exchanges by threatening to withhold subsidies from their citizens, and impose chaos on their insurance marketplaces?

In order to conclude the latter, you have to think that Democrats are like the Jews of Borat’s fantasy: they are evil for its own sake. And the truth is that if you listen to hate radio (or to a slightly smaller extent Fox News), you will hear exactly this framing. But it should be clear to anyone that this is not who Democrats are. They may be (and quite often are) stupid. They may be (and almost always are) beholden to special interests. But they aren’t in the business of destroying their own legislation. Think about another conservative canard: “Obamacare is part of a socialist takeover of America!” If that’s the case, why would all those closet socialists seek to destroy their own socialist legislation? It makes no sense.

Of course, it isn’t supposed to make sense. No one — Really: no one! — believes this nonsense about trying to coerce the states into setting up their own exchanges. This is just the best justification that the conservatives could come up with to justify this lawsuit. And the silliness of the justification shows just how ridiculous the lawsuit is.

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It Isn’t Kansas; It’s Us; We’re Vile People

SNAPOver at Salon, Digby wrote, The Republican Campaign to Destroy the Poor Stoops to a New Low. It’s a general article, but she is specifically referring to a new Kansas law that only allows people on assistance to get a maximum of $25 per day from an ATM. As Dylan Matthews wrote last week, it is a way of soaking the poor with expensive ATM fees. You know the ones; I’m sure you have been desperate at times and found yourself facing the screen, “This transaction will cost $3.00 in addition to whatever other fees your bank changes. Would you like to continue?”

Matthews noted that in addition to the various bank charges, the state of Kansas itself charges a $1.00 fee for withdrawals. So a conservative estimate involves $1.50 from the bank (but other banks charge more) and $1.00 from the state, for a total of $2.50 for each $20 withdrawn. That represents a 12.5% surcharge. What’s interesting about this is that a common conservative claim is that the poor need to learn the proper ways to manage their money. And here are these very same conservatives insisting that they do otherwise. I have little doubt that the banks themselves have worked behind the scenes to make this happen.

But the main thing is that this is about punishing the poor. It isn’t just a question of the financial penalty. The very idea of limiting withdrawals from their accounts is meant to make a big production of saying, “You are on assistance; you can’t be trusted; you are a low life.” Of course, clearly the politicians who are pushing this are the most repugnant kind of people. What’s more, Mother Jones reported earlier this year, People on Food Stamps Make Healthier Grocery Decisions Than Most of Us. But data don’t matter to these conservatives. They start with the conclusion: people are poor because they are immoral. The rest follows from that conclusion.

Dylan Matthews sums up exactly what I think:

I hate these kinds of provisions. Everyone gets benefits from the government, but, as Emily Badger has noted, benefits for the middle class and rich never seem to come with any strings attached. No one has ever been banned from spending their mortgage interest deduction or electric vehicle tax credit on movie tickets. When it comes time to crack the whip and eliminate frivolous expenses, it seems only the poor get targeted.

But sadly, the problem isn’t fundamentally with the politicians. Yes, of course, they are vile human beings. But think about that little factoid I mentioned above about people who get food stamps making better food purchasing decisions. Most Americans — including liberals — would find that surprising. Our default way of thinking is that there must be something wrong with the poor. Indeed, David Brooks has never been publicly shamed for claiming that the poor are suffering because of their lack of middle class values — even though it is both offensive and intellectually embarrassing.

So the question is how long will the American middle class continue to feel superior to the poor? How long will it take before it realizes that the issue with poverty is not “They behave so badly” but rather “There for the grace of God”? Americans are a particularly parochial people. We think rather highly of ourselves, when all of our advantages have been given to us. It would be wonderful — but extremely surprising — if we finally managed to grow up.

See Also

Should People Pursuing Risky Careers Be Forced to Starve?
Pay No Attention to Rich Man’s Welfare!

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Morning Music: Miles Davis

Bitches Brew Live - Miles DavisWhen I was a wee teen, my friend Will bought Isle of Wight: Atlanta Pop Festival. It was a three LP collection, containing tracks by an eclectic mix of people from Johnny Winter to Sly & the Family Stone to Kris Kristofferson. As I recall, I didn’t especially care for anything on that album except for David Bromberg’s wonderful version of “Mr Bojangles.” But I especially hated a 17 minute jam by Miles Davis, “Call It Anything’.” It just sounded like noise to me.

