A poor boy and his sister

A poor boy and his sister were gathering coins from a wishing fountain so they could buy a meal, when the boy exclaimed, “There must be rich people wishing here because there’s a bunch of quarters!” His sister responded, “No, it’s the poor people who make the quarter wishes; they have more to wish for.”

– Me paraphrasing my girlfriend paraphrasing part of a novel that she read in second grade called From the Mixed-Up Files of Mrs. Basil E. Frankweiler by E. L. Konigsburg.

Just Tax the Rich Already

We’re in a recession because people aren’t spending enough. People aren’t spending enough because they’re not making enough. They aren’t making enough because working- and middle-class wages have stagnated while executive pay has dramatically increased.1 Corporations are making record profits2, and the money isn’t trickling down.

The gap between the rich and everyone else is wider than ever and increasing.3 It makes sense to raise taxes on millionaires and billionaires and redistribute that money to services that help the lower and middle classes. Those services will create jobs. People will spend more money. The economy will improve.

Consider the alternative: spending cuts. What ends up being cut? Public services such as healthcare and education. These kinds of cuts lower the quality of life for the majority of this nation’s citizens.

I’ll take the first option.

They say there haven’t been any healthcare cuts

And they’re right—if they limit the word “cut” to mean only “budget cut.” There have been numerous cuts to healthcare services in the U.S.

Florida Medicaid recipients have all lost dental coverage and a $25 over-the-counter medicine reimbursement. Florida Medicaid has also been paying out decreasing amounts to healthcare professionals, causing patients to have to switch doctors numerous times as more and more providers drop Medicaid coverage.

Why are so many services being cut even as healthcare budgets are increasing?

First, more people are receiving government healthcare. The baby boomer generation is retiring and collecting Medicare benefits. Obama’s healthcare reform has expanded eligibility for Medicaid. And a sagging economy is causing people to reach out for help, such as Supplemental Security Insurance: a social program that provides financial assistance and Medicaid insurance.

Second, healthcare funds are being redirected from non-profit organizations to for-profit businesses. These businesses have higher administrative costs. They also have lower quality scores, probably because more healthcare funding is being packed into fat, for-profit wallets, leaving less money available to actually help treat the patients.1, 2

The future of healthcare in the U.S. looks bleak. Republicans are currently pressing for healthcare cuts in the deficit negotiations. Florida governor Rick Scott is proposing a 17% cut in disability programs. This is the man who was co-founder and CEO of a company convicted of the largest healthcare fraud case in U.S. history, pleading guilty to 14 felonies and paying out over $2 billion in settlements.

He may not have cut healthcare funding, but his company stole healthcare funds under his watch, which is far worse. Two whistle-blowers claimed that Scott was fully aware of the fraud, yet he was never put on trial. His penalty was being forced to resign with a $10 million severance package and $300 million in shares.

Since then he has passed Tea Party-endorsed legislation requiring welfare recipients to take drug tests—a policy deemed unconstitutional and fiscally irresponsible by the ACLU. According to the Department of Children and Families, 96% of recipients have passed the drug test, and the already failing program is costing taxpayers $180 million a year.3

What company is providing these drug tests? Solantic, co-founded by none other than Rick Scott. To avoid an unethical and illegal conflict of interest, he transferred his $62 million in shares to his wife.4, 5 Now they’re raking in taxpayer dollars.

The United States is the only developed nation without universal healthcare. Public healthcare is simply not as profitable as increased privatization to a privileged and dominant subculture that worships wealth and demonizes the poor.

Bad luck?

I recently quoted a line from the documentary Fault Lines: The Top 1%, saying “the reason poor people are poor is because there’s another group of people, rich and powerful people, who generally have a lot of control over social policy.”

A wealthy individual responded, “This brings to mind my favorite quote from Robert Heinlein:”

Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as “bad luck.”

Stranger in a Strange Land is one of my favorite novels. But I disagree with this particular Heinlein quote, though I admit I’m unaware of its context since I haven’t read Time Enough for Love.

The documentary I posted concerns the present economy. And at present we live in a developed nation where poverty is not the normal condition. By definition, developed nations have relatively high standards of living. So I don’t see how a historical paradigm that presumes poverty is normal applies here.

Moreover, I disagree that poverty is the default condition of humankind. Poverty exists only when the available resources are insufficient to meet the population’s basic needs, or when those resources are kept from the people. Humans flourished in their early years because they were not impoverished. Resources were abundant. Human advancement has always been a combined effort of nature and innovation.

Innovation comes from every economic class. Although it’s more likely to arise from the educated, who themselves are more likely to come from wealthy families. This inequality is being addressed in nations such as Sweden, Denmark, and Finland—who leads the world in education. Their public school systems include college, giving academic opportunities to every citizen regardless of their financial background. A more educated population has a greater potential to maximize innovation, because it’s not limited to only a few elite members of society.

