News You Can Use

• But who pays taxes? – I always think it is funny that whenever people about taxes being too high for the rich in America, no one ever talks about how low-income people pay much higher rates of taxes at the state and local level.   In this report, this website decodes how sales and property taxes take a higher percentage of income out of the middle and working class than the upper class leading to most tax systems actually being regressive and anti-poor.  In “low tax Texas”, people making less than $18,000 pay 12.2% in state and local taxes while millionaires pay only 3.0%.  Shh!  It’s a secret!

• First Ever Defeat of the Fed - Congressman Ron Paul may (R-TX) have pulled off what critics of the Federal Reserve have longed for forever: an audit of the Federal Reserve.  Today, the House Banking Committee added his audit bill to a bigger banking reform bill, a must-pass bill.  This victory is amazing when you consider the fact that Banking Chairman Wright Patman (D-TX) for decades tried to bring under democratic control the opaque and secretive institution that can veto the will of the President and Congress while refusing to divulge its activities and trillion dollar balance sheets.  In fact the institution is more secretive than the CIA which complies with the Freedom of Information Act, while the Fed simply stopped taking notes during its meetings once the law started in the 1970s (see William Greider’s magestic Secrets of the Temple for more).  Ron Paul arranged a left-right alliance of conservatives and populist Democrats to fight for the measure against the corporate centrists in both parties.  Socialist Senator Bernie Sanders is supporting the bill in the Senate, which only makes it that much more interesting.

• One more nail in the California dream – The University of California has decided to jack tuition up 32% to over $10,000 a year (three times more expensive than a decade ago) as the flagship campus, Berkeley, goes on strike.  Chancellor Mark Yudof, who fought for tuition deregulation in Texas as head of the University of Texas, has been putting workers and professors on unpaid furloughs, cut janitor services, stopped hiring, and canceled classes.  Yet somehow he managed to give bonuses and pay raises to executives in the system making over $250,000 to $1,000,000.  Funny how budget cuts work, huh?  I wonder how many janitors could have kept their jobs with that money.  Take that Wall Street!   Check out this interview quote:

What do you think of the idea that no administrator at a state university needs to earn more than the president of the United States, $400,000?
Will you throw in Air Force One and the White House?

Issue XXXIII – Dispatch from Britain: Drugs are Bad (some of the time)

Nutts about Drugs – Last month I learned in class that drugs in Great Britain are classified by A, B, or C depending on their perceived dangerousness to society.  Class A drugs are given the longest sentences (7 years) while B and C drugs are given less sentences (5 and 2 years respectively).  Recently, Parliament asked for a review of the harmfulness of drugs to society to see whether or not twenty drugs were placed in the appropriate class based on their danger to society.  Sounds fair, right?  Then the report came out

It turns out the ABC classification had little to do with danger and more the with perception of which drugs were dangerous.  People are going to jail for using drugs that are not really that harmful.  For example, the scientific study found that some A class drugs like heroin and cocaine were indeed in the right category (class A) but some drugs that were barely harmful like ecstasy and LSD were Class A.    Meanwhile, alcohol is the fifth most harmful drug in society but is completely legal and so is tobacco (ninth most harmful).  Clearly, the classifications need to be adjusted.

Instead, Home Minister Alan Johnson has decided to upgrade marijuana’s status to Class B after it had been moved down to Class C a few years ago.  Rather than listening to the scientists, he played war on science a la George W. Bush.  Professor David Nutt advised the government that this was going against the report and said so in a lecture in July.  So Home Minister Johnson decided to fire him for “campaigning” against the Government.

The press has been raking the minister over the coals, day in and day out, over this.  Other members of the scientific panel on drugs have resigned, and scientists are outraged and mass resignations may follow from scientific committees.  The Minister of Science is also shocked that Johnson fired him without consulting him either.  As it now stands, there is a chill in the scientific community to advising politicians on good policy.  Who thought that an allegedly “progressive” government would play the Catholic Church to Professor Nutt’s Galileo in the 21st century?  Just another lesson in the moral and political failings of the Blair-Brown New Labour Government.

 

Links

The Times – “How can scientists advise this or any government?”