One of the great joys of life has been to experience my gradual maturation of music appreciation. I’ve had the same experience with Frank Zappa. When I was young, I hated his guitar playing, but now I think it is marvelous (even if I’m not in the mood for it that often). And the same thing is true of Davis’ later work. This is the Bitches Brew period, and now I love it. In this live video from Isle of Wight in August of 1970, Davis is performing with quite a band. It includes the original Bitches Brew crew: Chick Corea on electric piano, Jack DeJohnette on drums, Dave Holland on bass with parts that seem designed to cause hand cramping, and Airto Moreira doing some unnatural things with percussion. In addition, there is Keith Jarrett on organ and Gary Bartz on soprano saxophone (Wayne Shorter was on the original album). This 35 minute set made up the majority (tracks 4 through 9) of Bitches Brew Live. It’s wonderful music.

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Anniversary Post: Golden Gate Bridge

Golden Gate BridgeOn this day in 1937, the Golden Gate Bridge opened. To be honest, it isn’t my favorite bridge. I’m more fond of the Bay Bridge because of its two short-tower suspension bridges one after the other. But that is more of an intellectual thing. The truth is that the Golden Gate Bridge is magnificent and I still get a thrill crossing it. There is the long ride up the Waldo Grade, the drive through the Waldo Tunnel, and then the steep descent to the bridge and almost two miles across the bay. Unfortunately, I cannot walk across the bridge. I’ve tried, but my acrophobia is too bad. Plus, I think, there is a residual from my grandmother who used to tell me (All the time!) that if I didn’t put on some weight, a strong wind would come up and blow me away.

After 9/11, I had a hard time understanding what New Yorkers were going through. I understood the terrorism aspect of it. But they had a special unhappiness that I didn’t understand. The way I figured out how to empathize was to imagine if someone had destroyed the Golden Gate Bridge. That certainly would mean something special to me. It is a potent symbol of the Bay Area. Of course, it is also beautiful. That is something that cannot be said of the Twin Towers. But I still get it. Note to would-be terrorist: please don’t destroy our bridge!

I could provide you with a history of the bridge. The problem is that having grown up in the Bay Area, I’ve heard too much about this stuff. And I don’t really care. It is an amazing structure, and a much needed tool for the area. But for you from out of the area, the Golden Gate is the entrance to the San Francisco Bay — also known as the “Golden Gate.” The bridge itself, is not golden. And even if it were, what the hell is “gate” doing in its name? Huh?!

Happy anniversary Golden Gate Bridge!

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Technology Is Changing, Not Improving

Paul KrugmanOn Monday, Paul Krugman wrote about one of the great myths of modern times: the increasing pace of technological development. In The Big Meh, he noted that while we seem to have a lot of new technologies, they don’t seem to be revolutionizing our economy. But what new technologies? People see substantial technological advances where there are only constant technological shifts. Once upon a time Flickr was a big deal, but then we got Instagram. The best you can say about most of this kind of technological change is that it allows corporate interests to better monetize play. It’s all summed up in Peter Thiel’s quote, “We wanted flying cars, instead we got 140 characters.”

Krugman even starts out the article by mocking the Apple Watch. And rightly so! Apple is the ultimate technology company of the modern world. That’s because it doesn’t do much in terms of technology. It takes other people’s ideas and packages them nicely. But more than that, it is all about brand and about how the products that people consume define them. It is extremely sad — pathetic, in fact. But in terms of the broader on the country, it doesn’t mean anything in a direct way. The newest version of the iPhone will not make us more productive and any happiness it brings will be short lived indeed.

But Apple provides a good example of why we don’t see much in terms of economic growth. The company employs a relatively small number of Americans: less than 100,000. These are generally good, middle class jobs. And then the company employs a million or so people overseas — paying them almost nothing. This allows Apple to keep more the fruits of laborers. And this is why Apple has been sitting on piles of cash. Eventually, in 2012, it was necessary to pay out major dividends. And then there have been the massive stock buybacks. Apple has lots of money, but no ideas. Unless you think the Apple Watch is a new, much less important, idea.

What all this means is that Apple works as a way to increase inequality. None of this would be surprising if Apple were just a tech film. Apple employs roughly the same number of people employed by Google and Microsoft. But they are not hardware companies. Just the same, the focus of venture capital these days is not on hardware. They are all out chasing their tails looking for the next “killer app.” And that will be… what? An application that will allow people to share even more moments from their lives with other people who don’t care enough about them to be part of those moments? I understand that there was a lot of marginal utility when grandma could see what granddaughter was up to in almost real time. The marginal utility of any new gains in that area are essentially zero.

