California Free Press

Poverty in the Midst of Plenty: Recurring Depressions

Robert Reich has a new blog post entitled: "The Future of Manufacturing, GM, and American Workers (Part I)" in which he states that manufacturing jobs are disappearing all over the world - not just in the US.

Even if the U.S. were to seal its borders and bar any manufactured goods from coming in from abroad--something I don't recommend--we'd still be losing manufacturing jobs. That's mainly because of technology. When we think of manufacturing jobs, we tend to imagine old-time assembly lines populated by millions of blue-collar workers who had well-paying jobs with good benefits. But that picture no longer describes most manufacturing. I recently toured a U.S. factory containing two employees and 400 computerized robots. The two live people sat in front of computer screens and instructed the robots. In a few years this factory won't have a single employee on site, except for an occasional visiting technician who repairs and upgrades the robots.

I left the following comment:

RR is right about the job loss due to computerization, automation and robotization, but his suggestion that these major job losses will be made up for by those who "analyze, manipulate, innovate and create" is nuts. This is the fundamental flaw in economic thinking today: that the loss of manufacturing jobs will be made up for by the service economy. Sure there are some new jobs created in these areas but not enough. And RR leaves out the fact that the robots and automatons are owned by large corporations that have the capital to invest in such devices. Where does this leave the average person? Basically as a consumer.

But in order to consume, a person has to get money from somewhere or the world's enormous production capacity will sit unused and the world's consumers will languish in poverty because they don't have the wherewithal to consume.

Could the world be a consumer's paradise? Sure it could if we could figure out a way to get money into the hands of consumers without their having to do increasingly superfluous work. Or better yet how about this idea. Let the consumers/taxpayers own the means of production. Then instead of profits flowing to an ever decreasing small circle of corporate investors, the profits would flow to we, the people, who would benefit from working a decreasing work week for an ever increasing paycheck with which to consume. Private production would become public production. Hell, we already own about 75% of GM. That means that we should be able to buy a new car for about 75% less than what we now pay.

Logically and rationally the only way to prevent recurring large scale depressions and the increase of poverty in the midst of plenty is to get money in the hands of the people. This can be done by providing jobs or this can be done by increasing ownership or it can be done by increasing welfare. Since the number of necessary jobs is diminishing, the only way to have prosperity in the world is to increase ownership and/or increase welfare which means taxing the owners more and redistributing the largesse. Our conservative friends find "redistribution" to be anathema. Their solution basically is to let there be poverty in the midst of plenty. Let there be a small "chosen class" and let the rest of the people live in poverty because "they haven't worked for it."

The prognosis for future societies is one of recurring depressions, followed by large scale government debt as government tries to alleviate the effects of large scale job loss. Taxation and redistribution will be fought tooth and nail by the ownership class. Poverty in the midst of plenty is the inevitable result except in countries such as Venezuela and Chile where they are attempting to socialize the means of production. A public option could create competing publicly owned industries alongside the private sector. This "mixed" economy could serve to widely expand the ownership society.

Expanding ownership to every citizen would amount to socialism but instead of a workers' paradise it would be a consumers' paradise, and I say bring it on!

Sotomayor No Liberal

Sotomayor's record as a lawyer defending corporate liability cases puts her more on the side of corporations than on the side of the people. She's hardly a radical or a progressive despite her appealing Horatio Alger life story. However, count on Rush, Newt and Ann to turn her into a flaming liberal just because she is an Obama nominee for the Supreme Court.

The Republicons will try to make hay out of anything despite its truth value. They manufacture the utterest nonsense and somehow try to persuade their constituency that it's the truth. Reality, facts mean nothing to them. So Rush hopes she'll fail. At what? Defending corporate interests in liability suits? How laughable! These guys are past masters in creating fantastic hogwash and then getting people to believe it!

I'm waiting for Newt's new book: "How To Lie and Make People Believe You for Dummies." His criticism of Nancy Pelosi is that she's not a good enough liar? That's no problema for Newt or Rush or Ann. They could get a PhD in lying. It's their stock in trade. And they appeal mainly to people for whom it's too much of an effort to think for themselves, people with no critical ability whatsoever, people who just want to get their dander up over tea parties and government interfering in their lives except in the bedroom where they want government to interfere. They don't want government telling corporations what to do, but they do want government telling women what they can and cannot do with respect to their own bodies.

They want lots of government regulation when it comes to marriage but none whatsoever when it comes to economic activity. In other words they want government to regulate all the little people while leaving corporations to do anything they want. And they try to get the media and everyone consumed with some little pea brain issue like gays in the military which amounts to fiddling while Rome burns. Any little factoid which can appeal to people's resentment or get them riled up, they take it and run with it, trying to drown out any discussion of the REAL issues facing the country. Then behind everyone's back corporations and the wealthy can continue to steal and turn the middle class into a nation of debtors.

The Republicon constituency and Rush Limbaugh's audience are being convinced to screw themselves while Rush, Hannity and Bill O'Reilly make millions. It's the foxes getting the chickens to agree to letting them guard the henhouse.

Zen and the Art of Motorcycle Maintenance

The Case For Working With Your Hands

 By

 

MATTHEW B. CRAWFORD

Published: May 21, 2009 in the New York Times

 

The television show “Deadliest Catch” depicts commercial crab fishermen in the Bering Sea. Another, “Dirty Jobs,” shows all kinds of grueling work; one episode featured a guy who inseminates turkeys for a living. The weird fascination of these shows must lie partly in the fact that such confrontations with material reality have become exotically unfamiliar. Many of us do work that feels more surreal than real. Working in an office, you often find it difficult to see any tangible result from your efforts. What exactly have you accomplished at the end of any given day? Where the chain of cause and effect is opaque and responsibility diffuse, the experience of individual agency can be elusive. “Dilbert,” “The Office” and similar portrayals of cubicle life attest to the dark absurdism with which many Americans have come to view their white-collar jobs.

 

Is there a more “real” alternative (short of inseminating turkeys)?

High-school shop-class programs were widely dismantled in the 1990s as educators prepared students to become “knowledge workers.” The imperative of the last 20 years to round up every warm body and send it to college, then to the cubicle, was tied to a vision of the future in which we somehow take leave of material reality and glide about in a pure information economy. This has not come to pass. To begin with, such work often feels more enervating than gliding. More fundamentally, now as ever, somebody has to actually do things: fix our cars, unclog our toilets, build our houses.

When we praise people who do work that is straightforwardly useful, the praise often betrays an assumption that they had no other options. We idealize them as the salt of the earth and emphasize the sacrifice for others their work may entail. Such sacrifice does indeed occur — the hazards faced by a lineman restoring power during a storm come to mind. But what if such work answers as well to a basic human need of the one who does it? I take this to be the suggestion of Marge Piercy’s poem “To Be of Use,” which concludes with the lines “the pitcher longs for water to carry/and a person for work that is real.” Beneath our gratitude for the lineman may rest envy.

This seems to be a moment when the useful arts have an especially compelling economic rationale. A car mechanics’ trade association reports that repair shops have seen their business jump significantly in the current recession: people aren’t buying new cars; they are fixing the ones they have. The current downturn is likely to pass eventually. But there are also systemic changes in the economy, arising from information technology, that have the surprising effect of making the manual trades — plumbing, electrical work, car repair — more attractive as careers. The Princeton economist Alan Blinder argues that the crucial distinction in the emerging labor market is not between those with more or less education, but between those whose services can be delivered over a wire and those who must do their work in person or on site. The latter will find their livelihoods more secure against outsourcing to distant countries. As Blinder puts it, “You can’t hammer a nail over the Internet.” Nor can the Indians fix your car. Because they are in India.

If the goal is to earn a living, then, maybe it isn’t really true that 18-year-olds need to be imparted with a sense of panic about getting into college (though they certainly need to learn). Some people are hustled off to college, then to the cubicle, against their own inclinations and natural bents, when they would rather be learning to build things or fix things. One shop teacher suggested to me that “in schools, we create artificial learning environments for our children that they know to be contrived and undeserving of their full attention and engagement. Without the opportunity to learn through the hands, the world remains abstract and distant, and the passions for learning will not be engaged.”

A gifted young person who chooses to become a mechanic rather than to accumulate academic credentials is viewed as eccentric, if not self-destructive. There is a pervasive anxiety among parents that there is only one track to success for their children. It runs through a series of gates controlled by prestigious institutions. Further, there is wide use of drugs to medicate boys, especially, against their natural tendency toward action, the better to “keep things on track.” I taught briefly in a public high school and would have loved to have set up a Ritalin fogger in my classroom. It is a rare person, male or female, who is naturally inclined to sit still for 17 years in school, and then indefinitely at work.

The trades suffer from low prestige, and I believe this is based on a simple mistake. Because the work is dirty, many people assume it is also stupid. This is not my experience. I have a small business as a motorcycle mechanic in Richmond, Va., which I started in 2002. I work on Japanese and European motorcycles, mostly older bikes with some “vintage” cachet that makes people willing to spend money on them. I have found the satisfactions of the work to be very much bound up with the intellectual challenges it presents. And yet my decision to go into this line of work is a choice that seems to perplex many people.

After finishing a Ph.D. in political philosophy at the University of Chicago in 2000, I managed to stay on with a one-year postdoctoral fellowship at the university’s Committee on Social Thought. The academic job market was utterly bleak. In a state of professional panic, I retreated to a makeshift workshop I set up in the basement of a Hyde Park apartment building, where I spent the winter tearing down an old Honda motorcycle and rebuilding it. The physicality of it, and the clear specificity of what the project required of me, was a balm. Stumped by a starter motor that seemed to check out in every way but wouldn’t work, I started asking around at Honda dealerships. Nobody had an answer; finally one service manager told me to call Fred Cousins of Triple O Service. “If anyone can help you, Fred can.”

I called Fred, and he invited me to come to his independent motorcycle-repair shop, tucked discreetly into an unmarked warehouse on Goose Island. He told me to put the motor on a certain bench that was free of clutter. He checked the electrical resistance through the windings, as I had done, to confirm there was no short circuit or broken wire. He spun the shaft that ran through the center of the motor, as I had. No problem: it spun freely. Then he hooked it up to a battery. It moved ever so slightly but wouldn’t spin. He grasped the shaft, delicately, with three fingers, and tried to wiggle it side to side. “Too much free play,” he said. He suggested that the problem was with the bushing (a thick-walled sleeve of metal) that captured the end of the shaft in the end of the cylindrical motor housing. It was worn, so it wasn’t locating the shaft precisely enough. The shaft was free to move too much side to side (perhaps a couple of hundredths of an inch), causing the outer circumference of the rotor to bind on the inner circumference of the motor housing when a current was applied. Fred scrounged around for a Honda motor. He found one with the same bushing, then used a “blind hole bearing puller” to extract it, as well as the one in my motor. Then he gently tapped the new, or rather newer, one into place. The motor worked! Then Fred gave me an impromptu dissertation on the peculiar metallurgy of these Honda starter-motor bushings of the mid-’70s. Here was a scholar.

Over the next six months I spent a lot of time at Fred’s shop, learning, and put in only occasional appearances at the university. This was something of a regression: I worked on cars throughout high school and college, and one of my early jobs was at a Porsche repair shop. Now I was rediscovering the intensely absorbing nature of the work, and it got me thinking about possible livelihoods.

As it happened, in the spring I landed a job as executive director of a policy organization in Washington. This felt like a coup. But certain perversities became apparent as I settled into the job. It sometimes required me to reason backward, from desired conclusion to suitable premise. The organization had taken certain positions, and there were some facts it was more fond of than others. As its figurehead, I was making arguments I didn’t fully buy myself. Further, my boss seemed intent on retraining me according to a certain cognitive style — that of the corporate world, from which he had recently come. This style demanded that I project an image of rationality but not indulge too much in actual reasoning. As I sat in my K Street office, Fred’s life as an independent tradesman gave me an image that I kept coming back to: someone who really knows what he is doing, losing himself in work that is genuinely useful and has a certain integrity to it. He also seemed to be having a lot of fun.

Seeing a motorcycle about to leave my shop under its own power, several days after arriving in the back of a pickup truck, I don’t feel tired even though I’ve been standing on a concrete floor all day. Peering into the portal of his helmet, I think I can make out the edges of a grin on the face of a guy who hasn’t ridden his bike in a while. I give him a wave. With one of his hands on the throttle and the other on the clutch, I know he can’t wave back. But I can hear his salute in the exuberant “bwaaAAAAP!” of a crisp throttle, gratuitously revved. That sound pleases me, as I know it does him. It’s a ventriloquist conversation in one mechanical voice, and the gist of it is “Yeah!”

After five months at the think tank, I’d saved enough money to buy some tools I needed, and I quit and went into business fixing bikes. My shop rate is $40 per hour. Other shops have rates as high as $70 per hour, but I tend to work pretty slowly. Further, only about half the time I spend in the shop ends up being billable (I have no employees; every little chore falls to me), so it usually works out closer to $20 per hour — a modest but decent wage. The business goes up and down; when it is down I have supplemented it with writing. The work is sometimes frustrating, but it is never irrational.

And it frequently requires complex thinking. In fixing motorcycles you come up with several imagined trains of cause and effect for manifest symptoms, and you judge their likelihood before tearing anything down. This imagining relies on a mental library that you develop. An internal combustion engine can work in any number of ways, and different manufacturers have tried different approaches. Each has its own proclivities for failure. You also develop a library of sounds and smells and feels. For example, the backfire of a too-lean fuel mixture is subtly different from an ignition backfire.

As in any learned profession, you just have to know a lot. If the motorcycle is 30 years old, from an obscure maker that went out of business 20 years ago, its tendencies are known mostly through lore. It would probably be impossible to do such work in isolation, without access to a collective historical memory; you have to be embedded in a community of mechanic-antiquarians. These relationships are maintained by telephone, in a network of reciprocal favors that spans the country. My most reliable source, Fred, has such an encyclopedic knowledge of obscure European motorcycles that all I have been able to offer him in exchange is deliveries of obscure European beer.