BBC - “Graph of the harmfulness of twenty drugs“

Issue XXXII: Education in Britain

I’ve got a gig writing for the London School of Economics’s student newspaper, the Beaver.  Last week the opinion section (aka Comment) ran four pieces on whether LSE takes too many students from private schools.  Only 7% of British students go to private schools, but they account for over 40% of LSE students.  Is this elitism, discrimination, or just a statement of how bad state schools are?  These are three opinions (1, 2, and 3) .

Apparently in Britain, all universities are public with tuition capped at £3,225 per year.  That means Oxford, Cambridge, LSE, Imperial, and any other university you can think of in Britain costs less than the University of Texas at Austin currently.  Oxford sniffles that it should go private and be like Harvard and charge $30,000-$40,000 a year and wiggle out of admitting state school students like the Government wants them too.   As the token American writer, I warn Britain what private university education really means and obscene social inequalities that result from it.

In other news:

• The London School of Economics fell in the World Rankings that the Times of London does every year.  Boo hoo.
• A Gazan trapped by Israel’s siege is unable to attend LSE after Israel destroys his home.  A campaign by students guilted the administrators into offering him a full scholarship to make up for his losses.  Really brings the Palestinian issue home, doesn’t it?

News Roundup

• Japan has elections? - Japan is a one-party state with elections.  Until today.  For only the second time since World War II, the Liberal Democratic Party of Japan lost in an election against the opposition, the Democratic Party of Japan (DPJ).  A former LDPer, Ichiro Ozawa aka “The Destroyer“, will be the man behind the curtain in the opaque world of Japanese politics.
• Who killed primary care?  - Slate.com has an interesting article about Medicare’s Relative Value Scale Update Committee (RUC), a panel run by the American Medical Association that decides what a physician’s services are worth.  Somehow only subspecialists ended up on the committee!  Gasp!
• Did Madonna take them all?  - In a very surprising feature, the Economist talks about the falling birthrates in Sub-Saharan Africa despite few improvements in socioeconomic status.  Urbanization of a very rural continent is part of the explanation.  It’s interesting to note that there used to be two Europeans for every African, now there is a one-to-one ratio.  Soon there will be twice as many Africans as Europeans.  And all of Africa only adds up to a billion people… less than India.
• As if you hadn’t heard – Ted Kennedy died.  The liberal lion of the conservative era, he pretty much lost all the time.  An article from his bitter admirer.
• Third World sold out for Crummy promise from Big Pharma  – Hopefully you have heard that Obama outrageously agreed to veto price controls against pharmaceutical companies if they “voluntarily” decide to reduce costs by $80 billion over TEN years.  The deal was struck with the quite sleazy head of pharmaceutical lobbying, ex-Congressman Billy Tauzin (R-LA).  Less played on the news, is the fact that Obama administration is adopting their talking points in fighting against the developing world’s struggle for affordable access to essential medicines.  Activists consider the Obama Administration no different or better than the Bush administration on this issue.  Apparently, getting an African in the White House doesn’t help Africans.  Barack Obama’s pathetic attempts for an inoffensive healthcare deal leaves us with a health care plan that doesn’t help Americans or the rest of the world either.    

 

Issue XXXI: But Who is Education Really for?

Is higher education (at least at the highest and most elite levels) really about education?  Or is it really just another Dr. Seussian moneymaking scam to put green stars on our bellies to make us feel entitled?

Once upon a time, going to your state’s (or country’s) proud and storied land-grant public university was good enough to get you on your way up to the top of your local elite.  But in the age of globalization, we now have an internationalization of elites and with it, an internationalization and concentration of elite status markers.  The biggest one?  A fancy American (or British) college education, particularly Oxbridge or the Ivy League.

The modern Sylvester McMonkey McBeans are “independent schools”, private boarding schools that function as feeder schools into the Ivy League.  Despite the Great Recession, applications to attend these schools (tuition averaging $20,000 a year) are still rising.  Apparently the elite that sold the world for a mortgage-backed security can still afford to pay $32,000 for some young punk’s high school.  Hell, Manhatten Private School Advisers charge $18,500 just help parents apply to these boarding schools.

