Money for Rural Communities

One thing I’ve read about the recent election is that some part of the result was a result of “resentment” of urban dwellers for all the money that gets spent on them.  But one thing you rarely hear is now much money rural communities receive by way of farm subsidies.  Approximately 60% of Wisconsin farmers received some form of subsidy in the past 20 years for their businesses.

The Environmental Working Group (EWG) has compiled a database of farm subsidies from 1995 - 2014 based on data from the USDA.  Wisconsin ranks 16th in its receipt of farming subsidies totaling $7.66 billion from 1995 - 2014.  The bulk of that money was spent on corn subsidies and dairy program subsidies.

Looking at just the corn subsidies, the average value-per-recipient was on the order of nearly $50,000 over the course of the program.  That’s about $2,500/year on average.  Plus, many farms draw on multiple programs.

I just think its interesting that the rural communities seem to think that only urban dwellers are the recipients of government largesse.  And I rarely hear urban dwellers complaining about these massive subsidies to agriculture.

Whither Guantanamo?

President Obama’s failure to fulfill his campaign promise to close the Guantanamo detention facility is looking like a real problem now.  Of all the campaign promises he made, his inability to act on this one is the most disappointing.

Repeal & Replace? I think not...

Lest we forget, Mr. Trump has promised to repeal and replace the Affordable Care Act as one of his first tasks.  But I think he’ll find that the health insurance industry is not a calm sea to navigate.  It’s full of rocky shoals, hidden reefs and circling sharks.  Stephen Pearlstein over at the WaPo Wonkblog has the details:

Let’s say that in the beautiful new world of “repeal and replace,” insurers are required to sell you insurance despite the fact that your kid has a brain tumor.  Insurance companies know what to do with that. Their actuaries can calculate that kids with brain tumors typically require (I’m making this number up) about $200,000 a year in medical care. So they’ll offer to sell you a policy at an annual premium of $240,000.

At this point your response will probably be that such an outcome not fair. When the law says insurance companies can’t discriminate on the basis for pre-existing conditions, surely what it means is that they have to charge roughly the same price for health insurance, irrespective of your pre-existing condition. In the language of insurance, that’s called “guaranteed issue at community rates.”

Unfortunately, in the states that have tried guaranteed issues at community rates, the insurance markets have collapsed. That’s because if you guarantee everyone the right to buy health insurance at community rates, then some consumers will game the system. The young and healthy ones won’t buy any health insurance at all—they’ll go without until they are diagnosed with diabetes or a brain tumor or get hit by a truck crossing the street.  And when that happens, they will immediately call up Aetna or Anthem and exercise their right to buy health insurance at the low community rate, irrespective of their medical condition. It won’t be long before insurance companies begin losing a ton of money and are forced either to raise premiums through the roof or stop writing policies altogether.

So how do you prevent that kind of gaming of the system by consumers?  Well, that’s easy.  You require that everyone buy at least some minimal level of insurance at the beginning of every year, so they can’t buy insurance only after they get sick. Let’s call that an” individual mandate.”  But because you can’t expect poor people to pay $1,000 a month, they will require subsidies to keep their out-of-pocket costs to something like 10 percent of income.  To pay for the subsidies, a new tax will be required.

So let’s review what just happened. To guarantee that people with pre-existing conditions can get affordable health insurance, you need to have rules requiring guaranteed issue and community rating.  To keep insurance companies in business because of guaranteed issue and community rating, you need to have an individual mandate.  And because poor people can’t afford health insurance, you need subsidies. Combine all three, and what you have, in a nutshell, is ... Obamacare.

Amazing, no?

Time to begin again

The election of Donald Drumpf is reason enough to return to my blog.

A Tale of Two Cities

In 1975, New York City was bailed out by President Gerald Ford.  Ford committed $2,300,000,000.00 in loans to the troubled city, an amount that today would be worth around $10,600,000,000.00.

In 1978, President Carter signed the New York City Loan Guarantee Act adding an additional $1,650,000,000.00 of funding (approximately $5,940,000,000.00 in 2013 dollars) to help New York recover.

In 2013, the city of Detroit goes bankrupt and President Obama offers nothing.

Can we call him a failure now?

The Sad State of The Academy

Neoliberalism is destroying the value of our public universities.

Central to this neoliberal view of higher education in the United States and United Kingdom is a market-driven paradigm that seeks to eliminate tenure, turn the humanities into a job preparation service, and transform most faculty into an army of temporary subaltern labor. For instance, in the United States out of 1.5 million faculty members, 1 million are “adjuncts who are earning, on average, $20,000 a year gross, with no benefits or healthcare, no unemployment insurance when they are out of work.”[11]  The indentured service status of such faculty is put on full display as some colleges have resorted to using “temporary service agencies to do their formal hiring.”[12]

...[M]any of the problems in higher education can be linked to diminished funding, the domination of universities by market mechanisms, the rise of for-profit colleges, the intrusion of the national security state, and the diminished role of faculty in governing the university, all of which both contradict the culture and democratic value of higher education and makes a mockery of the very meaning and mission of the university as a democratic public sphere. 