History shows us that the only time the elite are despised and cast aside by citizens is when they’ve been oppressing or otherwise taking advantage of those citizens. There has indeed typically been a period of poverty and a degree of chaos afterwards. But the new model that rises up in the aftermath tends to be an improvement upon the one that fell. I call that “progress.”

Why I oppose Republican fiscal policy

When given the choice between cuts to social programs that hurt the lower and middle classes, and tax increases on the upper class and large corporations that inconvenience the rich, Republicans choose to cut social programs. They choose to cut teachers’ salaries. They choose to cut support for the most needy among us, including children, the disabled, and the elderly. Clearly the GOP is putting the interests of the wealthy ahead of the vast majority of Americans.

Add to that Republican politicians like Michelle Bachmann who regularly lie to this country, inventing fictions like “Obama’s trip to India will cost taxpayers $200 million a day.”1 Far more of the GOP is lying to the public when they claim the money will “trickle down” from the millionaires and billionaires. Because it doesn’t. The rich are getting richer. And what I see is a pathetic, deceptive game that is ultimately tearing this country apart. Even John McCain has recognized the folly of his party in present fiscal negotiations, calling the actions of his fellow conservatives “deceiving” and “foolish.”2

This is not a conflict between the left and the right. This is a conflict between the top and the bottom. This is a conflict over money. And for whatever reason, it’s been largely the GOP that has sided with the rich. Surely there are plenty of conservative politicians out there with sane economic agendas. They’re just not the ones in congress.

1 http://www.politifact.com/truth-o-meter/statements/2010/nov/04/michele-bachmann/rep-michele-bachmann-claims-obamas-trip-india-will/
2 http://www.washingtonpost.com/blogs/plum-line/post/mccain-erupts-conservatives-are-lying-to-america/2011/03/03/gIQAUm2HdI_blog.html

First impressions of the Federal Reserve System

I’ve taken an interest in economics after struggling financially these past few years. After learning the basics, I turned my attention to the present economy. I found that the organization with the most influence over the US economy is the Federal Reserve. The following is a tentative assessment of the Fed. Feel free to correct me, preferably with citations.

The Federal Reserve functions to set national monetary policy and to supervise and regulate the U.S. banking system by controlling the supply of money and changing interest rates. Specifically, it’s mandated “to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates.”

How can the Fed make a profit when so much of the money in circulation is its own? I can see two or three ways. The first is by currency that existed prior to its inception. The second is by money gained from foreign trade and borrowing. I also recall hearing that commercial banks have the power to create money by employing something called fractional-reserve banking. That would be a third way the Fed can profit. But I don’t see how being paid back in money that it itself produced can be considered profit. Then again, it makes money without any backing. Perhaps it can make a profit because profit is literally what it makes.

The Fed has little government oversight or regulation. It’s only required interaction with congress is an annual report. Its 12 banks are privately owned and operated, and their shareholders are commercial banks. Overall it lacks transparency.

I think that an organization with this much economic power needs transparency and supervision, otherwise corruption would be easily concealed. Why allow the Fed so much secrecy? Am I supposed to expect them to be acting in the public’s best interest while they operate in private? No person is perfect. No person will always put public interests ahead of their own. That’s why transparency is essential: to keep watch over those in positions of power. The Federal Reserve is a system practically designed to be exploited.

America: Made in China

I discovered that my mother owns an American flag with a “Made in China” tag on it. It’s times like this when I wish I owned a camera. Pictures can be far more effective than words at conveying such symbolic irony.

So what am I implying? That I’m against the advancing global economy? Not entirely. But when corporations move their factories overseas and cut deals with oppressive governments that put children to work in sweatshops for five cents an hour*, support lucrative violence and genocide (look up East Timor, and let’s not forget the diamond industry), and buy up indigenous resources so the citizens are forced to work for the corporations in order to pay for things they once obtained for free, then, yeah, I guess I have a problem.

But, hey, it makes for inexpensive products at Wal-Mart like U.S. flags.

Keep shopping cheap, America. You’re only helping to screw over less fortunate people thousands of miles away. Out of sight, out of mind. Right? We can all afford to be ignorant—literally speaking, that is.

* I recently watched a pro-Wal-Mart video filled with straw men, biased statistics, and flimsy anecdotal evidence. In it they tried to justify child labor by claiming that it provided work for children who might otherwise seek money from prostitution in order to pay for bare necessities. Here’s an idea: Pay parents a living wage so their children don’t have to work at all! How big an asshole do you have to be to justify child labor? (And if you want to consider the plight of third world workers, ask them personally how they feel about their situation instead of consulting a lone economist analyzing money matters from afar.)