Most read Realitybase posts in May 2013

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

Executives inflate their own compensation with stock repurchase programs.How corporations drive up stock prices by buying back stock instead of investing in the business, triggering a Warren Buffett rant quoted here.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

Would it be a scandal if the IRS had approved all those Tea Party applications for tax exempt status?

Everybody including President Obama, Congress, and the chattering class seem to agree that it was a scandal that IRS bureaucrats slow-walked applications by Tea Party groups for tax exempt status under Internal Revenue Code Section 501(c)(4).  The acting commissioner of the IRS has been fired, and John Boehner wants to know who is going to jail, but is there really a scandal here and if so what exactly is it?  Suppose eminently fair-minded and smart people—like you and me, for example—were running that IRS bureaucracy in Cincinnati.  What would we have done with the numerous applications from new Tea Party groups? 

Section 501(c)(4) of the Internal Revenue Code allows tax exempt status for “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare . . . .”  IRS regulations, rulings, and court decisions summarized here have developed a body of law about what kinds of political activities are permitted and what kinds are not.  The IRS regulations give examples including this one:

Example (2) Organization B conducts research, seminars, forums, and other educational programs for the public on issues of public concern. It also engages in substantial lobbying activities. Its activities are under the direction of a Board of Directors whose members were appointed by the national committee of a major political party. It selects issues to study based on the needs of the party, and receives substantial financial support from the party. B's activities are not primarily "educational," given their partisan nature; accordingly, it does not qualify for exemption under IRC 501(c)(4). 

So here we are, you and I, having responsibility for processing exemption applications and it is reported to us that our processing unit is receiving a large number of applications from organizations that have the word “party” in their names and/or describe political activities as amongst their purposes.  Uh oh, there’s an even more delicate problem:  Most of those applications are coming from organizations with “Tea Party” in the name, such as Georgia Tea Party for a Free America.  We know, because we do read the mainstream media, that there is a nationwide Tea Party movement that works on tax issues, health care, and other public issues, that it is generally hostile to government and especially to the IRS, and that at least some parts of it are partisan in that they select, fund, campaign for, and ultimately elect their preferred candidates for public office.  Indeed, there is a “Tea Party Caucus” of several dozen Republican Members of Congress. 

Staff have requested guidance. What are we going to tell them?  Well there are some things we know for sure, aren’t there?  We know we can’t approve applications from organizations with names like Santa Monica Democratic Club or Peace and Freedom Party of Los Angeles County or California Republican Warriors without some very careful scrutiny because the faces of all those applications scream at us that their primary purpose is to influence partisan elections.  In fact, it could be a major scandal if we approved any of those applications--even if the files contained solid evidence that the names of the organizations were completely misleading, couldn’t it? 

What are our options?  We can agree, can’t we, that we cannot favor, or appear to favor, any one political party or ideology, but that we are legally obliged to deny tax exempt status to any group that engages in partisan political activities and to grant tax exempt status to groups that do qualify?  Clearly, our directive to staff should apply to all applications that use the word “party” in the organization name and/or that state that one of the purposes is to select, fund, or support political candidates because our directive must apply even-handedly to liberal and conservative groups alike.  But the harder question is how to direct staff to handle such applications? 

We could direct that they all be approved.  However, it seems clear that some of these organizations are not entitled to exemption under Section 501(c)(4), and we would face a public scandal and disciplinary action if we approve them despite the obviousness of their disqualifying partisan purposes. 

We could deny all applications that lack clear evidence that they are non-partisan despite their names.  Those denied can appeal, and the final decisions will become somebody else’s problem.  Of course, instead of or in addition to appealing, they may go public and try to embarrass and influence us by creating a public sense of scandal. 

We could process each application, with enhanced questioning and scrutiny, and issue timely decisions to the applicants even though staff will have great difficulty articulating solid distinctions between those that are approved and those that are denied.  Staff will hate doing this because they think these tough decisions are above their pay grade.  They are reasonable to think that, are they not? 

We could keep requesting more information until we run out of questions to ask and then, if necessary, defer decisions until somebody above our pay grade makes a policy decision. 