There is always a risk of introducing new complications when working on old motorcycles, and this enters the diagnostic logic. Measured in likelihood of screw-ups, the cost is not identical for all avenues of inquiry when deciding which hypothesis to pursue. Imagine you’re trying to figure out why a bike won’t start. The fasteners holding the engine covers on 1970s-era Hondas are Phillips head, and they are almost always rounded out and corroded. Do you really want to check the condition of the starter clutch if each of eight screws will need to be drilled out and extracted, risking damage to the engine case? Such impediments have to be taken into account. The attractiveness of any hypothesis is determined in part by physical circumstances that have no logical connection to the diagnostic problem at hand. The mechanic’s proper response to the situation cannot be anticipated by a set of rules or algorithms.

There probably aren’t many jobs that can be reduced to rule-following and still be done well. But in many jobs there is an attempt to do just this, and the perversity of it may go unnoticed by those who design the work process. Mechanics face something like this problem in the factory service manuals that we use. These manuals tell you to be systematic in eliminating variables, presenting an idealized image of diagnostic work. But they never take into account the risks of working on old machines. So you put the manual away and consider the facts before you. You do this because ultimately you are responsible to the motorcycle and its owner, not to some procedure.

Some diagnostic situations contain a lot of variables. Any given symptom may have several possible causes, and further, these causes may interact with one another and therefore be difficult to isolate. In deciding how to proceed, there often comes a point where you have to step back and get a larger gestalt. Have a cigarette and walk around the lift. The gap between theory and practice stretches out in front of you, and this is where it gets interesting. What you need now is the kind of judgment that arises only from experience; hunches rather than rules. For me, at least, there is more real thinking going on in the bike shop than there was in the think tank.

Put differently, mechanical work has required me to cultivate different intellectual habits. Further, habits of mind have an ethical dimension that we don’t often think about. Good diagnosis requires attentiveness to the machine, almost a conversation with it, rather than assertiveness, as in the position papers produced on K Street. Cognitive psychologists speak of “metacognition,” which is the activity of stepping back and thinking about your own thinking. It is what you do when you stop for a moment in your pursuit of a solution, and wonder whether your understanding of the problem is adequate. The slap of worn-out pistons hitting their cylinders can sound a lot like loose valve tappets, so to be a good mechanic you have to be constantly open to the possibility that you may be mistaken. This is a virtue that is at once cognitive and moral. It seems to develop because the mechanic, if he is the sort who goes on to become good at it, internalizes the healthy functioning of the motorcycle as an object of passionate concern. How else can you explain the elation he gets when he identifies the root cause of some problem?

This active concern for the motorcycle is reinforced by the social aspects of the job. As is the case with many independent mechanics, my business is based entirely on word of mouth. I sometimes barter services with machinists and metal fabricators. This has a very different feel than transactions with money; it situates me in a community. The result is that I really don’t want to mess up anybody’s motorcycle or charge more than a fair price. You often hear people complain about mechanics and other tradespeople whom they take to be dishonest or incompetent. I am sure this is sometimes justified. But it is also true that the mechanic deals with a large element of chance.

I once accidentally dropped a feeler gauge down into the crankcase of a Kawasaki Ninja that was practically brand new, while performing its first scheduled valve adjustment. I escaped a complete tear-down of the motor only through an operation that involved the use of a stethoscope, another pair of trusted hands and the sort of concentration we associate with a bomb squad. When finally I laid my fingers on that feeler gauge, I felt as if I had cheated death. I don’t remember ever feeling so alive as in the hours that followed.

Often as not, however, such crises do not end in redemption. Moments of elation are counterbalanced with failures, and these, too, are vivid, taking place right before your eyes. With stakes that are often high and immediate, the manual trades elicit heedful absorption in work. They are punctuated by moments of pleasure that take place against a darker backdrop: a keen awareness of catastrophe as an always-present possibility. The core experience is one of individual responsibility, supported by face-to-face interactions between tradesman and customer.

Contrast the experience of being a middle manager. This is a stock figure of ridicule, but the sociologist Robert Jackall spent years inhabiting the world of corporate managers, conducting interviews, and he poignantly describes the “moral maze” they feel trapped in. Like the mechanic, the manager faces the possibility of disaster at any time. But in his case these disasters feel arbitrary; they are typically a result of corporate restructurings, not of physics. A manager has to make many decisions for which he is accountable. Unlike an entrepreneur with his own business, however, his decisions can be reversed at any time by someone higher up the food chain (and there is always someone higher up the food chain). It’s important for your career that these reversals not look like defeats, and more generally you have to spend a lot of time managing what others think of you. Survival depends on a crucial insight: you can’t back down from an argument that you initially made in straightforward language, with moral conviction, without seeming to lose your integrity. So managers learn the art of provisional thinking and feeling, expressed in corporate doublespeak, and cultivate a lack of commitment to their own actions. Nothing is set in concrete the way it is when you are, for example, pouring concrete.

Those who work on the lower rungs of the information-age office hierarchy face their own kinds of unreality, as I learned some time ago. After earning a master’s degree in the early 1990s, I had a hard time finding work but eventually landed a job in the Bay Area writing brief summaries of academic journal articles, which were then sold on CD-ROMs to subscribing libraries. When I got the phone call offering me the job, I was excited. I felt I had grabbed hold of the passing world — miraculously, through the mere filament of a classified ad — and reeled myself into its current. My new bosses immediately took up residence in my imagination, where I often surprised them with my hidden depths. As I was shown to my cubicle, I felt a real sense of being honored. It seemed more than spacious enough. It was my desk, where I would think my thoughts — my unique contribution to a common enterprise, in a real company with hundreds of employees. The regularity of the cubicles made me feel I had found a place in the order of things. I was to be a knowledge worker.

But the feel of the job changed on my first day. The company had gotten its start by providing libraries with a subject index of popular magazines like Sports Illustrated. Through a series of mergers and acquisitions, it now found itself offering not just indexes but also abstracts (that is, summaries), and of a very different kind of material: scholarly works in the physical and biological sciences, humanities, social sciences and law. Some of this stuff was simply incomprehensible to anyone but an expert in the particular field covered by the journal. I was reading articles in Classical Philology where practically every other word was in Greek. Some of the scientific journals were no less mysterious. Yet the categorical difference between, say, Sports Illustrated and Nature Genetics seemed not to have impressed itself on the company’s decision makers. In some of the titles I was assigned, articles began with an abstract written by the author. But even in such cases I was to write my own. The reason offered was that unless I did so, there would be no “value added” by our product. It was hard to believe I was going to add anything other than error and confusion to such material. But then, I hadn’t yet been trained.

My job was structured on the supposition that in writing an abstract of an article there is a method that merely needs to be applied, and that this can be done without understanding the text. I was actually told this by the trainer, Monica, as she stood before a whiteboard, diagramming an abstract. Monica seemed a perfectly sensible person and gave no outward signs of suffering delusions. She didn’t insist too much on what she was telling us, and it became clear she was in a position similar to that of a veteran Soviet bureaucrat who must work on two levels at once: reality and official ideology. The official ideology was a bit like the factory service manuals I mentioned before, the ones that offer procedures that mechanics often have to ignore in order to do their jobs.

My starting quota, after finishing a week of training, was 15 articles per day. By my 11th month at the company, my quota was up to 28 articles per day (this was the normal, scheduled increase). I was always sleepy while at work, and I think this exhaustion was because I felt trapped in a contradiction: the fast pace demanded complete focus on the task, yet that pace also made any real concentration impossible. I had to actively suppress my own ability to think, because the more you think, the more the inadequacies in your understanding of an author’s argument come into focus. This can only slow you down. To not do justice to an author who had poured himself into the subject at hand felt like violence against what was best in myself.

The quota demanded, then, not just dumbing down but also a bit of moral re-education, the opposite of the kind that occurs in the heedful absorption of mechanical work. I had to suppress my sense of responsibility to the article itself, and to others — to the author, to begin with, as well as to the hapless users of the database, who might naïvely suppose that my abstract reflected the author’s work. Such detachment was made easy by the fact there was no immediate consequence for me; I could write any nonsense whatever.

Now, it is probably true that every job entails some kind of mutilation. I used to work as an electrician and had my own business doing it for a while. As an electrician you breathe a lot of unknown dust in crawl spaces, your knees get bruised, your neck gets strained from looking up at the ceiling while installing lights or ceiling fans and you get shocked regularly, sometimes while on a ladder. Your hands are sliced up from twisting wires together, handling junction boxes made out of stamped sheet metal and cutting metal conduit with a hacksaw. But none of this damage touches the best part of yourself.

You might wonder: Wasn’t there any quality control? My supervisor would periodically read a few of my abstracts, and I was sometimes corrected and told not to begin an abstract with a dependent clause. But I was never confronted with an abstract I had written and told that it did not adequately reflect the article. The quality standards were the generic ones of grammar, which could be applied without my supervisor having to read the article at hand. Rather, my supervisor and I both were held to a metric that was conjured by someone remote from the work process — an absentee decision maker armed with a (putatively) profit-maximizing calculus, one that took no account of the intrinsic nature of the job. I wonder whether the resulting perversity really made for maximum profits in the long term. Corporate managers are not, after all, the owners of the businesses they run.

At lunch I had a standing arrangement with two other abstracters. One was from my group, a laconic, disheveled man named Mike whom I liked instantly. He did about as well on his quota as I did on mine, but it didn’t seem to bother him too much. The other guy was from beyond the partition, a meticulously groomed Liberian named Henry who said he had worked for the C.I.A. He had to flee Liberia very suddenly one day and soon found himself resettled near the office parks of Foster City, Calif. Henry wasn’t going to sweat the quota. Come 12:30, the three of us would hike to the food court in the mall. This movement was always thrilling. It involved traversing several “campuses,” with ponds frequented by oddly real seagulls, then the lunch itself, which I always savored. (Marx writes that under conditions of estranged labor, man “no longer feels himself to be freely active in any but his animal functions.”) Over his burrito, Mike would recount the outrageous things he had written in his abstracts. I could see my own future in such moments of sabotage — the compensating pleasures of a cubicle drone. Always funny and gentle, Mike confided one day that he was doing quite a bit of heroin. On the job. This actually made some sense.

How was it that I, once a proudly self-employed electrician, had ended up among these walking wounded, a “knowledge worker” at a salary of $23,000? I had a master’s degree, and it needed to be used. The escalating demand for academic credentials in the job market gives the impression of an ever-more-knowledgeable society, whose members perform cognitive feats their unschooled parents could scarcely conceive of. On paper, my abstracting job, multiplied a millionfold, is precisely what puts the futurologist in a rapture: we are getting to be so smart! Yet my M.A. obscures a more real stupidification of the work I secured with that credential, and a wage to match. When I first got the degree, I felt as if I had been inducted to a certain order of society. But despite the beautiful ties I wore, it turned out to be a more proletarian existence than I had known as an electrician. In that job I had made quite a bit more money. I also felt free and active, rather than confined and stultified.

A good job requires a field of action where you can put your best capacities to work and see an effect in the world. Academic credentials do not guarantee this.

Nor can big business or big government — those idols of the right and the left — reliably secure such work for us. Everyone is rightly concerned about economic growth on the one hand or unemployment and wages on the other, but the character of work doesn’t figure much in political debate. Labor unions address important concerns like workplace safety and family leave, and management looks for greater efficiency, but on the nature of the job itself, the dominant political and economic paradigms are mute. Yet work forms us, and deforms us, with broad public consequences.

The visceral experience of failure seems to have been edited out of the career trajectories of gifted students. It stands to reason, then, that those who end up making big decisions that affect all of us don’t seem to have much sense of their own fallibility, and of how badly things can go wrong even with the best of intentions (like when I dropped that feeler gauge down into the Ninja). In the boardrooms of Wall Street and the corridors of Pennsylvania Avenue, I don’t think you’ll see a yellow sign that says “Think Safety!” as you do on job sites and in many repair shops, no doubt because those who sit on the swivel chairs tend to live remote from the consequences of the decisions they make. Why not encourage gifted students to learn a trade, if only in the summers, so that their fingers will be crushed once or twice before they go on to run the country?

There is good reason to suppose that responsibility has to be installed in the foundation of your mental equipment — at the level of perception and habit. There is an ethic of paying attention that develops in the trades through hard experience. It inflects your perception of the world and your habitual responses to it. This is due to the immediate feedback you get from material objects and to the fact that the work is typically situated in face-to-face interactions between tradesman and customer.

An economy that is more entrepreneurial, less managerial, would be less subject to the kind of distortions that occur when corporate managers’ compensation is tied to the short-term profit of distant shareholders. For most entrepreneurs, profit is at once a more capacious and a more concrete thing than this. It is a calculation in which the intrinsic satisfactions of work count — not least, the exercise of your own powers of reason.

Ultimately it is enlightened self-interest, then, not a harangue about humility or public-spiritedness, that will compel us to take a fresh look at the trades. The good life comes in a variety of forms. This variety has become difficult to see; our field of aspiration has narrowed into certain channels. But the current perplexity in the economy seems to be softening our gaze. Our peripheral vision is perhaps recovering, allowing us to consider the full range of lives worth choosing. For anyone who feels ill suited by disposition to spend his days sitting in an office, the question of what a good job looks like is now wide open.

Matthew B. Crawford lives in Richmond, Va. His book, “Shop Class as Soulcraft: An Inquiry Into the Value of Work,” from which this essay is adapted, will be published this week by Penguin Press.

The Latest from Frank Thomas on Health Care

Potential Administrative cost savings of $90 billion I pointed to are on the LOW side. Overall US health care Administrative costs today are reported to be 31% of total annual costs of say, the $2.4trillion you mention. This amounts to $744 billion in annual Administrative costs.

So my $90 billion cost saving estimate represents a meager 12% cost reduction ... however, still enough to cover the entire expected added cost of $75 billion to insure the uninsured and inadequately insured.