The picture seems quite bleak.

Behaving Like a Grown-Up

Pundits don't like being wrong, they often don't want to admit being wrong.  Niall Ferguson is a classic case of a public figure unable to admit his analytical errors.  But Niall's arch-nemesis, Paul Krugman, is a great example of what a grown-up does when they're wrong: He admits it and explains how he arrived at his erroneous conclusions.

After all, if you write about current affairs and you’re never wrong, you just aren’t sticking your neck out enough. Stuff happens, and sometimes it’s not the stuff you thought would happen. 

So what do you do then? Do you claim that you never said what you said? Do you lash out at your critics and play victim? Or do you try to figure out what you got wrong and why, and revise your thinking accordingly? 

I’ve been wrong many times over the years, usually on minor things but sometimes on big ones. Before 1998 I didn’t think the liquidity trap was a serious concern; the example of Japan suggested that I was wrong, and I eventually concluded that it was a big concern indeed. In 2003 I thought the US was potentially vulnerable to an Asian-crisis-style loss of confidence; when it didn’t happen I rethought my models, realized that foreign-currency debt was crucial, and changed my view. 

The case of the euro is a bit different: I was very pessimistic about the strategy of austerity and internal devaluation, which I thought would have a terrible cost — and I was completely right about that. I also guessed that this cost would prove politically unsustainable, leading to a crisis for the euro itself; so far, at least, I have been wrong. My economic model worked fine, my implicit political model didn’t; OK, so it goes.

Wise Words from a Wise Man

Those of you who know me know I am not only not religious, I'm rather anti-religious in my views.  That goes doubly for Christianity since, during my lifetime, Christianity in America has morphed from something benign into a tumor that has metastasized onto our civic life.  Worst of all, Christianity's adherents use their faith as a cudgel to beat perceived outsiders (minorities, LGBT citizens, people of minority faiths like muslims) and as a device to enforce the racist white patriarchy.

But now comes a Pope who is saying all the right things and is presenting an original version of Christianity that is all about love, compassion and care for the less fortunate.  I only hope this Papal vaccine can reverse the cancerous Christian tumor that has infested the body politic in America.  These are excerpts of an interview the Pope did with an Italian paper that the Vatican press office is attempting to censor.

The most serious evils currently afflicting the world are unemployment among the young and the solitude in which the elderly are left. The elderly need care and companionship; the young need work and hope. However, they have neither the one nor the other, and the trouble is that they are no longer seeking for them. They have been crushed by the present.

BOOKS TO READ: The Myth of Ownership: Taxes and Justice

Adding this one to the stack of books to read: The Myth of Ownership: Taxes and Justice by Liam Murphy and Thomas Nagel.  The book was reviewed in 2002 in the New York Times Book Review by David Cay Johnston.

Johnston writes,

[Murphy & Nagel] assert that a naïve philosophy of ''everyday libertarianism'' infects American politics with a ''robust and compelling fantasy that we earn our income and the government takes some of it away from us.'' This popular myth ''results in widespread hostility to taxes, and a political advantage to those who campaign against them and attack the I.R.S.'' 

This fantasy grows from the acceptance by all sides in the tax debate that gross, or pretax, incomes are presumptively just and therefore the proper moral base line to begin debate. The authors say pretax incomes are morally insignificant, an idea they confess is hard to sell. They argue that ''individual citizens don't own anything except through laws that are enacted and enforced by the state,'' because without government there would be anarchy, an endless war of all-against-one that would diminish incomes and wealth, not to mention life itself. Thus it is after-tax incomes that people are entitled to own. These ideas will encounter a hostile reception from partisans in the debate of the past quarter-century, in which the prevailing political rhetoric characterizes taxes as sheer waste, an unfair drag on the most productive people and an evil.

Sounds about right.  If not for the state, there would be no enforcement of property rights except through the barrel of a gun.  Anarchy would indeed be the only "rule of law" left.

Would you prefer red or white wine with your subsidized meal?

Supported by your supplemental nutrition tax dollars?

In the face of a hunger crisis in the US exacerbated by Republican cruelty in the form of supplemental nutrition funding cuts, it's important to realize that not all supplemental nutrition funding is being cut.

Let’s remember that the government already subsidizes lots of food. When wealthy executives dine at fancy French restaurants, part of the bill is likely to be deducted from taxes, which amounts to a subsidy from taxpayers. How is it that food subsidies to anemic children are more controversial than food subsidies to executives enjoying coq au vin?