Is there any other option?  What do you think we should do?  I’m counting on you to get this right. 

If these questions seem difficult, try these:  What policy directives should be issued by the new IRS management that has just taken over this week?  Should it approve all the Tea Party exemption applications?  None of them?  Flip coins?  Instruct front-line reviewers to clear the backlog of decision-making within 30 days applying only existing published guidelines?  Form a team of more senior reviewers to make individual decisions on each of the Tea Party applications?  If so, what guidance will they have that the front-line reviewers haven’t had?  Should the new acting commissioner personally review all these decisions?  

Update on Sunday, May 19, 2013 at 08:37AM by Skeptic

NYT has been talking to IRS staffers and former staffers in and involved with the Cincinnati determinations unit and reports the difficulties and dynamics were much as I speculated above.  But it wasn't just Tea Party applications that got flagged--staffers were also doing key word searches for other indicia of partisan political purposes and intentions.  The determinations unit got only occasional--and inconsistent--guidance from headquarters, and it was simultaneously overwhelmed by a flood of organizations reapplying for 501(c)(3) status.  It appears that one bureaucratic reaction was to work on the easy applications and put the hard ones on the back burner.  

LAT has a similar story here. A recurrent theme in the LAT story, and other reporting, is that IRS questions about applicants' political attitudes and activities was "inappropriate."  How can it be inapproriate to ask for evidence about the precise issues that the law says shall be the bases for these legal decisions? A further question of my own: Why were the applicant organizations and their Congressional allies so upset that the IRS decisions were not issued before the elections if they were not planning to participate in those elections?  

Update on Monday, May 20, 2013 at 08:51AM by Skeptic

Tax law professor Linda Beale has a good explanation of some of the key legal issues confronting the Cincinnati determination group, including this quotation she lifted from Stuart Levine's comments on her blog:  

An organization seeking to qualify under 501(c)(4) does not need a determination letter. Why then were they seeking these letters? Well, the (likely well-founded) suspicion of the people in Cincinnati was that these organizations wanted a determination letter under 501(c)(4) to assure donors that they weren't 527 organizations and that their political donations would be anonymous.

[He notes further that] the applications for all organizations seeking a determination letter are reviewed. That's 100% subject to review, not 1% or 2%. Second, one of the issues that has to be focused on in a 501(c)(4) review is whether the organization was engaged in an undue amount of political activity.

Beale also links us to this PowerPoint presentation by tax law professor Ellen Aprill giving a good overview of the various kinds of groups that can or cannot engage in political activity including 501(c) and 527 organization.  

Update on Wednesday, May 22, 2013 at 08:30PM by Skeptic

I been reading press reports and the analyses of others and am ready to say I think the only possible scandal in this situation is that liberal or non-Tea Party, non-conservative groups were not targeted for the same kind of enhanced scrutiny. I don't know whether the were or were not, but this story on Yahoo! News lists 1017 groups that got favorable determinations under 501(c)(4) since 2012. (Hat tip Angry Bear.)  Readers are invited to search that list and identify those that seem particularly likely to be liberal political action organizations.  

Most read Realitybase posts in April

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

H-1b, the "Outsourcing Visa" How H-1b and L-1 visas are being used and abused by US employers to outsource millions of high-tech jobs and to bring in low-wage indentured servants to fill jobs vacated by firing high-wage citizen incumbents.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

Prolonged unemployment has profound life-changing economic and social consequences. Selected findings from a meta-study about how prolonged periods of unemployment for 20-somethings change their lives permanently for the worse. Facts, figures, and anecdotes.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Why we acquire beliefs and refuse to change them Describing and discussing six reasons with evolutionary advantages why we may cling to our beliefs even after they have become undeniably counterfactual and unreasonable. The original post is supplemented by numerous follow-ups containing examples and views of others including John Maynard Keynes, Sam Harris, David Brooks, John Quiggin, Ashwin Parameswaran, Lawrence M. Krauss, Thomas Kuhn, John F. Kennedy, and David Warsh. This is the first time this has made the monthly hit parade, but it is one of my favorite posts.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

Congress, raise the minimum wage. You’ll be doing it not for the proles but for your own class.