Then when the young’uns graduate, Mommy and Daddy can get them into an elite college as a “legacy” admission (at Amherst, for example, 10% of seats are set aside for children of alumni who don’t make the grade).  Or by virtue of going to one of these prep schools, their headmasters (you know, principals in the rest of America) can work their connections and “understandings” with Ivy League schools to get them in.  This helps explain how the 7% of privately-educated children in Britain end up representing 40% of the enrollment of Oxford and Cambridge.  Apparently the green stars pay off.

Or do they really?  Wouldn’t these rich kids do just as well going to public K-12 schools?  SAT scores correlate strongly with affluence, so why would they need the help to get in?

Or why bother at all with fancy colleges?  An even dirtier secret is that rankings have next to nothing to do with the actual teaching and learning at the undergraduate level and more to do with alumni donation rates, SAT scores, and rejection/acceptance rates.  Surveys that remain unreleased to the general public find the amount of actual critical thinking and learning going on has nothing to do with the name brand of a school, so is anyone actually getting what they pay for?  Besides giving us the green belly star of smug entitlement of course.

Meanwhile our own state universities seek to abandon their public interest mission after decades of declining funding.  The University of Texas at Austin, for example, cost $50 a semester for tuition in the 1970s when 90% of their budget came from the state.  Now only a third of the budget comes from the state and the rest has to come from tuition and fees and other sources.  The once proud and cheap University of California System also faces financial and academic ruin from their budget crisis I detailed earlier.  UC San Francisco only receives 7% of its budget from the state of California, and they want to cut that too.

Yet despite the funding shortfalls public school administrators have picked up the habits of shameless and unaccountable private sector bankers.  Our former University of Texas chancellor, Mark Yudof, was an overpaid asshole ($787,319 with perks) who jumped ship to mismanage the University of California and collect more money ($828,000).  His sole accomplishment, as far as I can tell, was deregulating tuition through the roof while watching the flagship fall in international and national standings (15th to 70th in the world).  And like politically tone-deaf AIG executives, the UT bigshots gave themselves million dollar bonuses, despite hurricane season.  Yet rank-and-file university employees haven’t seen a raise in years!

Is it any wonder that Tony Marx, president of Amherst, said that elite colleges “deepen the country’s growing class divisions and exacerbate the long-term decline in economic and social mobility”?

Preach on brother; we could use more of you for those of us in the education world who don’t see education as a luxury good.  Perhaps we should stop joking that these institutions are a charities while we are it too.

Links:

Businessweek – Article about the new radical college president of Amherst

The Economist – Nauseating article about private boarding schools

Independent – Charity status of private schools under threat

Issue XXX: The Nonprofit Hospital Scam

Which is worse: being openly all about the money and bragging about it or pretending to be above such things while raking in the tall dollars anyway?  Open greed or greed with dignified poise?  The rude millions or the graceful aristocratic fortune?  The answer, dear readers, lies with the uniquely American institution of obscenely profitable “nonprofit” hospitals.

If Wall Street gambles the world economy with taxpayer backing, nonprofit hospitals receive billions of federal, state, and local tax breaks in order to provide charity care that they simply do not provide.  Examples abound:

• Methodist Hospital – The most prestigious hospital in Texas was sued by Jim Mattox, the populist state attorney general, for spending peanuts on indigent care (1% of gross revenues, 6.8% of net revenues) in the 1980s.  The numbers?  $5 billion in revenue over four years, $250 million in profits, $330 million in cash, and yet only $17 million in indigent care.  They must have spent their property tax break on hotels, hunting lodges, real estate, valets, and restaurants .
• M.D. Anderson – Flip-flopping between first and second place for the best cancer center in the world, the M.D. Anderson Cancer Clinic is actually part of the University of Texas, a public university system.  Recently testifying before Congress was a woman from Lake Jackson who was told turn over $60,000 to be admitted to the hospital after she gave them a check for $45,000 for her lab tests.  And she had insurance.  As the Senate Finance chairman in Austin remarked, “M.D. Anderson is public institution that doesn’t seem to see public patients.”  M.D. Anderson responded that you can’t “compare” M.D. Anderson to local Texas public hospitals in terms of their indigent load.  They are after all, only the second richest cancer charity in America the president muttered.  Perhaps they should be compared to these out of state gems.
• Northwestern – Northwestern built a new campus with marble lobbies for, you know, one billion dollars.  One thing they forgot to pay for was indigent care which was only $20.8 million in 2006 (compared to the CEO’s salary of $16.8 million and an annual tax break of $37.5 million).  Maybe the Scrooges should dig a bit deeper into their portfolio of $1.82 billion, enough to run for an entire year without a penny of revenue.
• University of Chicago – An “elite” institution (i.e. we treat rich people and research their diseases) in the poor African-American South Side of Chicago made the papers for its ER’s callous disregard of a child whose lip was bitten off by a dog because he only had Medicaid.  The American College of Emergency Physicians rebuked the institution for its systematic non-treatment of the uninsured and called for a congressional investigation.  An even dirtier secret is that the Urban Health Initiative to keep people out of the ER was cooked up by Michelle Obama and marketed by David Axelrod, Barack Obama’s chief strategist in their days back in Chicago.  The numbers?  $1 billion in revenue, $38 million in tax breaks, and yet only $8.7 million of charity care.  Northwestern (11,000 charity outpatients and 1,000 charity inpatients) looks like the Gates Foundation compared to the University of Chicago (63 charity outpatients, 312 inpatients).
• Pittsburgh - Nonprofit institutions, including the very profitable University of Pittsburgh Medical Center, cannibalize the tax base of the city by buying up profitable businesses and restaurants that are then exempt from local taxes.  The city still has to fund fire, police, electrical, and sewer services which raises taxes for everyone else (who then move outside the city limits becauses taxes are too high).  Of course, the hospital CEO makes $2.4 million while a struggling city dies a little bit more.

With stats like these, is it any wonder that 77% of nonprofit hospitals are profitable while only 61% of for-profit hospitals make money?  Perhaps it is best to leave the last word from the bastards themselves:

Methodist Hospital of Houston disputes the charges made by the Texas Attorney General, Jim Mattox. “We are a nonprofit hospital, but not a charity hospital,” said Larry L. Mathis, the hospital’s president. “We do not set out specifically to extend our services to the poor. We were founded 71 years ago as a teaching and research center, and we believe those activities are charitable because they benefit everyone.”

Links

• Wall Street Journal – “Senators Consider Curtailing Hospitals’ Tax Breaks“

Parasitology: Is America Capable of Real Growth?

From the savings-and-loan meltdown to the dot-com boom and bust to the housing boom and bust, Americans have been floating up or down based on the gambling of fat cats since 1980 started the era of financial deregulation.

One of my favorite writers, Matt Taibbi, has written about how investment banks (especially Goldman Sachs) have been ripping off Americans since the Great Depression in his article “The Great American Bubble Machine.”  They profit by peddling shit (IPOs, houses, crap mortgages), and then short-sell the American Dream.  Then they buy off members of both parties (especially Democrats).  The yuppie Democrats of the Clinton years have all prospered handsomely like Lawrence Summers, Robert Rubin, and Rahm Emmanuel.  Even Tim Geithner, who didn’t work in the private sector, is deeply conflicted given who he worked with at the New York Federal Reserve.

The article has attracted criticism, but people accuse him of conspiracy theories when what he is saying is no different from what an IMF economist has said.

This follows his excellent expose of how the London division of American International Group destroyed the world economy with collateralized debt obligations.  It starts like so:

It’s over — we’re officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

If the economy of post-Reagan America has been a sandcastle built on a foundation of debt and speculation, is it possible that America can have actual economic growth (as opposed to wild bubbles and crashes)?  We should ask Dr. Doom first.

Dispatch from California: You can’t always get what you Want

An atrocious bond rating on the edge of sinking further.  A finance department issuing IOUs instead of checks.  Double-digit unemployment.  State employees sent home because there is no money to pay them.  Schools and a majority of parks shut down.  An insulated middle class, upper class, and elite oblivious to the neediest who will suffer the most.  No solution is forthcoming and the leadership cannot and will not fix it.

Ungovernable, unfixable, and utterly broke.