As to what the best system solution is, I'm in no position to say what the best Model mix for the Hodgepoge system MESS described bluntly but truthfully by John and me. The Netherlands has "reinjected market forces" as you propose into its unique managed competition health care program. But it's a simple as well as very sophisticated system where the GP has a key role as the Gatekeeper to insure no overuse of sppecialist care

At the moment, I do favor some CENTRAL and DECENTRALIZED Single Payer program perhaps offered by Medicare as well as private insurers (to maximize competition).
Whatever the final decisions here by Obama's Administration, I believe the final Real Reforms for a BASIC CARE quality-cost effective system should reflect some of the following KEY elements introduced step-by-step as needed:

A....Care based on need, not ability to pay

B....Care based on a reasonably uniform, standard health care benefits package for all

C....Care based on simplifying, harmonizing and coordinating federal and state health care including standarization and computerization of medical treatment coding, billing forms, and billing procedures

D....Care based on NO pre-conditions or risk rationing of clients by insurers

E....Care based preferably on NO deductibles/co-pays for incomes below say, 150% of the poverty level or $30,000, and perhaps income-means graduated deductibles/co-pays beyond this level

F....Care where the insured or to be insured always have free choice of insurers and providers

G....Care based on premium costs deductibles and co-pays preferably being no more than 5-6% of one's income above $30,000 with balance of funding coming from employers and employees through possibly a shared federal/state payroll tax of say, 6% sent directly. This is part of attempt to get at harmonization of 50 state different rules and taxes regarding health care.

H.... Care system that provides uniform high quality standards and tight oversight of same regionally and locally particularly; individual state income and/or tax-base wealth differences would be subsidized by federal government

I....Supplemental insurance coverage by private insurers enriched coverages, for catastrophic or long-lasting chronic illnesses.

The insurer industry also needs extensive Consolidation to reach appropriate health care economies of scale regionally.

Trillions in Debt Used to Pay Off Speculators Rather Than To Create Jobs

The fact that the US government is creating huge amounts of debt to pay off speculators, many of whom are foreign, instead of using the money to create jobs will produce hyperinflation, a jobless recovery, a diminution of the value of the dollar or some combination of the above. Globalization has created a situation that not only are some American banks too big to fail but some foreign banks and other financial institutuions are too big to fail as well. We cannot allow foreign hedge funds, private equity funds or sovereign wealth funds to fail because they are the very institutions who are funding our debt. The fact that our national debt is being financed by foreigners means that American financial institutions cannot be allowed to default on money owed to foreigners. This melange of toxic ingredients will probably lead to a nasty denouement for which the only recovery will be a pull back from the global economy regardless of what this means for international trade. In fact if international trade goes by the wayside, this would probably have a salutory effect for most Americans. It would mean that jobs would HAVE to be created in the US to supply basic products and services here.

An instructive example is the German Weimar Republioc in the 1920s where hyperinflation produced the wierd phenomenon that a loaf of bread cost a wheelbarrowful of marks. This situation was totally ameliorated by Hitler in four years making Germany once again the most prosperous nation in Europe. How did he do it? Basically, he deglobalized the German economic system, created a new currency and a massive public works program. The new currency couldn't be speculated against and was paid out to German workers for working in the publics work programs. Because every unit of currency that was paid out produced a unit of work, this currency was non-inflationary and created jobs in the private sector because Germans once again had jobs and money to spend. Foreign speculators against the mark as well as German reparations for the First World War were circumvented, and the German economy was reignited in short order. Later Hitler repudiated the unpopular reparations. This program built the Autobahn, and Hitler became immensely popular among the German people. It has been said that, if Hitler had died in 1938 before the invasion of Poland, he would have gone down as one of the greatest leaders in world history. 

This is from an article by Ellen Brown on the Web of Debt website:

More interesting is a little-known sequel to this tale. What allowed Germany to get back on its feet in the 1930s was the very thing today’s commentators are blaming for bringing it down in the 1920s – money issued by seigniorage by the government. Economist Henry C. K. Liu calls this form of financing “sovereign credit.” He writes of Germany’s remarkable transformation: “The Nazis came to power in Germany in 1933, at a time when its economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Yet through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies it could exploit, into the strongest economy in Europe within four years, even before armament spending began.” While Hitler clearly deserves the opprobrium heaped on him for his later atrocities, he was enormously popular with his own people, at least for a time. This was evidently because he rescued Germany from the throes of a worldwide depression – and he did it through a plan of public works paid for with currency generated by the government itself. Projects were first earmarked for funding, including flood control, repair of public buildings and private residences, and construction of new buildings, roads, bridges, canals, and port facilities. The projected cost of the various programs was fixed at one billion units of the national currency. One billion non-inflationary bills of exchange called Labor Treasury Certificates were then issued against this cost. Millions of people were put to work on these projects, and the workers were paid with the Treasury Certificates. The workers then spent the certificates on goods and services, creating more jobs for more people. These certificates were not actually debt-free but were issued as bonds, and the government paid interest on them to the bearers. But the certificates circulated as money and were renewable indefinitely, making them a de facto currency; and they avoided the need to borrow from international lenders or to pay off international debts. The Treasury Certificates did not trade on foreign currency markets, so they were beyond the reach of the currency speculators. They could not be sold short because there was no one to sell them to, so they retained their value. Within two years, Germany’s unemployment problem had been solved and the country was back on its feet. It had a solid, stable currency, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare.  Germany even managed to restore foreign trade, although it was denied foreign credit and was faced with an economic boycott abroad. It did this by using a barter system: equipment and commodities were exchanged directly with other countries, circumventing the international banks. This system of direct exchange occurred without debt and without trade deficits. Although Germany’s economic experiment was short-lived, it left some lasting monuments to its success, including the famous Autobahn, the world’s first extensive superhighway.

Obama has created a stimulus package the intent of which is to create jobs. But, at the same time, the amount of money printed and handed over to banks has been far greater. This "quantitative easing" which is a euphemism for printing money by the Federal Reserve Bank is problematical. In addition to the job creation crisis resulting primarily from globalization and the shifting of jobs to low wage countries, there is a continuing mortgage crisis caused by people who lose their jobs not being able to keep up with their mortage payments. Very little has been done effectively to stanch the flood of foreclosures. In addition the states are virtually bankrupt. California is reduced to letting prisoners out of prison and eliminating welfare. All these contributory factors can do nothing else but to make the economic and financial crisis worse. It may get to the point where the only solution is to go whole hog towards a system similar to the one Hitler created in the 1930s. By the way Lincoln did something similar during the Civil War when he created greenbacks. The idea is to have a currency created by government - not private banks - which can't be speculated against or sold short and which puts purchasing power in the hands of workers in return for jobs which rebuild the society including but not limited to infrastructure. Superstructure can be created as well.

Germany’s scheme for escaping its crippling debt and reinvigorating a moribund economy was clever, but it was not actually original with the Germans. The notion that a government could fund itself by printing and delivering paper receipts for goods and services received was first devised by the American colonists. Benjamin Franklin credited the remarkable growth and abundance in the colonies, at a time when English workers were suffering the impoverished conditions of the Industrial Revolution, to the colonists’ unique system of government-issued money. In the nineteenth century, Senator Henry Clay called this the “American system,” distinguishing it from the “British system” of privately-issued paper banknotes. After the American Revolution, the American system was replaced in the U.S. with banker-created money; but government-issued money was revived during the Civil War, when Abraham Lincoln funded his government with U.S. Notes or “Greenbacks” issued by the Treasury. The dramatic difference in the results of Germany’s two money-printing experiments was a direct result of the uses to which the money was put. Price inflation results when “demand” (money) increases more than “supply” (goods and services), driving prices up; and in the experiment of the 1930s, new money was created for the purpose of funding productivity, so supply and demand increased together and prices remained stable. Hitler said, “For every mark issued, we required the equivalent of a mark’s worth of work done, or goods produced.” In the hyperinflationary disaster of 1923, on the other hand, money was printed merely to pay off speculators, causing demand to shoot up while supply remained fixed. The result was not just inflation but hyperinflation, since the speculation went wild, triggering rampant tulip-bubble-style mania and panic.

The real problem is that Obama's job creation stimulus plan seems paltry compared to his bank bail-out plan overseen by Treasury Secretary Tim Geithner. Money created by quantitative easing to pay off derivatives and credit default swaps is completely inflationary. Our foreign creditors such as China have noticed this as well as our diminished capacity to buy their exports. They, therefore, are shifting their attention to the creation of a world reserve curency other than the dollar. Their interest in lending us more money to fund our debt will also consequently be reduced. The US, drowning in debt, will at some point be forced to let inflation diminish the value of that debt which will make it easier to pay off to the chagrin of the Chinese who will be receiving a lesser return on their investment than they expected. Meanwhile, China will invest in its own internal economy and start selling its output to its own middle class much in the same way as Henry Ford overpaid his workers so they could actually consume the products they were producing. The US may as well have to delay repayment of its massive foreign debt at some point which is not the same as renegging on it, but will serve to create large scale dislocations in the world economy. No longer will the US be the engine that drives world production and consumption.

Is the United States, then, out of the hyperinflationary woods with its “quantitative easing” scheme? Maybe, maybe not. To the extent that the newly-created money will be used for real economic development and growth, funding by seigniorage [printing money or quantitative easing] is not likely to inflate prices, because supply and demand will rise together. Using quantitative easing to fund infrastructure and other productive projects, as in President Obama’s stimulus package, could invigorate the economy as promised, producing the sort of abundance reported by Benjamin Franklin in America’s flourishing early years. There is, however, something else going on today that is disturbingly similar to what triggered the 1923 hyperinflation. As in Weimar Germany, money creation in the U.S. is now being undertaken by a privately-owned central bank, the Federal Reserve; and it is largely being done to settle speculative bets on the books of private banks, without producing anything of value to the economy. As gold investor James Sinclair warned nearly two years ago: “[T]he real problem is a trembling $20 trillion mountain of over the counter credit and default derivatives. Think deeply about the Weimar Republic case study because every day it looks more and more like a repeat in cause and effect . . . .” The $12.9 billion in bailout funds funneled through AIG to pay Goldman Sachs for its highly speculative credit default swaps is just one egregious example. To the extent that the money generated by “quantitative easing” is being sucked into the black hole of paying off these speculative derivative bets, we could indeed be on the Weimar road and there is real cause for alarm. We have been led to believe that we must prop up a zombie Wall Street banking behemoth because without it we would have no credit system, but that is not true. There is another viable alternative, and it may prove to be our only viable alternative. We can beat Wall Street at its own game, by forming publicly-owned banks that issue the full faith and credit of the United States not for private speculative profit but as a public service, for the benefit of the United States and its people.

Bill Moyers on Health Care

Published on Friday, May 22, 2009 by CommonDreams.org

Rx and the Single Payer

by Bill Moyers and Michael Winship

In 2003, a young Illinois state senator named Barack Obama told an AFL-CIO meeting, "I am a proponent of a single-payer universal health care program."

Single payer. Universal. That's health coverage, like Medicare, but for everyone who wants it. Single payer eliminates insurance companies as pricey middlemen. The government pays care providers directly. It's a system that polls consistently have shown the American people favoring by as much as two-to-one.

There was only one thing standing in the way, Obama said six years ago: "All of you know we might not get there immediately because first we have to take back the White House, we have to take back the Senate and we have to take back the House."

Fast forward six years. President Obama has everything he said was needed -- Democrats in control of the executive branch and both chambers of Congress. So what's happened to single payer?

A woman at his town hall meeting in New Mexico last week asked him exactly that. "If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense," the President replied. "That's the kind of system that you have in most industrialized countries around the world.

"The only problem is that we're not starting from scratch. We have historically a tradition of employer-based health care. And although there are a lot of people who are not satisfied with their health care, the truth is, is that the vast majority of people currently get health care from their employers and you've got this system that's already in place. We don't want a huge disruption as we go into health care reform where suddenly we're trying to completely reinvent one-sixth of the economy."

So the banks were too big to fail and now, apparently, health care is too big to fix, at least the way a majority of people indicate they would like it to be fixed, with a single payer option. President Obama favors a public health plan competing with the medical cartel that he hopes will create a real market that would bring down costs. But single payer has vanished from his radar.

Nor is single payer getting much coverage in the mainstream media. Barely a mention was given to the hundreds of doctors, nurses and other health care professionals who came to Washington last week to protest the absence of official debate over single payer.

Is it the proverbial tree falling in the forest, making a noise that journalists can't or won't hear? Could the indifference of the press be because both the President of the United States and Congress have been avoiding single payer like, well, like the plague? As we see so often, government officials set the agenda by what they do and don't talk about.

Instead, President Obama is looking for consensus, seeking peace among all the parties involved. Except for single payer advocates. At that big White House powwow in Washington last week, the President asked representatives of the health care business to reason together with him. "What's brought us all together today is a recognition that we can't continue down the same dangerous road we've been traveling for so many years," he said, "that costs are out of control; and that reform is not a luxury that can be postponed, but a necessity that cannot wait."

They came, listened, made nice for the photo op. and while they failed to participate in a hearty chorus of "Kumbaya," they did promise to cut health care costs voluntarily over the next ten years. The press ate it up -- and Mr. Obama was a happy man.

Meanwhile, some of us looking on -- those of us who've been around a long time -- were scratching our heads. Hadn't we heard this before?

Way, way back in the 1970's Americans were riled up over the rising costs of health care. As a presidential candidate, Jimmy Carter started talking about the government clamping down. When he got to the White House, drug makers, insurance companies, hospitals and doctors -- the very people who only a decade earlier had done everything they could to strangle Medicare in the cradle -- seemed uncharacteristically humble and cooperative. "You don't have to make us cut costs," they promised. "We'll do it voluntarily."

So Uncle Sam backed down, and you guessed it. Pretty soon medical costs were soaring higher than ever.

By the early '90s, the public was once again hurting in the pocketbook. Feeling our pain, Bill and Hillary Clinton tried again, coming up with a plan only slightly more complicated than the schematics for an F-18 fighter jet.

This time the health industry acted more like Tony Soprano than Mother Teresa. It bludgeoned the Clinton reforms with one of the most expensive and deceitful public relations and advertising campaigns ever conceived -- paid for, of course, from the industry's swollen profits.

As the drug and insurance companies, hospitals and doctors dumped the mangled carcass of reform into the Potomac, securely encased in concrete, once again they said don't worry; they would cut costs voluntarily.

If you believed that, we've got a toll-free bridge to the Mayo Clinic we'd like to sell you.

So anyone with any memory left could be excused for raising their eyebrows at the health care industry's latest promises. As if on cue, hardly had their pledge of volunteerism rung out across the land than Jay Gellert, chief executive of Health Net Inc. and chair of the lobbying group America's Health Insurance Plans, assured his pals not to worry abut the voluntary reductions. "We believe that we can do it without undermining the viability of companies," he said, "and in effect enhancing the payment to physicians and hospitals." In other words, their so-called voluntary "reforms" will in no way interfere with maximizing profits.