From the Wall Street Journal:

Huffpo adds this:

As unemployment skyrocketed during the economic downturn, job opportunities for everyone -- including college graduates -- narrowed and low-wage work began to replace steady middle-class jobs. Three-fifths of the jobs lost during the recession paid middle-income wages, while the same share of the jobs created during the recovery are low-wage work, according to an August study from the National Employment Law Project.

The result: Nearly half of the college graduates in the class of 2010 are working in jobs that don't require a bachelor's degree and 38 percent have jobs that don't even require a high school diploma, according to a January report from the Center for College Affordability and Productivity. The report called into question whether too much public money is being spent on providing students with degrees that make them overqualified for the only jobs that are available.

And--if it isn't too much trouble--please change some policies that are preventing the creation of 10-20 million jobs.  

Most read Realitybase posts in March

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

H-1b, the "Outsourcing Visa" How H-1b and L-1 visas are being used and abused by US employers to outsource millions of high-tech jobs and to bring in low-wage indentured servants to fill jobs vacated by firing high-wage citizen incumbents.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Why we acquire beliefs and refuse to change them Describing and discussing six reasons with evolutionary advantages why we may cling to our beliefs even after they have become undeniably counterfactual and unreasonable. The original post is supplemented by numerous follow-ups containing examples and views of others including John Maynard Keynes, Sam Harris, David Brooks, John Quiggin, Ashwin Parameswaran, Lawrence M. Krauss, Thomas Kuhn, John F. Kennedy, and David Warsh. This is the first time this has made the monthly hit parade, but it is one of my favorite posts.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

Newspapers are obsolete—Part 3: New Horizons I have no idea why this old post got so many views. It's only one paragraph posted for the purpose of linking to a (gated) NYRB article.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The other American Dream of rising incomes—Horatio Alger stories One of my earliest and perhaps my longest inquiry into upward socioeconomic mobility in America. Spoiler alert: The rate of upward mobility has been declining since 1980, and Horatio Alger stories are now more likely to occur in Denmark, Norway, Finland, Canada, Australia, and other advanced nations than in the US.

Who are a politician’s constituents?

Dylan Mathews is reporting today on research showing that state legislators all across the political spectrum believe their own constituents are more conservative than they actually are as determined by polling.

Broockman and Skovron find that all legislators consistently believe their constituents are more conservative than they actually are. This includes Republicans and Democrats, liberals and conservatives. But conservative legislators generally overestimate the conservatism of their constituents by 20 points. "This difference is so large that nearly half of conservative politicians appear to believe that they represent a district that is more conservative on these issues than is the most conservative district in the entire country," Broockman and Skovron write. This finding held up across a range of issues. 

Mathews suggests the legislators are victims of epistemic closure, an inability or unwillingness to comprehend that they have incorrectly assessed their constituents' views. Digby, commenting on this at Campaign for America's Future, suggests that the political media and donor class are both more conservative than the electorate at large.

Years of right wingers playing the refs by accusing the media of being liberal lapdogs has taken its toll. And, frankly, many of the elite political media are extremely well compensated and live in a world filled with rich, powerful people. They naturally identify with them and have less understanding of the average Americans' daily concerns. (And no, it doesn't matter if they came up from the average middle class — our meritocratic ethos says they did it all on their own and everyone else could too. Many of them are more hardcore about this than the children of the aristocracy.)

Perhaps "playing the refs" has also influenced how ordinary people view themselves. In What does it mean that the US electorate is "center-right"? Nothing.--

I found it is true that self-described conservatives have outnumbered self-described liberals in every election year since at least 1970. But I found that when polled on specific policy questions likely voters were apt to skew liberal instead of conservative. In other words, respondents' self-described ideology is useless in predicting public attitudes toward specific policy issues.

But really doesn't it get down to this simple fact: A politician's true constituents are his/her donors and the media, not the voters? Those who represent their true constituents can get reelected, and those who represent only the voters in their districts will likely be replaced.