Krugman ended his column by noting that the exact things that are said about technology today were said about technology in the 1930s. Then as now, it was used as an excuse for why it was that companies like Apple were sitting on piles of cash and not hiring. Today, we hear that everyone ought to be computer programmers or the ill-defined “entrepreneurs.” It’s all silly. Those Chinese workers pumping out iPhones are not better educated or otherwise more capable of doing that work than are Americans. It’s all about incentives. As Dean Baker is fond of noting: globalization has only been allowed to destroy the jobs of the American middle class. Doctors, dentists, lawyers, and scads of other professions continue to enjoy economic protection.

SS Ideal X

I’m not a futurist; I don’t know where technology could go if our culture weren’t held captive by a bunch of little brains who are only interested in next quarter’s profit statement. But I do know that technologically speaking, there is more sound and fury than substance when it comes to technological innovation. Having a transistor radio was an improvement on the home radio, but it wasn’t anything close to as big a deal as the invention of radio itself. Now people want to make a big deal about Pandora on their phones or extra gigabytes for MP3s. These things are nice, but hardly revolutionary. When was the last time we had a technological revolution? Container ships have undoubtedly had a bigger effect on our lives than computers — much less the most recent iPhone.

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Parasitic Credit Card Companies

David GlasnerA favorite tactic of the credit-card industry is to offer customers zero-interest rate loans on transferred balances. Now you might think that banks were competing hard to drive down the excessive cost of borrowing incurred by many credit card holders for whom borrowing via their credit card is their best way of obtaining unsecured credit. But you would be wrong. Credit-card issuers offer the zero-interest loans because, (a) they typically charge a 3 or 4 percent service charge off the top, and (b) then include a $35 penalty for a late payment, and then (c), under the fine print of the loan agreement, terminate the promotional rate on the transferred balance, increasing the interest rate on the transferred balance to some exorbitant level in the range of 20 to 30 percent. Most customers, especially if they haven’t tried a balance-transfer before, will not even read the fine print to know that a single late payment will result in a penalty and loss of the promotional rate. But even if they are aware of the fine print, they will almost certainly underestimate the likelihood that they will sooner or later miss an installment-payment deadline. I don’t know whether any studies have looked into the profitability of promotional rates for credit card issuers, but I suspect, given how widespread such offers are, that they are very profitable for credit-card issuers. Information asymmetry strikes again.

—David Glasner
Is Finance Parasitic?

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What Came First in TPP: the Trade or the Cronyism

Tyler CowenOne interesting thing about the Trans-Pacific Partnership (TPP) is that libertarians are on both sides of it. There are what I would consider the stupid libertarians, who are in favor of the deal because they are for anything that seems like it will make the rich richer. These are the kinds of libertarians who are against unions and for the liberty-destroying “right to work” laws. If we exclude the people who are libertarians simply because it is a presentable form of neo-confederacy (and that is most of them), the majority of libertarians are of this kind: people who just think the rich are super-keen and need to be ever rewarded. This group includes Tyler Cowen — hero of subgeniuses everywhere!

Timothy B. LeeBut there is a small fraction of the libertarian movement that is actually in favor of individual liberty. This group will generally be against the TPP. They understand that this treaty is not much about trade. What it is primarily about is providing handouts to powerful economic interests. So I was pleased to see that, as I had previously noted, Timothy B Lee is one of the better kinds of libertarians. He’s still wrong about exactly what libertarianism would bring, but he is at least trying to create a better world for all, not just for those who are already doing well.

Over the weekend, Lee wrote, Why Killing Obama’s Trade Deal Could Be Good for Free Trade. Cowen had claimed that if the TPP gets shot down, future trade deals could be worse as a result. Why that would be isn’t clear. His followups seemed to be a lot of magic thinking: he believes it because he’s already decided that the TPP must be good. Lee, in refreshing contrast, was clear as could be: it’s the cronyism, stupid!

The US has been using trade deals to push counterproductive copyright and patent policies on the rest of the world since the 1990s. Each time a deal comes up for a vote, supporters play up the trade provisions and downplay the corporate giveaways. If the TPP is approved, we can expect the same kind of terms in the next trade bill the US negotiates.

And conversely, if the failure of the TPP is seen to be due to all of the corporate giveaways in the deal, then future deals would be seen as DOA if they included them. As Lee put it, “When special interest groups started lobbying for another round of goodies, US trade negotiators would be able to say, ‘We’d love to help but we can’t risk having the deal rejected.'” The only question is whether future trade negotiators would see it that way.