Also last week, John Lechleiter, the chief executive of drug giant Eli Lilly, blasted universal health care in a speech before the U.S. Chamber of Commerce. "I do not believe that policymakers have yet arrived at a full and complete diagnosis of what's wrong and what's right with U.S. health care," he declared. "And I am very concerned that some of the proposed policies -- the treatments, to continue my metaphor -- will have unintended side-effects that make our situation worse."

So why bother with the charm offensive on Pennsylvania Avenue? Could it be, as some critics suggest, a Trojan horse, getting the health industry a place at the table so they can leap up at the right moment and again kill any real reform?

Wheelers and dealers from the health sector aren't waiting for that moment. According to the non-partisan Center for Responsive Politics, they've spent more than $134 million on lobbying in the first quarter of 2009 alone. And some already are shelling out big bucks for a publicity blitz and ads attacking any health care reform that threatens to reduce the profits from sickness and disease.

The Washington Post's health care reform blog reported Monday that Blue Cross Blue Shield of North Carolina has hired an outside PR firm to put together a video campaign assaulting Obama's public plan. And this month alone, the group Conservatives for Patients' Rights is spending more than a million dollars for attack ads. They've hired a public relations firm called CRC -- Creative Response Concepts. You remember them -- the same high-minded folks who brought you the Swift Boat Veterans for Truth, the gang who savaged John Kerry's service record in Vietnam.

The ads feature the chairman of Conservatives for Patients' Rights, Rick Scott. Who's he? As a former deputy inspector general from the Department of Health and Human Services told The New York Times, "He hopes people don't Google his name."

Scott's not a doctor; he just acts like one on TV. He's an entrepreneur who took two hospitals in Texas and built them into the largest health care chain in the world, Columbia/HCA. In 1997, he was fired by the board of directors after Columbia/HCA was caught in a scheme that ripped off the Feds and state governments for hundreds of millions of dollars in bogus Medicare and Medicaid payments, the largest such fraud in history. The company had to cough up $1.7 billion dollars to get out of the mess.

Rick Scott got off, you should excuse the expression, scot-free. Better than, in fact. According to published reports, he waltzed away with a $10 million severance deal and $300 million worth of stock. So much for voluntarily lowering overhead.

With medical costs rising six percent per year, that's who's offering himself as a spokesman for the health care industry. Speaking up for single payer is Geri Jenkins, a president of the California Nurses Association and National Nurses Organizing Committee -- a registered nurse with literal hands-on experience.

"We're there around the clock," she told our colleague Jessica Wang. "So we feel a real sense of obligation to advocate for the best interests of our patients and the public. Now, you can talk about policy but when you're staring at a human face it's a whole different story."

Bill Moyers is managing editor and Michael Winship is senior writer of the weekly public affairs program Bill Moyers Journal, which airs Friday night on PBS. Check local airtimes or comment at The Moyers Blog at www.pbs.org/moyers. Research provided by editorial producer Rebecca Wharton.

Single Payer Health Care a Non-Starter in the Senate

Published on Saturday, May 23, 2009 by The Boston Globe

Held Hostage by the Health System

by Dr. Marcia Angell

The Senate Finance Committee's hearings on health reform earlier this month did not include testimony from any advocate for single-payer insurance. Physicians for a National Health Program, which represents 16,000 doctors, asked the committee to invite me to testify, but it chose not to. If I had been invited, this is what I would have said:

The reason our health system is in such trouble is that it is set up to generate profits, not to provide care. We rely on hundreds of investor-owned insurance companies that profit by refusing coverage to high-risk patients and limiting services to others. They also cream off about 20 percent of the premiums for profits and overhead.

In addition, we provide much of our medical care in investor-owned health facilities that profit by providing too many services for the well-insured and too few for those who cannot pay. Most physicians are paid fee-for-service, which gives them a similar incentive, particularly specialists who receive very high fees for performing expensive tests and procedures. Nonprofits behave much like for-profits, because they must compete with them. In sum, healthcare is directed toward maximizing income, not maximizing health. In economic terms, it's a highly successful industry, but it's a massive drain on the rest of the economy.

The reform proposals advocated by President Obama are meant to increase coverage for the uninsured. That is certainly a worthwhile goal, but the problem is that they leave the present profit-driven and highly inflationary system essentially unchanged, and simply pour more money into it - an unsustainable situation. That is what is happening in Massachusetts, where we have nearly universal health insurance, but costs are growing so rapidly that its long-term prospects are poor without cutting benefits and greatly increasing co-payments. Initiatives such as electronic records, case management, preventive care, and comparative effectiveness studies may improve care, but the Congressional Budget Office and most health economists agree that they are unlikely to save much money. Promises by for-profit insurers and providers to mend their ways voluntarily are not credible.

Nearly every other advanced country has a largely nonprofit national health system that provides universal and comprehensive care. Expenditures are on average about half as much per person, and health outcomes are generally much better. Moreover, these countries offer more basic services, not fewer. They have on average more doctors and nurses, more hospital beds, longer hospital stays, and there are more doctor visits. But they don't do nearly as many tests and procedures, because there is little financial incentive to do so.

It is often argued that the first order of business should be to expand coverage, and then worry about costs later. But it is essential to deal with both together to stop the drain on the rest of the economy and the further fraying of healthcare. The only way to provide universal and comprehensive coverage and control costs is to adopt a nonprofit single-payer system. Medicare is a single-payer system, with low overhead costs, but it uses the same profit-oriented providers as the private system and also preferentially rewards specialists for tests and procedures. Consequently, its costs are rising almost as rapidly as those in the private sector. Representative John Conyers introduced an excellent bill that calls for extending Medicare to everyone in a nonprofit delivery system. That could be done gradually, by lowering the Medicare age a decade at a time.

A single-payer system is ignored by lawmakers because of the influence of the health industry lobbies. They raise the specter of rationing and long waits for care. There are indeed waits for some elective procedures in some countries with national health systems, such as the United Kingdom. But that's because they spend far less on healthcare than we do. For them, the problem is not the system; it's inadequate funding. For us, it's not the funding; it's the system. We spend more than enough.

I urge you to consider a nonprofit single-payer system. The economic interests of the health industry should not be permitted to hold the rest of the economy hostage and threaten the health and well-being of the public.

© Copyright 2009 Globe Newspaper Company.

Dr. Marcia Angell is a senior lecturer in social medicine at Harvard Medical School and former editor-in-chief of the New England Journal of Medicine.

College Grads Jobless and in Debt from Student Loans

Many college students are graduating this year without any job prospects and with tens of thousands of dollars of student loan debt. According to an article in the Washington Post, about 40% of this year's graduating class has no job lined up or plans in place for graduate school. For most graduate school would just mean more mounting student loan debt without necessarily any greater job prospects after finishing. What this boils down to is that students have been sold a bill of goods about the value of a college diploma, how it represents the American dream and why they should go into debt to obtain it.

There are a number of important lessons to be learned from this fiasco. #1 Don't get a college education and a degree that doesn't confer an actual credential to perform a professional function which can't be done while self-employed. If your degree is in a field in which you must be employed by someone else, it isn't worth it. Why? There may be no jobs, you can be laid off or downsized at any time and your financial life is out of your own control. If your degree is in a field which doesn't confer a credential that actually allows you to work in self-employment, it's worthless. For example, a degree in psychology does not allow you to hang out your shingle as a Marriage, Child and Family Counsellor. For that credential you need several years more graduate school, internship and testing to obtain the credential that will actually allow you to be in business for yourself and earn money.

Employee requirements and credentials have been creeping upwards. It used to be that a high school diploma would qualify you for many jobs. Then a diploma from a four year college was the ticket to a prosperous life. Then you needed a one year Master's Degree. Then it took two or more years to get a MS degree. Then you needed a PhD. Then you needed a post doc. Up, up and up with no guarantee of a job at the finale. But today there is a guarantee that you will be in debt to the tune of $100,000., a debt that can't be discharged in bankruptcy if there are no jobs available in your chosen field or if you get sick and can't work or if, God forbid, you should become disabled.

And for that matter those who graduate with no job are still expected to pay back on their student loans. If they can't pay their loans will go into default, fees and penalties will be added and they will be hounded by collections agencies. Not exactly what students pursuing the American dream, those who worked hard and played by the rules, had counted upon.

This is from an article in the LA Times:

Natalie Hickey left her small hometown in Ohio six years ago and aimed her beat-up Dodge Intrepid for the West Coast. Four years later, she realized a long-held dream and graduated with a bachelor's degree in photography from Brooks Institute in Santa Barbara. She also picked up $140,000 in student debt, some of it at interest rates as high as 18%. Her monthly payments are roughly $1,700, more than her rent and car payment combined. "I don't have all this debt because I was buying stuff," said Hickey, who now lives in Texas. "I was just trying to pay tuition, living on ramen noodles and doing everything as cheaply as I could." Hickey got caught in an increasingly common trap in the nation's $85-billion student loan market. She borrowed heavily, presuming that all her debt was part of the federal student loan program. But most of the money she borrowed was actually in private loans, the fastest-growing segment of the student loan market. Private loans have no relation to the federal loan program, with one exception: In many cases, they are offered by the same for-profit companies that provide federally funded student loans. As a result, some students who think they are getting a federal loan find out later that they hold a private loan. The difference can be costly. Whereas federally guaranteed loans have fixed interest rates, currently either 6% or 6.8%, private loans are more like credit card debt. Interest rates aren't fixed and often run 15% or more, not counting fees. Most students have little experience in taking out loans, yet the federal government doesn't require lenders to disclose the total cost of a student loan and other terms upfront -- before signing -- as it does for car loans and mortgages. "Students are in the cross hairs, being bombarded by very sophisticated and, to some extent, ethically marginal lenders," said Rep. George Miller (D-Martinez), who sponsored legislation passed this year that will require lenders to provide more disclosures on fees. "My fear is that we are developing a predatory market, just like we have had in mortgages."

Unlike credit card debt, student loan debt can't be discharged in bankruptcy. Thus if you can't work for health reasons or because you can't find a job, they will still come after you for the debt, and exhorbitant fees and penalties will be added in many cases tripling or quadrupling the amount of the loan. They will garnish your social security, your disability check or use any other method of getting their money. In fact they encourage default because most of their profits are made after the loan goes into default and not from students actually paying off their loans on schedule.

From Publishers Weekly:

Think credit-card debt is a problem? Take a look at the lives ruined through the corporate thug tactics, usurious fees and vicious harassment employed by some of the nation's largest student-loan providers in this shocking exposé from Collinge, founder of StudentLoanJustice.org. The author had a manageable $38,000 in loans—until he missed a single payment. Fees and charges quickly piled up, and his debt mushroomed to more than $100,000. The author reveals that since lenders make far more money from defaulted loans than they do from borrowers in good standing, they go to extraordinary—and illegal—lengths to force borrowers into default. There are currently more than five million defaulted loans on record, and incredibly, student loans are the only type of loan in U.S. history to be nondischargable in bankruptcy. The author exposes the engineers (and profiteers) of this predatory system and urges Congress to restore standard consumer protections to student loans, concluding with a call to arms for progressive changes, refinancing rights and a plethora of practical advice for borrowers. Comprehensive and stirring, this extraordinary book is whistle-blowing at its finest.

For a good and exhaustive explanation of the predatory student loan industry go to studentloanjustice.org or read the book, "The Student Loan Scam" by Alan Collinge.

More on Dutch Health Care

From Frank Thomas via Robert Reich's blog:

The new Dutch health care system has been explained in vast detail on this blog including prices and benefits covered for Disability and Exceptional Medical conditions ... nothing concerning 'supplemental' coverages has been left out by design as you question.

I´ve summarized the exact benefit coverage of the Basic plan on Reich´s two or three essays ago aas well as a few months ago.

It´s very simple: the required Basic coverage for all has following typical MONTHLY individual premium prices. These prices come direct from current health insurance policy for my wife and me. For the Basic Plan, they vary little among insurers:

___________________________________
BASIC DUTCH PLAN: Monthly Premiums Including Dental Per Individual:

ZERO Deductible.........$137.00
$130 Deductible.........$131.50
$260 Deductible.........$126.00
$520 Deductible.........$115.00
$650 Deductible.........$109.00

___________________________________
UPGRADES: (Monthly)
1 Star..................$30.50
2 Star..................$41.50
3 Star..................$69.75
4 Star.................$113.00

___________________________________
TOTAL PREMIUM COSTS WITH UPGRADES: Assuming ZERO and $650 Deductible:

DEDUCTIBLE.......ZERO......$650
(Monthly Data)

1 Star.........$167.50....$139.50
2 Star.........$178.50....$150.50
3 Star.........$206.75....$178.75
4 Star.........$250.00....$222.00

___________________________________
Cost for Family of Four Assuming ZERO and $650 Deductible:

DEDUCTIBLE.......ZERO......$650
(Monthly Data)

1 Star.........$335.00....$279.00
2 Star.........$357.00....$301.00
3 Star.........$413.50....$357.50
4 Star.........$500.00....$444.00
___________________________________

The most upgraded 4-Star policy for a family of four costs about $5,400 annually or less the ONE-THIRD a comparable US benefit coverage plan that will have a much higher deductible. The Dutch insurer is under no requirement to provide these 4-Star upgrades to everyone. The 'Risk Equalization' provision in the new Dutch health care plan subsidizes insurers for those individuals having a high risk history of chronic illness. I´ve explained all that in great detail on this blog.

So as not to bias John Lawrence´s and my study against US comparable benefit premium costs, our study assumes a Basic monthly premium cost of $300 for a family of four. This reflects a $650 deductible and a 2-Star upgrade to the Basic Dutch plan.

My wife and I, however, are very satisfied with the Basic Dutch Plan coverage benefits with NO upgrades. Based on a $650 deductible, it costs us $218.00 monthly (including dental)or $2,616annually. In addition, there is an employee tax contribution of 12.15% capped on an income of $41,800. This insurance covers special Exceptional Medical expenses for treatment and nursing in recognized institutions and nursing homes and supply of artificial appliances.

