Daily Archives: October 18, 2011

by | October 18, 2011 · 10:30 PM

OWS Rallying Cry: Student Loans Increase

By John Stang

Much of the OWS movement has focused, not to pigeonhole all the wants of the movement, on the rise student debt after college.  This has been mocked by columnists such as Washington Post columnist George Will when he writes:

And forgiveness of “all debt on the entire planet period.” Progressivism’s battle cry is: “Mulligan!” It demands the ultimate entitlement — emancipation from the ruinous results of all prior claims of entitlement.

Outside those who mock the idea of “debt forgiveness” for student loans, others are noting how the crisis is getting worse.  U.S.A. Today reports today:

The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York. Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Boardreports. Total outstanding debt has doubled in the last five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.

More importantly:

Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What’s happening:

Making this worse, Moody’s Analytic says that Youth Unemployment (those under the age of 24) has risen to 15%, 5-6% above the national average.  To put it simply, many students need to take out student loans to attend college and in a recession, getting a job to pay off those loans is very difficult.

In order to engage the youth, the OWS should work to take this energy against rising student loan costs and run with it, like they are doing now.  There are many solutions that OWS can endorse, such as volunteer service for debt forgiveness, subsidize university level education more, free university level education through higher tax rates, and straight up debt forgiveness.  Conservatives will see the last solution as a the ultimate form of entitlement.  Depending on how the movement wants to be viewed, finding solutions that would allow students to work to pay off student debt would be a much more palatable solution to someone who is outside the OWS movement and wanting to get on board.  I find this issue to be the one most support, but a good solution will keep them on board!

More importantly, engaging the public on certain topics of finance that affect them will be what attracts them to the OWS.  Unlike the Tea Party’s obsession with the national debt, which does not impact people directly, student loans, the increasing cost in consumer items, and economic justice are all issues people can identify with.  A large swath of political topics is not a bad thing when viewed in this light.

Photo Credit: David Davies on Facebook and Charts from Moody’s Analytics

Update: Ezra Klein posted a really good graph comparing student loans that are 90 days delinquent to other loans.

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by | · 9:46 PM

Academics vs. Politics: Clash of Civilizations

By John Stang

Brad Plummer at the Washington Post discusses the difficulty with communicating scientific data to the public:

Increasingly, many scientists are puzzling over how best to present what they know and don’t know to a broader audience. It’s not as easy as it sounds. What do you do when there’s a small but real chance that global warming could lead to a catastrophe? How do you talk about that in a way that’s useful to policymakers? “This is something we’ve struggled with a lot over the years,” says Michael Oppenheimer, a professor of geosciences at Princeton University. And as the world’s climatologists get started on the next big assessment of climate science — due in 2013 — figuring out how to talk about what they’re unsure of has taken on renewed urgency.

His example:

Indeed, a climate assessment that traffics only in the most likely scenarios may prove misleading. Harvard economist Marty Weitzman has argued that climate projections often have large ranges, and the worst-case scenarios at the tail end can be really awful. Just pulling out one example: A 2010 paper in the Proceedings of the National Academy of Sciences concluded that there’s a roughly 5 percent chance that rising temperatures could render vast regions of the planet — like the Eastern United States or most of India — utterly uninhabitable. How should we think about “fat tail” risks like that?

Conclusion:

To some extent, translating rapidly moving research into actionable policy terms is still outside many scientists’ comfort zones. “If we had all the time in the world to study this, it would be no big deal, it’d just be some arcane scientific debate,” says Oppenheimer. “But because there’s a policy context, there’s an added urgency in getting it right.” What’s more, there’s always the worry that emphasizing uncertainty could be overhyped by deniers and skeptics who want to argue that there’s no problem at all. But Oppenheimer says that that’s a risk worth taking. “My personal view,” he says, “is that you have to be direct and honest about these things.”

There is no big mystery to this.  Climate scientists are academics normally talking to a group of experts with a background in this area.  Communicating scientific data with technical terms and various forms of data to the general public is a challenge in-it-of-itself.  More importantly, there is a question about the percentage or risk.  ”Risk” implies probability and each side will take the lower or upper end of the scale depending on their viewpoint.

All academic disciplines that push policy positions have this problem.  Academics are focused on making an argument to advance their field.  Politicians, on the other hand, have an interest (i.e. business interests like oil, natural gas, land) to push for their district.  In the public sphere, those two will clash.  Thus, for environmental issues or economic debates, no matter what the best academic argument will be, that coming true in the policymaking realm can be slim.

If only academics ruled the world!

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by | · 10:39 AM

Democracy Now!

By John Stang

The OWS movement has a similar ring to the Green Party or the Libertarian Movement, bringing democracy back to the people.  This means letting communities decide and finding a way to ways to let people have legitimate control of the political system that is not hampered by corporate interests.  Anne Applebaum comments about the problems with protesting democracy:

Of course these international protests do have a few things in common, both with one another and with the anti-globalization movement that preceded them. They are similar in their lack of focus, in their inchoate nature, and above all in their refusal to engage with existing democratic institutions. In New York, marchers chanted, “This is what democracy looks like,” but actually, this isn’t what democracy looks like. This is what freedom of speech looks like. Democracy looks a lot more boring. Democracy requires institutions, elections, political parties, rules, laws, a judiciary and many unglamorous, time-consuming activities, none of which are nearly as much fun as camping out in front of St. Paul’s Cathedral or chanting slogans on the Rue Saint-Martin in Paris.