Zimbabwe?  Bihar?  Burma?  No, I’m talking about the biggest state in the nation and the eighth-largest economy, the once-great state of California.  Once a prosperous middle-class land ruled by enlightened moderate politicians like Republican Governor Earl Warren, the state had the best public school system and university system in the country (and world).  After decades of decline it is now the dichotomous land of ‘hood or Hollywood while the middle class has been packing up and moving to the Mountain West and Texas for years.

It takes a lot of work to piss away a good thing, and Californians did themselves in with right-wing populist tax gimmicks and a Progressive Era constitution highjacked by special interests and bad ideas.  The worst idea combined both of these : the Golden State electorate voted for Proposition 13 which froze property tax increases at a small annual rate until resale of the property.  This decimated the once-generous tax base and leads to ludicrous situations where Warren Buffet pays more property taxes in Omaha than in Laguna Beach.  Ridiculous rules also required that budgets and taxes be made with two-third majorities.  Even the 2003 political meltdown and circus that lead to the populist recall election of Arnold Schwarzneggar failed make a dent in the long-term problems the state faced with each election bringing a new set of pols ready to kick decision time further down the road (Texas pols, please take note).

California, the original red state, houses the right-wing paradise of Orange County which gave us Richard Nixon and Ronald Reagan.  The modern conservative movement was born in Southern California and hated “pinkos” like Earl Warren.  They had Eisenhower “kick [him] upstairs” to the Supreme Court so they could take over the Republican Party with true believers like their hero Barry Goldwater (R-AZ).  Goldwater was famously trounced in the 1964 Lyndon Johnson landslide, but his supporters went on to deliver his fondest disciple, Ronald Reagan, to the governor’s mansion.  Reagan was not as anti-government and hawkish as the conservative nostalgists will have us believe, but his 1980 presidential election brought the rapid decline and death of the moderate and liberal Republicans to the point that Sarah Palin is now the frontrunning candidate for the GOP primary.

Californians, like Americans in general, want it all.  Good schools, parks, environment, and social services and low taxes.  California has given to America as it has taken from us: summer blockbusters and the Godfather, free speech movements and Richard Nixon, peace movements and the nuclear bomb, middle class prosperity and housing bubbles.  Pending a constitutional revolution, the Golden State has clearly lost its shine for a long time to come.

Sorry dudes, you can’t always get what you want.

Atlantic Monthly - “California Dreamers“
Salon.com – “Californians are sinking themselves“
The Economist – “California: The ungovernable state“
Salon.com - “Are Californians overtaxed?“

Issue XXIX: The Health Care Reader

Will America still be Sicko and continue to be the only industrialized nation without universal health care?  The complaints against American health care are simple: too expensive, too many uninsured, and too unpredicatable coverage.  Every decade or two a movement to fix our disasterous health care system pops up and gets smited down by special interests or co-opted by interest groups.  For the epic history of American medicine and reform failure, I recommend The Social Transformation of American Medicine for a history up to 1982 (for a quickie, check here).

President Barack Obama has declared that he wants universal health care out of Congress this year.  The history of health care reforms failures spans at least sixty years when Harry Truman ran on a platform of universal health care in 1948 and upset the leading Republican candidate for president.  Truman defeated Dewey only to have his plans defeated by the American Medical Association, Republicans, and Southern Democrats.  When Lyndon Johnson created Medicare and Medicaid in the 1960s, it was over the opposition of the AMA (that’s right… they didn’t want to insure old people).

The AMA is back and has come out against Barack Obama’s “public-plan option” that would compete against private insurers.  Since government insurance plans have lower administrative costs than private plans, more money goes into actual health care (per dollar) than with, say, Blue Cross/Blue Shield.  To quote the New England Journal of Medicine:

Indeed, the key reason for public-plan choice is that public health insurance offers a set of valued features that private plans are generally unable or unwilling to provide: stability, wide pooling of risks, transparency, affordable premiums, broad provider access, and the capacity to collect and use patient information on a large scale to improve care. Public health insurance emphasizes the broad sharing of risk, ensuring coverage that is affordable and of high quality for the small portion of the population that accounts for most health care spending.