The Dutch Basic Plan premium cost of $300 for a family of four compares to a US monthly premium cost of $1,200 or $14,400 annually for a family of four based on a $1,500 deductible and including dental.

SUMMARY:

I think this adequately covers your "supplemental" insurance point. No doubt many Dutch people purchase one of the 4-Star exceptional or exotic upgrades for special medical conditions or unexpected occurences. This is because the added premium costs are very reasonable as is quite evident above.

The standard Dutch Basic plan covers everyone ... and even with the supplemental 4-Star upgrades the annual premium is at least ONE-FOURTH less costly than that for a similar US benefit plan also having a much higher deductible.

As is well-known by those who make the effort, the Swiss, Swedish, and Danish plans are by far quality and cost superior to comparable US benefit health care plans ... whether one looks at data for a family of two or four.

While the US Founders, Norway Thrives

Please note that Norway is a socialist country. Yet Norway has very little personal or national debt and is one of the richest countries in the world per capita. That means that individual wealth is very high and most Norwegians own a boat and a second home. If that's socialism, I'm all for it. In addition to cradle to grave welfare, Norwegians enjoy a short work week, a high level of individual income and wealth and a high level of equality. That means that the wealth is greatly shared and not concentrated in a very rich upper class combined with a poverty and homeless class as exists in the US.

The following article is from the New York Times, "Thriving Norway Provides an Economics Lesson":

By LANDON THOMAS Jr.
Published: May 13, 2009

OSLO — When capitalism seemed on the verge of collapse last fall, Kristin Halvorsen, Norway’s Socialist finance minister and a longtime free market skeptic, did more than crow.

As investors the world over sold in a panic, she bucked the tide, authorizing Norway’s $300 billion sovereign wealth fund to ramp up its stock buying program by $60 billion — or about 23 percent of Norway ’s economic output.

“The timing was not that bad,” Ms. Halvorsen said, smiling with satisfaction over the broad worldwide market rally that began in early March.

The global financial crisis has brought low the economies of just about every country on earth. But not Norway.

With a quirky contrariness as deeply etched in the national character as the fjords carved into its rugged landscape, Norway has thrived by going its own way. When others splurged, it saved. When others sought to limit the role of government, Norway strengthened its cradle-to-grave welfare state.

And in the midst of the worst global downturn since the Depression, Norway’s economy grew last year by just under 3 percent. The government enjoys a budget surplus of 11 percent and its ledger is entirely free of debt.

By comparison, the United States is expected to chalk up a fiscal deficit this year equal to 12.9 percent of its gross domestic product and push its total debt to $11 trillion, or 65 percent of the size of its economy.

Norway is a relatively small country with a largely homogeneous population of 4.6 million and the advantages of being a major oil exporter. It counted $68 billion in oil revenue last year as prices soared to record levels. Even though prices have sharply declined, the government is not particularly worried. That is because Norway avoided the usual trap that plagues many energy-rich countries.

Instead of spending its riches lavishly, it passed legislation ensuring that oil revenue went straight into its sovereign wealth fund, state money that is used to make investments around the world. Now its sovereign wealth fund is close to being the largest in the world, despite losing 23 percent last year because of investments that declined.

Norway’s relative frugality stands in stark contrast to Britain, which spent most of its North Sea oil revenue — and more — during the boom years. Government spending rose to 47 percent of G.D.P., from 42 percent in 2003. By comparison, public spending in Norway fell to 40 percent from 48 percent of G.D.P.

“The U.S. and the U.K. have no sense of guilt,” said Anders Aslund, an expert on Scandinavia at the Peterson Institute for International Economics in Washington. “But in Norway, there is instead a sense of virtue. If you are given a lot, you have a responsibility.”

Eirik Wekre, an economist who writes thrillers in his spare time, describes Norwegians’ feelings about debt this way: “We cannot spend this money now; it would be stealing from future generations.”

Mr. Wekre, who paid for his house and car with cash, attributes this broad consensus to as the country’s iconoclasm. “The strongest man is he who stands alone in the world,” he said, quoting Norwegian playwright Henrik Ibsen.

Still, even Ibsen might concede that it is easier to stand alone when your nation has benefited from oil reserves that make it the third-largest exporter in the world. The money flowing from that black gold since the early 1970s has prompted even the flintiest of Norwegians to relax and enjoy their good fortune. The country’s G.D.P. per person is $52,000, behind only Luxembourg among industrial democracies.

As in much of the rest of the world home prices have soared here, tripling this decade. But there has been no real estate crash in Norway because there were few mortgage lending excesses. After a 15 percent correction, prices are again on the rise.

Unlike Dublin or Riyadh, Saudi Arabia, where work has stopped on half-built skyscrapers and stilled cranes dot the skylines, Oslo retains a feeling of modesty reminiscent of a fishing village rather than a Western capital, with the recently opened $800 million Opera House one of the few signs of opulence.

Norwegian banks, said Arne J. Isachsen, an economist at the Norwegian School of Management, remain largely healthy and prudent in their lending. Banks represent just 2 percent of the economy and tight public oversight over their lending practices have kept Norwegian banks from taking on the risk that brought down their Icelandic counterparts. But they certainly have not closed their doors to borrowers. Mr. Isachsen, like many in Norway, has a second home and an open credit line from his bank, which he recently used to buy a new boat.

Some here worry that while a cabin in the woods and a boat may not approach the excesses seen in New York or London, oil wealth and the state largesse have corrupted Norway’s once-sturdy work ethic.

“This is an oil-for-leisure program,” said Knut Anton Mork, an economist at Handelsbanken in Oslo. A recent study, he pointed out, found that Norwegians work the fewest hours of the citizens of any industrial democracy.

“We have become complacent,” Mr. Mork added. “More and more vacation houses are being built. We have more holidays than most countries and extremely generous benefits and sick leave policies. Some day the dream will end.”

But that day is far off. For now, the air is clear, work is plentiful and the government’s helping hand is omnipresent — even for those on the margins.

Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs.

Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”

To Ms. Halvorsen, the finance minister, even the underside of the Norwegian dream looks pretty good compared to the economic nightmares elsewhere.

“As a socialist, I have always said that the market can’t regulate itself,” she said. “But even I was surprised how strong the failure was.”

Holders of Credit Default Swaps Could Force GM Into Bankruptcy

Hedge funds which hold billions of dollars of GM debt (bonds) also own credit default swaps (CDSs) which pay off in the event of a GM bankruptcy. Problem is they stand to make more if GM goes into bankruptcy and the CDS pay off than they do on the original bonds. And only 10% of GM bondholders could force GM into bankruptcy.

Here's an analogy. Suppose you take an insurance policy out on your wife. Suppose, for the sake of argument, you calculate that your wife is worth $100 million to you over the course of your marriage. Now you take out an insurance policy for $1 billion dollars on your wife's life or for ten times the amount that you figure your wife is really worth. In that scenario you have every financial incentive to kill your wife because you will get 10 times what she is worth to you alive. This is exactly the position the GM bondholders who also own CDS are in since many of them have taken out way more in CDS insurance than they own in the original bonds. The bonds are the underlying asset and it makes some kind of economic sense to insure those bonds up to the value of the bonds in case the bonds are defaulted on. In that case the holder of the bonds/CDS would lose no money. But the system allows them to insure the bonds for way more than the value of the bonds creating the perverse incentive that the bondholders would make more money if they can force GM into bankruptcy than they could if GM paid off on the original bonds. And to make matters worse, CDS can be purchased without even owning the underlying asset, and, for those people, they have every incentive to do all they can to see that GM fails.

Here is the article from the Financial Times:

Credit insurance hampers GM restructuring By Henny Sender in New York Published: May 11 2009 23:33 | Last updated: May 11 2009 23:33 Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM de­clares bankruptcy, a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the automaker, analysts say. Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares, a United Auto Workers union healthcare fund 39 per cent and existing shareholders 1 per cent. However, analysts say the chances the proposal will be accepted have been diminished by the large number of credit default swap (CDS) contracts written on GM’s debt. Holders of such swaps would be paid in the event of a default – but would lose money if they agreed to restructure GM’s debt. For investors who own bonds and CDS, this could create an incentive to favour a bankruptcy filing. According to the Depository Trust & Clearing Corporation, investors hold $34bn in CDS on GM. Once off-setting positions are considered, the DTCC estimates CDS holders would make a net profit of $2.4bn if GM were to default. The opposition of 10 per cent of bondholders is enough to derail the proposal, which has already triggered protests from investors who argue it unfairly rewards the UAW at the expense of bondholders. “You have every incentive not to agree,” said one bondholder, a large credit hedge fund. “You would be locking in a loss if you did. It isn’t only the ‘shark’ capital; it will be the mom and pop mutual funds who will oppose this deal. ” Prices for GM’s debt and CDS indicate investors believe a bankruptcy filing is highly likely. GM’s bonds are trading at between 6 and 12 cents on the dollar. To insure $100m in GM debt for five years, an investor would have to pay $89m plus another $5m a year over the life of the CDS contract. The CDS positions mark a crucial difference between GM and Chrysler, which filed for bankruptcy protection as part of what it hopes will be a swift restructuring. Chrysler had $6.9bn in bank loans, on which there were few credit insurance contracts. “Chrysler looks like a simple two-car funeral compared to the traffic jam of assets and liabilities and contracts at GM,” said the credit research boutique CreditSights. “Chrysler provides limited parallel.”

From a related article in Reuters entitled "GM Bankruptcy Seen As All But Inevitable":

DETROIT (Reuters) - After 100 years in business and 10 months of frenzied but failed restructuring, General Motors Corp is weeks from the bankruptcy filing experts say will be required to complete the Obama administration's bid to reshape a fallen icon of American industry. Facing a government-imposed June 1 deadline to restructure, GM is scrambling to slash some $27 billion of bond debt, win sweeping cost concessions from the United Auto Workers union and eliminate almost 1,600 U.S. dealers. But with the clock ticking, experts see it as all but certain GM will follow its smaller rival Chrysler into federal bankruptcy court. "I almost think it is inevitable," independent auto industry analyst Erich Merkle said. "I don't know how they are going to escape it." The battery of problems to have hit GM range from plunging sales and declining share to a line-up that has seen more misses than hits over the past decade and that trails engineering leaders like Toyota Motor Corp and Honda Motor Co in hybrid technology. But GM's debt-laden balance sheet is the source of its immediate crisis and the reason restructuring experts, analysts and auto executives do not see a way forward that avoids what could be a complicated and contentious bankruptcy. "The only way it is not inevitable is if the government accepts whatever percentage of bondholders have tried to exchange, whether it is 40 percent or 50 percent or 60 percent," said Peter Kaufman, president and head of restructuring and distressed mergers and acquisitions at the Gordian Group LLC in New York. GM has said that it must have 90 percent of the $27 billion of bonds participate in the exchange or it will be forced to file for bankruptcy. GM's offer to its bondholders would give them only a 10 percent equity stake in a reorganized company. Representatives of a committee representing major bondholders have called that offer unfair given the payout being offered to the UAW. In a sign of how far apart the sides remain, bondholders have sought a majority stake in the new GM, the controlling position in a new and smaller auto company GM has offered to the U.S. Treasury. After extending $15.4 billion to keep GM afloat since the start of the year, the U.S. Treasury would own at least 50 percent of the automaker under GM's proposed terms. A UAW healthcare trust would hold nearly 40 percent of GM in return for allowing GM to pay $10 billion -- half of its remaining funding obligation -- in stock, instead of cash. "Trying to get the bondholders, labor and the dealers and other constituents all onboard with an out-of-court plan is a very difficult goal," said Bob Gordon, a restructuring expert at Clark Hill PLC.

High Taxes Produce Greater Happiness in European Countries

The happiest taxes on earth
Commentary: More people are satisfied in heavily tariffed nations by Thomas Kostigen

SANTA MONICA, Calif. (MarketWatch) -- Northern Europeans are the happiest people on the planet, according to a new survey.

The Organization for Economic Cooperation and Development says people in Denmark, Finland and the Netherlands are the most content with their lives. The three ranked first, second and third, respectively, in the OECD's rankings of "life satisfaction," or happiness.

There are myriad reasons, of course, for happiness: health, welfare, prosperity, leisure time, strong family, social connections and so on. But there is another common denominator among this group of happy people: taxes.

Northern Europeans pay some of the highest taxes in the world. Danes pay about two-thirds of their income in taxes. Why be so happy about that? It all comes down to what you get in return.

The Encyclopedia of the Nations notes that Denmark was one of the first countries in the world to establish efficient social services with the introduction of relief for the sick, unemployed and aged.

It says social welfare programs include health insurance, health and hospital services, insurance for occupational injuries, unemployment insurance and employment exchange services. There's also old age and disability pensions, rehabilitation and nursing homes, family welfare subsidies, general public welfare and payments for military accidents. Moreover, maternity benefits are payable up to 52 weeks.

Simply, you pay for what you get. Taxes in the U.S. have taken on a pejorative association because, well, we are never really quite sure of what we get in return for paying them, other than the world's biggest military.

Healthcare and other such social services aren't built into our system. That means we have to worry more about paying for things ourselves. Worrying doesn't equate to happiness.

The U.S. ranked 11th on the OECD list. In addition to the top three, we were beat out by Sweden, Belgium, Canada, Australia, New Zealand, Switzerland and Norway. To be sure, we were ahead of France, Great Britain, Japan and China, among many others. But we can do better.

With the highest gross domestic product in the world, we are the richest country. On a per capita basis, though, we don't even make the top 10. The U.S. ranks 15th in this category, according to the International Monetary Fund.

Denmark -- maybe because they are happy -- ranked fifth. Other, more "satisfied" countries also earn more on an individual income basis. Oh yes, and the average workweek in Scandinavian countries is less than the U.S.'s

We need to take better care of ourselves.

It may not just be taxes, of course, that lead to happiness. There are other factors to consider. But better social services and less worry about having to pay for things such as medical bills, retirement and education do help with the happiness factor.

Yet, we are so dead set against paying more taxes that it's even spawning nationwide protests. Tea party, anyone?

Maybe it's time that we looked at taxes differently. We have to pay them anyway. So they might as well make us happy. If Northern Europe is any benchmark, the more we'd pay the happier we just may be.