But on that issue, Lee is also right: none of the major players arguing against this treaty are doing so out of a sense of protectionism. The number one thing that I hear people talking about is that it strengthens intellectual property rights, which will increase costs everywhere. The second thing I hear most often is the threat that the TPP could cause to democratic governance through the strengthening of investor-state dispute settlement — the unaccountable international legal system that could force countries to pay companies for laws that the court claims are hurting companies’ profits.

On the other hand, so what if future trade negotiators don’t take that lesson away from the defeat of the TPP? Surely after the defeat of the Transatlantic Trade and Investment Partnership (TTIP) for similar reasons, they would learn. And if not for that one, maybe the next. Whatever it takes. Although I have to say: I don’t see us getting more of these treaties if there aren’t major businesses able to get special treatment. The barriers to trade are already low. The TTP (and TTIP) didn’t come about because governments were itching for them. Now, the point of these deals seems to be very little besides the cronyism. I think they start with the cronyism and then come up with other things that will allow them to be sold.

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Dealing With Inequality Requires Progressive Taxes

Family Legacy

This cartoon sums up a fact of our economic system. And it provides all the information you need to appraise the claim so loved by conservatives, “We don’t care about equality of outcomesopportunity.” What they mean is that they don’t care about either. It’s really quite simple: equality of opportunity — or even anything in the same ballpark — is a lie if equality itself is too far out of kilter. The conservatives who don’t care about inequality are just the modern day royalists. They want to enforce the current class makeup of society, but rather than use the idea of “blood” they use the far less reasonable idea of “meritocracy.”

The great cure-all for inequality is “education.” I’ve written about this a lot over the years. It is based on a correlation. Not surprisingly, people with college degrees make more money than people without college degrees. Of course, I’m highly skeptical of the mechanism here. For one thing, it is easier to get a college degree if you are stupid with rich parents than it is if you are smart with poor parents. So to some extent, a college degree is simply an indication of class. But the real reason that people push education is because it is a way of saying, “We can’t do anything right now!” And then they have another couple of decades to come up with a new reason why the rich should never be taxed.

Matt BruenigSo when Bernie Sanders (or Barack Obama) suggest that college be free, I’m not exactly inspired. That’s not to say that I don’t think it is a good idea. But it is not the panacea that many people think it is. As a result, I was very interested to read a recent article by Matt Bruenig, Wealth Inequality and Student Debt. In it, he provided a very useful thought experiment.

First, consider our current system for funding higher education. Two students — one rich and the other poor — go to a college that costs $100,000 for four years. The rich student gets no government assistance, but her parents pay the $100,000 and she ends up with no debt. The poor student gets $50,000 from the state, and nothing from her parents. She ends up with $50,000 in debt. Thus, the rich student is $50,000 ahead of the poor student.

Bernie SandersSecond, consider the Sanders system for funding higher education. Both students pay nothing for college. But the rich student’s family still gives her $100,000 — perhaps as a down-payment for her first house. So she ends up $100,000 ahead and the poor student ends up even. In the first case, the poor student ends up $50,000 worse off. In the second case, the poor student ends up $100,00 worse off. This means that the more progressive system actually increases inequality more than the current system.

Note that this is true whether we are looking at the student alone, or the student’s family. And it is worse than even this makes out. Because a college degree for the rich student is going to be worth more than the college degree of the poor student. The rich student will simply have more opportunities based upon her connections. So the reward for that $100,000 investment is almost certainly far greater than the reward that the poor student gets from her $50,000 investment.

All of this highlights the fact that we need a highly progressive tax system. This, of course, is why the rich are so stuck on the idea of a flat tax. It is considered by them to be “fair.” But, of course, in the case above, it clearly isn’t. The tax system folds back on itself, because it doesn’t benefit the poor as much as it ought to. In the most basic sense, the rich student’s parents should be paying at least $50,000 more in taxes than the poor student’s parents pay. And when it comes to the upper middle class, that may well be the case. But when it comes to the truly wealthy, that isn’t the case at all. As I noted during the 2012 election, in Mitt Romney’s most recent tax year (2011), he had paid almost exactly the same tax rate that I did, even though I had made about $20,000 that year and he had made more than $13 million.

Clearly, there are more specific solutions to this problem. For example, we could just pay the tuition of poor students and not leave them in debt, even as we did nothing for rich students. But ultimately, the “free college” solution is the best. We just have to figure out how to tax everyone fairly. Until we do that, all is lost.

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