She continues:

Unlike the Egyptians in Tahrir Square, to whom the London and New York protesters openly (and ridiculously) compare themselves, we have democratic institutions in the Western world. They are designed to reflect, at least crudely, the desire for political change within a given nation. But they cannot cope with the desire for global political change, nor can they control things that happen outside their borders. Although I still believe in globalization’s economic and spiritual benefits — along with open borders, freedom of movement and free trade — globalization has clearly begun to undermine the legitimacy of Western democracies.

Institutions, institutions, institutions – those are what the protesters want to reform.  Getting inside the institution to change it hardly makes for easy change.  Slow, painstaking procedures like the filibuster in the senate is an example of this problem in action that needs to be reformed, but by being a member of the senate, you will not be likely to change it.  See what happened when they did try at the beginning of the year.  Outside movements make more a direct impact than those who are on the inside.  It relates the problem more to the people and vents frustrations in a more public manner.  The OWS movement, I would argue is doing what Applebaum suggests, it recognizes that we do live in a democratic society, but the institutions are letting us down and not serving the people.  Corporate finance for them is the link that is creating that disconnect, you can argue others cause it to, but corporate greed and malice is the most obvious.

Is democracy messy?  Yes  Will it ever be perfect? hardly so.  Can major improvement be made to make it stronger?  Absolutely!

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by | · 6:55 AM

Ronald Reagan, Dirty Socialist

By Luke Brinker

If there’s one man who merits the label “conservative icon,” it has to be former President Ronald Reagan. According to conservative mythology, Reagan single-handedly won the Cold War, delivered an economic boom, and made us “believe in ourselves” again. (There were, of course, the unsavory details: US funding for death squads in Latin America, exponential growth in debt and deficits, soaring income inequality, and that Iran-Contra thing.) But at the risk of repeating what’s on the verge of becoming a political cliche, I’ve got to ask whether today’s tea party-era GOP would accept Ronald Reagan as a conservative Republican in good standing.

This was a man, after all, who as California governor in 1969 signed a law legalizing abortion. (He would later reverse his position on the issue, but look at how social conservatives suspect Mitt Romney of insincerity in his own conversion.)

When Californians voted on whether to prohibit gay men and lesbians from teaching in public schools in the late 1970s, former Gov. Reagan opposed the effort to shut out gay teachers. (His record on AIDS was generally horrendous, but Reagan also had gay friends like the actor Rock Hudson.)

This morning, Reagan administration economic adviser Bruce Bartlett is out with a column examining the Gipper’s record on tax reform. While conservatives herald Reagan as a tax cutter, Bartlett notes that key provisions of the 1986 tax reform law would be anathema to tea party types:

Reagan was especially pleased that “millions of the working poor will be dropped from the tax rolls altogether” and that rich people and big corporations would “pay their fair share.” The law was indeed a major accomplishment, one that Reagan had every right to be proud of.

Class warrior!

And:

Once politicians make any exceptions to wiping the slate clean, they are on a slippery slope, because those benefiting from the next most popular deduction will be standing in line demanding an exception, too.

For these reasons, all tax reform plans premised on completely throwing out the tax code and starting from scratch are hopelessly utopian, with not the remotest possibility that any of them will ever be enacted. And support for them is not costless. Because so much political energy is channeled into the Fair Tax, the flat tax, the 9-9-9 plan and other proposals, very little is left over for changes that fall short of tearing the tax code out by its roots but are still needed.

The 1986 law was never about starting from scratch. It was about making progress, improving the tax code and accomplishing something at the end of the day that was worth doing. Yet despite the relative modesty of the goal, it was still extraordinarily difficult to accomplish and could easily have fallen apart on many occasions during the process. It succeeded, in large part, because of factors no longer present in our political system.

First, there was a tradition of tax reform, as was accomplished in the tax reform acts of 1969 and 1976, which concentrated on eliminating tax loopholes that only benefited special interests. This was considered a good idea per se, even if tax rates were not cut in the process. Today, such reforms would be viewed as tax increases and impermissible under the “tax pledge” that Republicans are dogmatically committed to.

Second, Republican tax reformers of the 1980s, such as Representative Jack Kemp of New York and Senator Bob Kasten of Wisconsin, were willing to put specific tax preferences on the table for elimination and take the heat for doing so.

Reagan built on their efforts and put forward a very detailed plan for tax reform in May 1985, based on several years of work by the Treasury Department, that identified a long list of tax provisions needing pruning from the tax code, along with supporting analysis and documentation.

Today, Republicans like Mr. Cain put most of their efforts into devising catchy slogans and almost none into providing details of their tax proposals.

Third, bipartisanship wasn’t a dirty word in the 1980s. The 1986 law would have been impossible if the Republican chairman of the Senate Finance Committee, Bob Packwood of Oregon, and the Democratic chairman of the House Ways and Means Committee, Dan Rostenkowski of Illinois, weren’t committed to the effort and willing to work closely, compromising, making deals and splitting differences in a way that Congressional Republicans and Democrats are incapable of doing today.

What a wishy-washy RINO!

Finally:

In the end, the key compromise that made the 1986 law work was Reagan’s willingness to raise the capital gains tax to 28 percent from 20 percent in return for dropping the top income tax rate to 28 percent from 50 percent.

Why did Reagan hate job creators so much?

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