Thomas M. Kostigen is the author of "You Are Here: Exposing the Vital Ink Between What We Do and What That Does to Our Planet" www.readyouarehere.com

Novel Idea: Everyone Should Have Right to a Job With a Livable Wage

Today the world economy is capable of produsing a plethora of goods and services - almost an embarassment of riches. So why is there so much poverty, such an unequal distribution of wealth and income and too few good paying jobs. The answer is simple. There is no direct connection between the jobs provided by an economy and the goods and services that economy is capable of producing. In order for people to consume, where consumption means both necessary and unnecessary items, they need money, and, for most people, the only way to get money is by means of a job. There are, however, other ways to acquire money both legitimate and illegitimate. For instance, one can get money via a return from capital. This comes in the form of interest, rent and dividends. Once money has been accumulated, it can be loaned out and the return to capital is in the form of interest. Or an asset can be purchased like a house and that asset can be rented out. Then the return to capital comes in the form of rent. Money can also be acquired if the government doles it out in the form of welfare or unemployment insurance. For an economy to work and for people to be reasonably well off, enough money has to be in enough hands so that goods and services can be bought, and then jobs can be created to provide those goods and services.

Ironically, though, the more capable an economy is of producing goods and services, the less money there is in enough hands to purchase them because less labor is required to produce them. Automation, computerization and robotization make human labor less necessary in the production process. Therefore, just as unlimited production with minimal human drudgery becomes a reality, people become less able to consume that production because requisite labor (and hence jobs) becomes less necessary. So there is a glut of possible production and also a glut of unneeded labor with a consequent diminished ability to purchase that production. One way around this dilemma is for the public sector to create jobs that the private sector seems incapable of creating precisely because it has created labor saving (and hence job reducing) machines. Another way is for government to simply increase the money supply by printing money and handing it out to consumers so they can make purchases. Keynesian economics is based on the principal that government spending can get the economy moving again by priming the pump, getting money into consumers' hands, and then having the economy create jobs when those consumers spend that money. This works as long as the increased production from consumers' spending their money leads to more job creation. In an advanced economy, however, increased production can be had simply by cranking up the machines - computers, robots etc - and not necessarily by hiring more human labor.

So what to do? Government can not afford to simply print money or borrow it indefinitely. If something like full employment does not come about as a result of the government temporarily spending money into the economy, the only rational solution is to tax the owners of the means of production and use that money either to create jobs in the public sector or dole it out to consumers. This then becomes a way effectively to equalize ownership and forestall the increasing inequality brought about by the concentration of capital and the means of production in fewer and fewer hands.

This excerpt is from William Greider's new book, Come Home, America.

First, every American who is willing and able ought to have the right to a job that pays a livable wage. If the private sector will not provide these jobs, then the public sector should be the employer of last resort. Franklin Roosevelt described the goal -- the practical equivalent of full employment -- in his "second Bill of Rights," and the public has overwhelmingly endorsed the principle ever since. In recent decades, the economy has drifted even further from the promise, creating in its place a broad labor market of the underclass -- temporary jobs paying unlivable wages and often filled by undocumented immigrants. Guaranteed public jobs paying more than the minimum wage would permanently and automatically stabilize the economy, swelling the ranks of public workers in recessions and shrinking them when private jobs become more abundant. Instead of punishing the working poor most severely in downturns, as the system does now, the government would redistribute the costs of recession so that all taxpayers would share the burden as a public obligation. The social consequences of a change like this could be profound: it would be a direct assault on the poverty and hopelessness of inner-city precincts and decaying rural towns where the same pathologies ravage families and young people without regard to race or ethnicity. Real jobs would mean that reliable incomes would flow into those communities, providing a concrete basis for economic development and neighborhood restoration as well as the redemption of damaged lives, especially the prospects for young people.

The advantage of public sector jobs is that the government can decide what kinds of jobs to create and what should be the production goals of those jobs. Unlike the private sector where jobs are created strictly in response to enterprises undertaken with the goal of making a profit, government can create jobs with socially desirable production like infrastructure creation and repair, for example, something that would be considered unprofitable by the private sector. The private sector might consider a more profitable enterprise to be one which caters to human vices like gambling, for instance. Immense casinos are invested in with the intention of profiting from relieving people of their money by encouraging them to gamble. Casino ownership has produced billionaires while infrastructure rebuilding has produced none.

The Keynesian scenario is that economies will eventually recover from depressions and recessions if only government temporarily primes the economic pump, runs temportary deficits. But what if the government must permanently prime the pump because of a jobless recovery. Just because consumers are buying again doesn't necessarily mean that jobs are being created again or being created in parts of the world where labor is relatively more expensive. Offshoring of jobs to parts of the world where labor is cheap combined with more automated production and less unionization results in a situation in which maldistribution of income can lead to a permanent recession unless government is willing to run deficits indefinitely or print money indefinitely or tax the rich and redistribute the money indefinitely. Of these prospects, only a redistribution of income is fiscally sound. Large corporations, however, which are the primary repositories of wealth and capital will choose to abandon consumer markets where consumers don't have the means to purchase for more promising consumer markets in countries where money is distributed more widely because that's where the cheap labor is located.

It is because of this contradictory conundrum of the concentration and centralization of capital due to increasing production capacity leading to increasing immiseration of the masses that the people eventually demand a reorganization of economic systems.

The US Safety Net: A Hodge Podge, Disconnected, Hit or Miss, Arbitrary Patchwork

There is an excellent article in the New York Times detailing what Frank Thomas and I have been writing about in our series of articles comparing the Dutch and American social safety nets. The article points out that the American system is a hodge podge, hit-or-miss, scattershot, patchwork jumble of a system that helps some people and not others in identical circumstances. A lot of the reason for this is that the various programs are administered by the individual states and not by one centralized authority as is done in Holland so that one is at the mercies and vagaries of the state authorities instead of knowing by virtue of one well-defined program where one stands.

Here is an excerpt from the article:

As millions of people seek government aid, many for the first time, they are finding it dispensed American style: through a jumble of disconnected programs that reach some and reject others, often for reasons of geography or chance rather than differences in need. Health care, housing, food stamps and cash — each forms a separate bureaucratic world, and their dictates often collide. State differences make the patchwork more pronounced, and random foibles can intervene, like a computer debacle in Colorado that made it harder to get food stamps and Medicaid. The result is a hit-or-miss system of relief, never designed to grapple with the pain of a recession so sudden and deep. Aid seekers often find the rules opaque and arbitrary. And officials often struggle to make policy through a system so complex and Balkanized.

The Balkanization of the US safety net accounts for much of the disparity between US and European welfare systems. Holland, Sweden and many other countries have well-defined systems that in and of themselves contribute to a sense of stability and peace of mind. One knows where one stands and what one can count on. Not true in the US where the system is characterized by arbitrariness, seeming caprice and a skating-on-thin-ice sense of not knowing where one stands if and when one might actually need to count on a functioning safety net. Instead the safety net is frayed and one wrong move or one pissed-off bureaucrat causes it to rip apart.

This is caused by a lack of centralization in the definition of various programs. Instead of the states being the administrators of well-defined Federal programs, the states can arbitrariliy decide how to administer Federal money. This is the worst of both worlds. We have seen this even more blatantly recently by virtue of the fact that individual state governors have rejected stimulus money that would have extended unemployment benefits and other programs aimed at needy people in their states. So the governors are in a position to effectively make political decisions countermanding Federal attempts to help out American citizens and get the economy moving again.

This points to gross defects in the American system and way of life. Instead of a house built on a rock, American citizens are living in a house built on sand where petty state bureaucrats can decide whether or not they sink or swim. Pettiness, arbitrariness and political gamesmanship infused with colliding bureaucracies and red tape subject the American citizenry to stress and anxiety rather than having one smoothly functioning system the intent of which is to alleviate stress and provide comfort and succor in times of economic and financial upheaval.

Trickle-down Economics of Reagan Era Became Economic Waterboarding

The following is from an article by Mark Harris:

With declining profit rates, Reaganomics had by the early 1980s become the ideological clearinghouse to justify trashing "outdated" government restrictions on capital growth. Supposedly, dismantling "burdensome" restrictions on trade and commerce would prompt the wealthy, inspired by their growing good fortune, to invest with renewed vigor in new jobs and capital growth. A rising tide of popular affluence would thus be the result.

Of course, it didn't quite work out that way. The "trickle-down" economics of the Reagan era instead turned into a form of economic waterboarding for the average American. Income circulated only one-way, upward from the middle class and poor to the already well-off on their way to becoming the super well-off. Good paying union jobs were exported overseas where wages were cheap and work standards low, while at home wages and benefits stagnated and union growth stalled. Two decades later 40 to 50 percent of all U.S. corporate profits come from operations and sales abroad, while wages have remained mostly flat. Tellingly, the income gap between the haves and everyone else is greater now than any time in the nation's history.

A World on Edge

If laissez faire economics is dead, as French President Sarkozy recently declared, so also is the era of American global economic power. Today, the financial sector constitutes about 22 percent of all U.S. economic activity, notes former Republican strategist Kevin Phillips in "Bad Money." As for manufacturing, it is down to about 12 percent of the economy. These facts reflect less the dynamic character of American capitalism than its underlying instability and weakness. Why? Because the financial sector creates nothing of real value. It is, as Bello notes, "tantamount to squeezing value out of already created value." It should be an ABC of economics that only industry, agriculture and their accompanying trade and services introduce real value into the economy.

It should also be ABC that the current crisis is the result of bipartisan policies. It was the Clinton Administration and Congress that engineered passage of the Financial Services Modernization Act of 1999, leading to repeal of decades-old regulations restricting banks from offering investment or insurance services. The runway was thus cleared for an already burgeoning investor economy to soar into the speculative stratosphere. After all, why invest in actual economic growth when the real money is to be made buying and selling other people's mortgages?

Unfortunately, the Obama Administration proceeds as if the crisis is a serious temporary problem that money and some regulatory tinkering to the economic engine can repair. Meanwhile, the Republican right-wing sinks further into ludicrous irrelevancy, their jabs at Obama's "socialist" policies appearing increasingly grotesque and out of touch.

But since they've brought up the topic of socialism, why not talk about the real thing? The essence of the socialist idea is that the economy can and should be planned, both to make best use of resources and to serve not private profit but the majority's human needs. In other words, socialism represents the extension of democracy into the economy. In its absence we instead witness the current havoc wreaked on our economy by a relatively small number of super-rich, who use their economic and political power to twist the levers of the economy to serve their own narrow interests.

Some liberal economists such as Nobel Prize winner Paul Krugman have recently begun to sound the alarm on Obama's recovery plan. Expecting those who caused the crisis to solve the crisis just won't work, says Krugman, even if you reward them beyond their wildest dreams. Krugman favors more extensive measures such as nationalizing the largest banks. Still, his perspective is limited. In the long run he'd like to keep the banks in private hands. Bank nationalization should be just a temporary solution.

Why? Why, indeed, should private ownership of major economic institutions be considered sacrosanct, especially when those who've had their chance to run things have instead run things into the ground? In a rational society the banking system would exist as an arm of the public good, a regulated system subject to democratic management. It might be even easier to grasp the capitalist folly in health care. We need private health insurance companies as much we need private fire departments that serve only their own paid-up enrollees.

A Comparison of Dutch and American Social Safety Nets - Part 6

This is a continuation of a series of inter-societal comparisons between the US and the Netherlands. Frank Thomas supplied the information about the Netherlands and John Lawrence supplied the information about the US. Proceeding parts can be found here: Part 1, Part 2, Part 3, Part 4, Part 5.

The Dutch Occupational Disability Insurance System

In the Netherlands all workers are insured against loss of earnings due to occupational disability.  Ocupational disability is defined as the loss of earning capacity from inability to perform work tasks due to disease or infirmity.

Dutch social safety-net programs are very closely integrated to cover most contingencies. The trend has been to slowly tighten benefits when and where appropriate while retaining  prudently fair and humane coverages. The aging of society has also made tightening necessary.  

This summary will clarify the Dutch Occupational Disability Insurance System.  It is comprised of four connected pieces of legislation: ZW, WIA, WGA, IVA:

I.    ZW:      Sickness Benefits Act
II.   WIA:    The Work and Income According to Labor Capacity Act  (Including the WGA and IVA Acts)

I.    ZW: Sickness Benefits Act   

An employee judged less than 35% occupationally disabled, in principle, continues to exercise employment. Employers are thus obligated to continue paying 70% of an employee’s last wage up to a maximum of Euro 183.00 or $235.00 per day for the first 104 consecutive weeks (under the WULBZ Act).  Under collective bargaining agreements, a higher percentage than 70% is possible up to 100% of the employee's last salary depending on the employer, and 100% is paid for absence due to childbirth.    

Responsibility for maximizing the employment capacity of the employee lies with the employee’s company. Only in cases where employers have no possibilities whatsoever to further employ the employee can the latter be discharged following permission by the Center for Work Income. In such cases, the employee can register an appeal for an Unemployment Insurance benefit (WW). Employee is also entitled to social assistance under the Supplemental Benefits Act if the total of the ZW and WIA benefits and any other family income is less than the statutory social minimum income. An appeal must be made to the Social Security Institution for the supplemental benefit.

II.    WIA: The Work & Income According to Labor Capacity Act                               

The WIA was put into effect January 1, 2006 and replaced the Occupational Disability Act or WAO. The WAO continues to exist for persons who currently benefit from WAO conditions. The new WIA legislation covers all the risks of inability to work above an occupational disability level of 35% up to 80% per related WGA act and disability between 80% and 100% per related IVA act.

 The new WIA act emphasizes return to work, putting emphasis on people’s capabilities and less on their disabilities. This is a break with traditional WAO legislation where the stress was mainly on income support. The new law responds to a growing number of disability recipients and further increase expected with aging population. Over past years, the Dutch have taken serious steps to solve this problem in their Social Security system by stimulating claimants and beneficiaries to work to the extent that their medical situation permits.       

The WIA consists of two provisions:

A. The regulation governing the Re-Employment of people with a partial disability called the WGA
B. The regulation governing Income Protection for people who have been registered as being completely incapable of work due to disability called the IVA.