This doesn’t outlaw private insurance, it just competes with it.  But the dirty secret is that a public plan can be a backdoor way to government insurance for all!  On a truly equal playing field, government insurance would outcompete private insurance for cost savings and eventually drive the private sector out.  Insurance company hacks in Congress will try to prevent that from happening, but Speaker of the House, Nancy Pelosi, has said that she will not allow a non-public plan reform package to come out of her chamber.  The big story is how the two committes in the Senate led by Ted Kennedy and the more conservative Max Baucus (D-Montana) will agree on their differences.  Red state Democrats are saying they are against a public plan.

The health care debate will be long and confusing, but I’ve included links at the bottom for those who want to follow the debate closely.  But perhaps the most important actor with be the general public, working through Obama’s Organizing for America community organizing tool.  Events will be held all over America this month (yes, even in Texas) to get communities organized to fight for health care reform.  Sign up and participate to make this the last time America has to debate covering the uninsured.  (P.S. doctors, nurses, and students are especially wanted!)

Links
Slate – Chatterbox Archives (excellent news/analysis/controversy on health care)
Slate – “The Online Guide to Health Care Reform“
The New Republic - “The Treatment” health care blog
New England Journal of Medicine – “Healthy Competition – The Why and How of a Public-Plan Choice“

Issue XXVIII: Farmers, Communists, and World’s Cheapest Car

The Indian National Congress and their United Progressive Alliance swept the Indian elections last week coming within 11 seats of forming the first majority government in decades.  Their main rival, the Hindu Bharatiya Janata Party’s National Democratic Alliance, lost seats all over the country.  Regional parties like Laloo Prasad’s RJD also received a beatdown.  But perhaps the most interesting story of the elections is the thrashing the electorate gave to the Communists who recently controlled over 10% of the seats in Parliament.

The Left Front is a grouping of leftist parties, but mostly consists of the Communist Party of India (CPI) and the Communist Party of India-Marxist (CPI-M). The 2004 elections were the biggest elections ever for the Communists, and their votes were crucial to the UPA government’s formation. But the Left withdrew from the Congress government after Prime Minister Manmohan Singh pushed for a nuclear treaty with the United States. Then they attacked their own voters.

The Communist Party of India-Marxist is the third biggest party in India. It runs two states, West Bengal (which includes Calcutta) and Kerala. The Communists have never lost an election in West Bengal since they came to power in 1977 on a program of land reform for the rural majority. The landless were given title to the small plots of land they worked in a very fertile and densely populated state (population 80 million). The farmers loved the Communists ever since and have been loyal to them for generations. Then the Communists found a new best friend: big business.

Ratan Tata invented the Nano, the “1 lakh car” ($2500 equivalent), to bring Tata Motors international fame. Tata wanted to build the Nano in Bengal, and Communists wanted to industrialize their backwards and poor state. Since the state is so crowded, there is no empty land to build factories. The state promised Tata more land than they actually had free, and then moved to confiscate it from thousands of farmers. The police and Communist Party members acted as goons for the state, beating up protesters. When the peasants, celeberities, and intellectuals fought back, the police killed 14 farmers. With leading opposition leader Mamata Bannerjee’s (some say opportunistic) support for the farmers of Singur, Tata gave up on building his factory in West Bengal and moved it to Gujurat.

The Communists had now pissed off their rural supporters and failed to industrialize their poor state. The people’s party had become anti-people. Singur voted strongly against the CPI(M) in local elections recently. But the real shocker was when the CPI(M) lost the state, only winning 15 of 42 seats to Delhi. Rural discontent spread even to the cafés of Calcutta. Bengalis love their intellectuals and writers, and even these Left supporters turned against the Communists for their thuggery against villagers.

Pity the Left Front. The party has lost its grassroots, squandered its decades in power, and

“self-seekers” have ruined a party that can’t re-imagine its role in post-Cold War India. But the questions the Left asks (“Development for whom?” “Justice for whom? and Freedom for whom?”) are the very questions modern India most needs answered.

Links

Asia Times - “A right path for India’s left“

BBC News – “Bastion of Indian communism crumbles“

New York Times – “Communists’ Land Plan Could Backfire in India“