As noted above, the WIA is applied following the first two years (104 consecutive weeks) of an employee’s sick leave. During the first two years, rehabilitation and effecting a return to work is the
responsibility of the employer and the employee. The employer is obligated during these two years to continue paying the employee’s wages (sick leave) at a level of 70% of the employee's last wage up to a maximum of $235 per day.  At the end of the two-year period, a government unemployment agency will judge whether employer/employee have done their best to keep the sick employee at work. This includes a medical examination. 

As noted also, the WIA makes a distinction between partial occupational disability (WGA) and long-term and full occupational disability (IVA). Criteria assessing work capability have been tightened as demonstrated in the following Sub-Acts of the WIA Act.

IIa. WGA   (Reintegration Act Benefit for Partially Disabled Persons)

Under WGA, all employees under and up to age 65, including civil servants, are insured for loss of  income due to disability. Persons who are partially disabled or temporarily fully disabled may apply for a benefit allowance under WGA.  Qualification for a WGA allowance applies to an employee who is incapable of working with a degree of disability between 35% and 80%.  A person who recovers and can earn 65% or more of former earnings will lose the WGA benefit.                                             

The act provides incentives to encourage both employer/employee to endeavor to rehabilitate the employee. For the employee, the incentive lies in the fact that the wage earnings are only partly taken into account in terms of deductions in the benefit allowance. For the employer, the advantage is that the firm is not obligated to pay sick leave to an employee with a WGA benefit if the employee becomes ill within 5 years of commencement of the benefit. Employers also get a discount on social insurance  premiums if they employ, or retain in employment, a partially disabled person.

The WGA benefit is at first a salary-related benefit, the duration of which is dependent on employee’s employment history. At the end of this period, there is a possibility of a follow-up or supplementary allowance. 

An employee who works and earns at least half of his residual earning capacity is entitled to a supplement of 70% of the difference between his last wage and his residual earning capacity or new wage. However, an employee who is unemployed or who earns less than half of his residual earning capacity is entitled to a followup allowance of 70% of the legal minimum wage multipled by the percentage of occupational disability. In principle, an employee is entitled to one of these allowances until the retirement age of 65.

Structured  benefit levels under WGA include:

(1) A person not working receives a wage-related benefit of 70% of the employee's last daily wage up to a maximum of Euro 183.00 /$235.00 per day and for no more than 38 months.

(2) A person working  receives a wage-related benefit of 70% of the difference in comparison with the daily wage to a maximum of Euro 183.00/$235.00 per day.

(3) After the wage-related benefit has ended, the amount a person earns is taken into account. If this is at least 50%  of the remaining earning capacity, the WGA will supplement the wage by 70% of  difference between the last daily wage (to a maximum of Euro 183.00 /$235 per
day) and the remaining earning capacity or new wage. 

(4) If a person is not working after the wage-related benefit has ended or if a person is earning less than 50% of the remaining earning capacity, the benefit is based on a percentage of the minimum wage : at 1 Euro = 1.30 USD, the current monthly gross statutory minimum wage is Euro 1,381.20 ( $1,795.50)  
      

To repeat points (3) and (4): (3) a person who works and earns at least half  of his/her so-called remaining earning capacity is entitled to a follow-up  supplement of  70% of the difference between last wage (to a maximum of Euro 183.00/$235.00 per day) and the remaining earning capacity;  (4) a person with partial disability who’s completely unemployed or who earns less than half of  what he/she is capable of in light of that person’s occupational disability (called remaining or residual earning capacity) is entitled to a follow-up supplement based on a percentage of the minimum wage. In principle , an employee may qualify and be entitled to one or more of these WIA/WGA benefits up to the retirement age of 65.

IIb.  IVA  (Benefit for Fully Disabled Persons)

A person is considered completely disabled or long-term disabled if his/her residual earning capacity is less than 20% (over 80% disabled) of what it was before the disability occurred and if the chances of recovery are zero or negligible. In this case, income support is the primary responsibility of the government under the IVA benefit regulation for fully disabled with no prospect for return to work.

Following the first 104 week sick leave for which the employer is liable, an employee who is both fully and permanently incapacitated  -- i.e., a  degree of  disability between 80% and 100% -- can qualify for an IVA benefit. The government believes this benefit should be  a reasonable income provision suitable also for the future. The IVA benefit amounts to 75% of most recent maximum daily wage up to a maximum of Euro 183.00 or $235.00, effective 2009.

Eligible employees must undergo a medical exam every year during first five years of absenteeism to monitor possible recovery. If one is declared partially disabled during that period, he or she will no longer be eligible for the IVA benefit under the WIA insurance legislation. That person would then have to apply for a WGA benefit. If not partially disabled, her or she will retain the IVA benefit.

The following summarizes contributions under the various Employee Insurance schemes:

                                                          Employer                         Employee

      I.        WAO/WIA basis                       5.65%                                  --

II.    WAO/WIA differentiated *         --                                        --

III.  WAO general                             0.15%                                --

IV.   WW general                              4.75%                              3.50%

V.     WW differentiated *                   --                                       --

The contributions for above employee Insurance schemes are levied on wages and salaries up to €3,850.00 ($5,000.00) per month.

 * differentiated  = these percentages vary per company.

In principle, anyone employed in the Netherlands is compulsorily insured under the Employee Insurance schemes. If the total of any of of the three benefits – ZW, WIA, or  WAO – and any other family income is less than the statutory social minimum income, the recipient is entitled to apply to the Social Security Institution (SVB) for a supplement  under the Supplemental Benefits Act.

Self-Employed Persons:

All self-employed persons under 65, their spouses who assist in the business, professional practitioners, etc. can take out a private insurance contract to cover the risk of loss of income due to disability. Temporary and self-employed persons can take out a voluntary ZW-insurance.

In the Netherlands, a self-employed worker is a natural person who, according to the Dutch tax authority, earns an income by profit from a company that does not employ any other employees. Also, the director/shareholder, employed in his or her own business as the only employee is considered a self-employed worker.

Self-employed workers with no employees differ from employees on the following social-security issues:

(a)    There is no agreement to perform labor for a certain period
 of time.
(b)    There is no employer obliged to pay a salary.
(c)    There is no dependency relationship.

In brief, self-employed workers are solely responsible for the financial risks related to loss of income when ill and/or unemployed, and for old-age pension insurance.

About 50% of self-employed persons in the Netherlands suscribe to some form of private occupational disability insurance.  Average annual premiums are currently around €3,000 ($3,900) …  although the range is €675 ($875) a year for some individuals to  as high as €7,200 ($8,775) a year for others.

So cost is one factor,  but there are two other factors behind why just 50% of the self-employed take out private occupational disability insurance.  The first has to do with the relation of cost and benefit to income.  The benefit is linked to income levels. In general, a large number of the self-employed have a “limited income” meaning that many only have a right to limited occupational insurance benefits.  This makes the cost-benefit ratio more unattactive.

The second factor is that insurance companies require applicants not only to have a medical examination but also to submit  a “health certificate,” which in some cases is highly detailed. In addition, private disability  insurance policy conditions often include exclusion clauses, premium surcharges, and qualifying periods … all making such policies uninteresting to some self-employed persons. For example,  some insurance companies may specify a qualifying period of 2 years before covering risks related to pregnancy. As a result, self-employed  women who have taken out occupational disability insurance  are not covered for maternity leave within the first two-year period of policy commencement.

On the positive side,  in recent years some trade unions in the Netherlands have been  reaching agreements with insurance companies resulting in “collective” occupational disability insurance schemes for self-employed persons.These insurance schemes include maternity leave benefits for pregnancy.

A similarly positive development is new legislation effective July 1, 2008 which provides a benefit for self-employed women wishing to take maternity leave, called the ZEZ-regulation or Self-Employed and Pregnant regulation. This benefit is dependent on income in the prior  year,  up to a maximum amount equal to the current monthly gross statutory minimum wage of €1,381.20 or $1,795.50. The self-employed doesn’t have to pay a premium to be eligible for this benefit. This regulation also applies to co-working partners.      

WW  ( Unemployment Insurance Act)

The WW or Unemployment Insurance Act insures employees against the financial consequences of unemployment. Two requirements must be met: (1) he/she must have been employed for a period of at least 26 weeks over the 36 weeks immediately prior to becoming unemployed, and (2) he/she must have received wages over 52 days or more in at least four of the five calendar years prior to the year in which he/she became unemployed.

If only the first requirement is met, the employee will receive a WW benefit during the first two months of unemployment that is set at 70% of last earned wage (to maximum of $235.00 per day) and then a one-month WW benefit up to $235.00 per day.

If both requirements are met, he/she will receive, in addition to the three -month benefit, a wage related WW benefit of 70% of the maximum daily wage up to $235.00. The duration of the benefit depends on the employee's employment history, but in total cannot exceed 38 months. 

Following is the table of benefits:

            EMPLOYMENT DURATION                    PERIOD OF BENEFITS

 

               4   Years or Less                                                  6  Months

                5-9   Years                                                            9  Months

   10-14   Years                                                         1  Year

               15-19   Years                                                         1.5  Years

               20-24   Years                                                          2  Years

               25-29   Years                                                          2.5  Years

               30-34   Years                                                           3   Years

               35-38   Years                                                    38 Months Maximum

The WW unemployment benefit is well-synchronized with the Dutch Occupational Disability benefits. There are no conflicts or doubling up of entitlements. The Dutch are prudent, pragmatic and creative administrators of these social-net systems. The government is generally always adjusting  them in a timely manner to new economic realities while also assuring fair and humanly decent programs for those in trouble. And all entitlements are based on  closely controlled “reintegration into the work force” and "get back to work program initiatives"to the extent physically possible for the disabled employee.

Occupational Disability in the US

The Social Security and Supplemental Security Income (SSI) disability programs are the largest of several Federal programs that provide assistance to people with disabilities. While these two programs are different in many ways, both are administered by the Social Security Administration and only individuals who have a disability and meet medical criteria may qualify for benefits under either program.

Social Security Disability Insurance pays benefits to you and certain members of your family if you are "insured," meaning that you worked long enough and paid Social Security taxes.

Supplemental Security Income pays benefits based on financial need.

When you apply for either program, we will collect medical and other information will be collected from you from you and a decision will be made about whether or not you meet Social Security's definition of disability.

If you have limited income and resources, you may be able to get SSI. SSI is a federal program that provides monthly payments to people age 65 or older and to people who are blind or disabled. If you get SSI, you also may be able to get other benefits, such as Medicaid and food stamps.

A Word About Medicare

After you receive disability benefits for 24 months, you will be eligible for Medicare. You will get information about Medicare several months before your coverage starts. If you have permanent kidney failure requiring regular dialysis or a transplant or you have amyotrophic lateral sclerosis (Lou Gehrig’s disease), you may qualify for Medicare almost immediately.

Help for low-income Medicare beneficiaries

If you get Medicare and have low income and few resources, your state may pay your Medicare premiums and, in some cases, other “out-of-pocket” medical expenses such as deductibles and coinsurance.

Generally, your household cannot have more than $2,000 in resources (things you own). But, if your household includes a disabled person or a person age 60 or older, the limit is $3,000. The resources of a person who is getting SSI or benefits under the Temporary Assistance for Needy Families (TANF) program are not counted for food stamp purposes either. Resources include cash, bank accounts and other property.

Not all resources count. For example, your home and the land it is on do not count for food stamp eligibility. A car or truck counts differently, depending on how it is used. Most states now use TANF rules in place of food stamp vehicle rules if the TANF rules are more beneficial to the food stamp household. Some states have also chosen to exclude certain resources excluded by TANF or Medicaid.
Most households also must meet an income limit. Certain things do not count and can be subtracted from your income. Your household may qualify for other income exclusions if it includes someone who is age 60 or older or disabled. The income limits vary by household size and may change each year.
  
 What amount of food stamps can you get?

If your household is eligible, the amount of food stamps you get depends on your monthly household income and expenses for such things as:

• Mortgage or rent;
• Utilities; and
• Child care or elder care needed to allow someone to work.

Medical expenses of more than $35 a month for elderly and disabled people are deducted from your household income if they are not paid for by another party such as Medicaid, Medicare or an insurance company.

You can also find out how much you may be able to get online through the Pre-Screening Tool at www.foodstamps-step1.usda.gov .

Using the Tool I put in for a family of 4 with a $1500. monthly income, rent of $1000. a month, utility bill of $100. a month, no child care expense and no assets. The tool figured I would qualify for $400. a month in food stamps.

Homeless people and food stamps

If you are homeless you can still get food stamps even if you do not have an address, a place to stay or a place to cook meals. You are considered homeless if you do not have a fixed regular nighttime residence or your primary nighttime residence is a temporary accommodation in:

• A supervised shelter;
• A halfway house;
• The residence of another person; or
• A place not designed for regular sleeping, such as a hallway, bus station or lobby.
   
Other nutrition programs available

The food stamp program is just one of many nutrition programs available. The federal government and many state and local government agencies sponsor numerous programs that provide people with information about, and access to, a more nutritious diet. Many of these programs also are set up to improve the health and eating habits of children.

Here are two examples:

Special Supplemental Nutrition Program for Women, Infants and Children (WIC)

• The WIC program provides nutritious foods to supplement the diets of low-income pregnant, postpartum and breast-feeding women, infants and children up to five years of age. It also provides nutrition education and referrals to health services and other assistance programs.
• WIC is administered by the Department of Agriculture through state health departments. Eligibility is based on income and on nutritional risk as determined by a health professional.
You can contact your state or local health department for more information about this program.
Nutrition Services Incentive Program (NSIP)

• NSIP (formerly Nutrition Program for the Elderly or NPE) is a food program designed to help older people. It is run by the Department of Health and Human Services through the state agencies on aging. NPE is part of the Grants for State and Community Programs on Aging, which also authorizes in-home services for frail elderly people, support services and senior center operations. The nutrition services program provides elderly Americans with nutritious meals.
• If you are age 60 or older, you are eligible for the program and so is your spouse, even if he or she is not 60 years old. Age is the only factor used to decide if you are eligible. You do not have to meet any income limits to get meals through the program.
• Neighborhood centers for the elderly serve well-balanced, hot or cold meals at least once a day, five days a week. When possible, transportation is offered to and from the sites for those who need it. Home-delivered meals, usually called “Meals on Wheels,” are provided to elderly people who are homebound.

For more information about this program, contact your local Office on Aging or ask your local Social Security office.
 
More food programs

There are other food programs administered by the Department of Agriculture.

Several food distribution programs give commodities to needy households or to organizations that provide meal service to low-income people, including soup kitchens, churches and homeless shelters.
The Child and Adult Care Food Program offers meals and snacks to children in eligible day care centers, family day care homes and other care centers, as well as to functionally impaired adults and elderly people in day care situations.

The School Lunch and Breakfast Programs offer meals at schools to children. Low-income children get these meals free or at a reduced price, while other children have access to reasonably priced meals.
The Summer Food Service Program offers free meals and snacks to needy children during the months when school is not in session.

The Senior Farmers’ Market Nutrition Program provides low-income seniors (individuals who are at least 60 years old) with coupons during the harvest season that can be exchanged for eligible foods at farmers’ markets, roadside stands and community supported agriculture programs.
For more information about these programs contact your local social services, health, agriculture, aging office or school.

Getting Back to Work Incentives

If you are getting disability benefits, we have good news for you. Social Security’s work incentives and Ticket to Work programs can help you if you are interested in working.

Special rules make it possible for people receiving Social Security disability benefits or Supplemental Security Income (SSI) to work and still receive monthly payments.

And, if you cannot continue working because of your medical condition, your benefits can start again—you may not have to file a new application.

Work incentives include:

• Continued cash benefits for a time while you work;
• Continued Medicare or Medicaid while you work; and
• Help with education, training and rehabilitation to start a new line of work.

The rules are different under Social Security and SSI. But, whether you are receiving Social Security or SSI, it is important to let the authorities know promptly when you start or stop working, or if any other change occurs that could affect your benefits.

The Ticket to Work program may also help you if you would like to work. You can receive vocational rehabilitation, training, job referrals and other employment support services free of charge. You will not undergo medical reviews while you are using the ticket and making timely progress pursuing your return to work plan.

Social Security work incentives at a glance

Trial work period—The trial work period allows you to test your ability to work for at least nine months. During your trial work period, you will receive your full Social Security benefits regardless of how much you are earning as long as you report your work activity and you continue to have a disabling impairment. In 2009, a trial work month is any month in which your total earnings are $700 or more, or, if you are self-employed, you earn more than $700 (after expenses) or spend more than 80 hours in your own business. The trial work period continues until you have worked nine months within a 60-month period.

Extended period of eligibility—After your trial work period, you have 36 months during which you can work and still receive benefits for any month your earnings are not “substantial.” In 2009, earnings of $980 or more ($1,640 if you are blind) are considered substantial. No new application or disability decision is needed for you to receive a Social Security disability benefit during this period.
Expedited reinstatement—After your benefits stop because your earnings are substantial, you have five years during which you may ask us to start your benefits immediately if you find yourself unable to continue working because of your condition. You will not have to file a new disability application and you will not have to wait for your benefits to start while your medical condition is being reviewed to make sure you are still disabled.

Continuation of Medicare—If your Social Security disability benefits stop because of your earnings, but you are still disabled, your free Medicare Part A coverage will continue for at least 93 months after the nine-month trial work period. After that, you can buy Medicare Part A coverage by paying a monthly premium. If you have Medicare Part B coverage, you must continue to pay the premium. If you want to end your Part B coverage, you must request it in writing.

Work expenses related to your disability—If you work, you may have to pay for certain items and services that people without disabilities do not pay for. For example, because of your medical condition, you may need to take a taxi to work instead of public transportation. We may be able to deduct the cost of the taxi from your monthly earnings before we determine if you are still eligible for benefits. 
 
How your earnings affect your Social Security benefits

During the trial work period, there are no limits on your earnings. During the 36-month extended period of eligibility, you usually can make no more than $980 a month or your benefits will stop. But, the work expenses you have as a result of your disability are deducted when we count your earnings to see if they can help you keep more of your benefits. If you have extra work expenses, your earnings could be substantially higher than $980 before they affect your benefits. This substantial earnings amount usually increases each year.

They deduct work expenses related to your disability from your earnings before they determine if you are still eligible for benefits. These expenses may include the cost of any item or service you need to work, even if the item or service also is useful to you in your daily living. Examples include prescription drugs, transportation to and from work (under certain conditions), a personal attendant or job coach, a wheelchair or any specialized work equipment.

If you lose your job

If you lose your job during a trial work period, your benefits are not affected. If you lose your job during the 36-month extended period of eligibility, call us and your benefits will be reinstated as long as you are still disabled.
 
 Special rules for workers who are blind

If you are blind and you work while receiving your Social Security benefits, there are special rules.
• You can earn up to $1,640 a month in 2009 before your earnings may affect your benefits.
• If you earn too much to receive disability benefits, you are still eligible for a disability “freeze.” This means that we will not count those years in which you had little or no earnings because of your disability in figuring your future benefits.

This can help you because your benefits are based on your highest earnings over your work life. For more information on special rules for blind persons, ask for If You Are Blind Or Have Low Vision—How We Can Help (Publication No. 05-10052).
 
SSI work incentives at a glance

Continuation of SSI—SSI payments are made to people age 65, blind or disabled and have little income or resources. If you are disabled and work despite your disability, you may continue to receive payments until your earnings, added with any other income, exceed the SSI income limits. This limit is different in every state. Even if your SSI payments stop, your Medicaid coverage usually will continue if your earnings are less than your state level.

Expedited reinstatement—If we stopped your payments because of your earnings and you become unable to work again because of your medical condition, you may ask us to start your payments again. You will not have to file a new disability application if you make this request within five years after the month your benefits stopped.

Work expenses related to your disability—If you work, you may have to pay for certain items and services that people without disabilities do not pay for. For example, because of your medical condition, you may need to take a taxi to work, instead of public transportation. We may be able to deduct the cost of the taxi from your monthly earnings before we determine if you are still eligible for benefits.

Plan to achieve self-support—If they approve your plan for a work goal that will reduce your dependence on SSI or help you leave the SSI rolls, any money you use for this purpose will not be counted when they figure out how your current income and resources affect your payment amount. For more information, ask for Working While Disabled—A Guide To Plans For Achieving Self-Support (Publication No. 05-11017).

Students with disabilities—We do not count up to $1,640 of your earnings a month in 2009 (maximum of $6,600 for 2009) when we compute your SSI payment amount if you are under age 22 and go to school or are in a training program on a regular basis.
  
 
How your earnings affect your SSI payments

The amount of your SSI payments is based on how much other income you have. When your other income goes up, your SSI payments usually go down. So when you earn more than the SSI limit, your payments will stop for those months. But, your payments will automatically start again for any month your income drops to less than the SSI limits. Just tell us if your earnings are reduced, or if you stop working.

If your only income besides SSI is the money you make from your job, then we do not count the first $85 of your monthly earnings. We deduct from your SSI payments 50 cents of every dollar you earn after the $85 deduction.
Example: You work and earn $1,000 in a month. You receive no other income besides your earnings and your SSI.

$1,000
– $85 = $915 divided by 2 = $457.50

They would deduct $457.50 from your SSI payment.

You may be eligible for a “plan to achieve self-support” which allows you to use money and resources for a specific work goal. These funds do not count when we figure out how your current income and resources affect your benefit amount. 
    
How long your Medicaid will continue

In general, your Medicaid coverage will continue, even after your SSI payments stop, until your income reaches a certain level. That level varies with each state and reflects the cost of health care in your state. (We can tell you the Medicaid level for your state.) However, if your health care costs are higher than this level, you can have more income and keep your Medicaid. In most states, for your Medicaid to continue, you must:

• Need it to work;
• Be unable to afford similar medical coverage without SSI;
• Continue to have a disabling condition; and
• Meet all other SSI eligibility requirements.

If you qualify for Medicaid under these rules, they will review your case from time to time to see if you are still disabled or blind and still earn less than your state’s allowable level.
 
Work Incentives Planning and Assistance program

Social Security has a Work Incentives Planning and Assistance program (WIPA)that will help answer questions about Social Security’s work incentives and help you make a decision about working.
Community-based organizations provide information and work incentives planning and assistance to people who are receiving Social Security or SSI disability benefits and who are working or considering work. Their community work incentive coordinators can help you understand how work affects your payments and explain what other federal, state and local supports there are for people with disabilities who want to work.

A GENERAL COMPARISON

In general the Dutch system seems much more simplified and straightforward. The American system is much more fraught with bureaucratic red tape, rules and regulations. It seems designed more to exclude people than to include them. The American system places great emphsis on food security as there are several different nutritional assistance programs. But beyond that there is cash assistance for the truly needy, but probably not at the same level as the Dutch system. There is a hodge podge of various programs in the American system. One must learn to navigate a maze of bureaucracy. The Dutch system is streamlined and straightforward. Medicare in the US is available for the needy but again the rules and regulations seem designed to exclude as many people as they include, and one must navigate a maddening tangle of bureaucratic red tape. In general the simpler the system, the better. Often times people who are in need of help don't have the patience, perseverance or time luxury required to actually qualify for any benefits. The emphasis on food assistance in the American system but paltry benefits for little else bespeaks the notion that the US doesn't want homeless people dying on the streets due to starvation, but other than that, they don't much care if a certain segment of their population lives on the streets. There are, however, similar to the Dutch, incentives for getting back to work and off of social security and SSI assistance. There is not anything as sophisticated as the Dutch system for adjusting the assistance required to the particular level of disability. The US websites provide you with tools for computing your eligibility but not with complete information so that you can make an analysis of eligibility requirements and benefits and compare them with another country's.

Corporations and the Wealthy Must Pay Their Fair Share!

Robert Reich has a new blog post about Obama's initiative to take on Corporate tax havens. fuzzy posted the following comment:

fuzzy said:

Couldn't the answer to "why now?" be
(a) because he's president now and
(b) because it's the right thing to do, so he might as well start trying to accomplish it

Exactly. One needs to appreciate the timing of Obama's various moves which has been exquisite. I suppose Rahm Emmanuel among others is responsible for this, but there has been a method so far to every move Obama has made on the chessboard of US politics. He has avoided having a peripheral issue taking the nation's mind off his main agenda as Clinton didn't. He has focused the public when he needed to, and he has "filled in the cracks" with relatively minor issues, backed and filled, so to speak.

The issue of corporate tax havens is a hugely resonant one because it so smacks of privileges for the rich and powerful which are demonstrably unfair to middle class Americans. In a global economy there has to be clearly defined responsibilities for multi-national corporations. So far they've been getting away with murder. The public gets screwed two ways: their jobs going overseas and the multi-nationals escaping paying their fair share of the tax burden. It just ain't right, and everybody knows it.

So Obama is finally trying to bring some sanity to Washington, and the only issue here is whether the lobbyists or the people will prevail. Those who have the money must pay more of the tax burden. That's the only way the US will avoid further economic and financial debacles, and so far they've been doing everything they can to avoid paying their fair share. The result is the US government has gone further and further into debt.

Bush encouraged everyone, corporations and wealthy alike, to avoid paying taxes. He took pleasure in running the government into debt because it accorded well with Republican philosophy: leave the next Democratic administration such a mess that they would take up all their time working their way out of it and so they wouldn't have any money available to pass programs to benefit the American people. Reagan's chief of staff said it well: "sometimes you have to have people come along after a parade and clean up the horse poop." That, according to Republican logic, is the role of the Democrats. Their intention was to leave the government so indebted that the only thing that could be done was to privatize everything. Well, we've seen what a mess this has generated when it comes to health care. CEOs of health insurance corporations skim billions off the top in profits, profits made from denying health care to those who are the most in need. You've got a health care situation; hmmm, maybe we can find a preexisting condition or maybe you made a mistake on your paperwork.

Corporations have become the enforcers of a kind of perverse morality which finds every little nit to pick in order to tell their customers that they made a mistake, therefore, are at fault, therefore, they will not receive any benefits. This morality play is played out from mortgages, to student loans, to credit cards - anywhere you turn in American financial life. Corporations have become the new churches who are able and willing to enforce a Calvinistic morality down the throats of the American people regardless of their religion.

So it is only well and right and moral for Obama to go after the off shore tax havens and the multi-national avoidance of taxes. It represents a rolling back of the tide created by the Reagan-Bush-Bush administrations to further the interest of corporations and the wealthy at the expense of the American middle class. If ever the US budget is to be brought into alignment and balance with some semblance of fairness, this is only fundamentally common sense. Any arguments to the contrary represent corprorate and lobbyist efforts to befuddle, confuse and take advantage of the American people, and Lord knows, they have the money and the brainpower to do it. Their only motive is to make money by any means fair or foul and they only hire the best and the brightest!

Also posted as a comment on Robert Reich's blog.

What's Good for Wall St Is Good for America (NOT)

An excerpt from "The Quiet Coup" in the Atlantic by Simon Johnson, former chief economist of the IMF:

Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.

One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.

These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.

Wall Street is a very seductive place, imbued with an air of power. Its executives truly believe that they control the levers that make the world go round. A civil servant from Washington invited into their conference rooms, even if just for a meeting, could be forgiven for falling under their sway. Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. I vividly remember a meeting in early 2008—attended by top policy makers from a handful of rich countries—at which the chair casually proclaimed, to the room’s general approval, that the best preparation for becoming a central-bank governor was to work first as an investment banker.

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. AIG’s Financial Products division, for instance, made $2.5 billion in pretax profits in 2005, largely by selling underpriced insurance on complex, poorly understood securities. Often described as “picking up nickels in front of a steamroller,” this strategy is profitable in ordinary years, and catastrophic in bad ones. As of last fall, AIG had outstanding insurance on more than $400 billion in securities. To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

Wall Street’s seductive power extended even (or especially) to finance and economics professors, historically confined to the cramped offices of universities and the pursuit of Nobel Prizes. As mathematical finance became more and more essential to practical finance, professors increasingly took positions as consultants or partners at financial institutions. Myron Scholes and Robert Merton, Nobel laureates both, were perhaps the most famous; they took board seats at the hedge fund Long-Term Capital Management in 1994, before the fund famously flamed out at the end of the decade. But many others beat similar paths. This migration gave the stamp of academic legitimacy (and the intimidating aura of intellectual rigor) to the burgeoning world of high finance.