Update on Monday, March 25, 2013 at 10:43AM by Skeptic

Bill Keller's op ed in today's NYT seeks answers for seemingly inexplicable differences in recent legislation in States that are apparently not so different from each other.  He considers Bill Bishop's 2008 book, The Big Sort, the thesis of which is that people choose to form geographic communities of like-minded person. Then he considers Dante Chinni and James Gimpel's 2010 book Our Patchwork Nation, which focuses on what they see as an urban-rural divide. Then he says:

I heard a more satisfying if somewhat depressing explanation for the seemingly random eruptions of political idiosyncrasy from Samuel Abrams, who teaches politics at Sarah Lawrence and Stanford. Abrams, who has spent the last decade or so researching our political habits, begins with the evidence that most Americans are simply not engaged in local politics, except perhaps on pocketbook issues. In the absence of public attention, motivated, well-financed and sometimes extreme elites have captured the lawmaking process in many state capitals. Legislatures are vulnerable to (and often populated by) the most ardent believers in a cause, the ones who care enough to take the time, raise the money, turn out on Election Day and lobby relentlessly.

“People who participate in state and local government tend not to be representative of the masses at all,” Abrams told me. “They tend to be highly engaged political elites — 15 percent of the population who think they’re fighting this culture war. They’ll see an opening. They’ll see a judge, they’ll see a legislature that looks amenable to something, and they’ll try to push it through and build a groundswell around that.”

Update on Saturday, March 30, 2013 at 04:33PM by Skeptic

Dave Johnson put up a post three days ago that starts this way:

A new study, Democracy and the Policy Preferences of Wealthy Americans, by Professors Benjamin I. Page, Jason Seawright and Larry M. Bartels sought to gauge the political and policy priorities of the wealthy, and how these concerns contrast with the concerns of the rest of us. Amazingly, the priorities of the 1% match up with the priorities of our political class, while the priorities and needs of the vast majorities of us are ignored.

Johnson fills out the piece with examples and references from other studies and articles reinforcing the conclusion.  

Most read Realitybase posts in February

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth. This post got about 1,000 views from a Reddit referral. 

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

What's killing American females? A recent study shows that Americans rank last in life expectancy in a group of 21 high-income countries, that American females are falling behind much faster than American males, and that Americans rank near the bottom in almost all causes of death. Several charts.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post) Education researcher Bree Hernandez says there is projected to be good jobs growth for STEM graduates but these jobs are destined to be concentrated geographically. She suggests that low-tech communities can improve their chances of becoming technology hubs by establishing STEM programs in local colleges and universities.

The Recession is Coming! The Recession is Coming! December 2007 post with charts showing America's middle class had been in recession for 7 years and asking if we really care.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

American Youth: Digitally Skilled and Unemployable. A graph shows that Americans under 25, who presumably are the most familiar with digital technology, are losing employment share to those over 55, who presumably are least at home in the digital age. This counterintuitive trend started long before the Great Recession.

What’s killing American females?

This question emerged unexpectedly from my post on US healthcare efficiency did not go off the rails until about 30 years ago. Lane Kenworthy posted the following graph to show that, when compared to all of 19 other wealthy OECD nations, US per-capita health care expenditures went through the roof while simultaneously delivering much smaller gains in life expectancy at birth.

My initial reaction was that something happened to accelerate the rate of spending increases in America. It did not occur to me that there had been a divergence in life expectancy improvement. However, taking the data apart revealed just the opposite: The rate of increase in real US per-capita health care expenditures has been steadily shrinking since at least 1960 but, starting in about 1983, America diverged downward from the peer nations in the rate of life expectancy improvements. 

 

Digging a little deeper it appeared that most of the adverse divergence was attributable to females and that males continued to have life expectancy gains at about the same rate as in the recent past. 

Why that happened was a complete mystery to me until the publication last month of U.S. Health in International Perspective: Shorter Lives, Poorer Health by the National Academy of Sciences. Hat tip Sabrina Tavernise at NYT. This is a monumental report of nearly 400 pages that is by no means focused on my question, "What's killing American females?" but there are clear partial explanations.

First, the study confirms that the US has been at or near the bottom in life expectancy and in the rate of increase in life expectancy and that the adverse divergence is almost entirely caused by US females.

These charts show the probabilities of surviving to age 50, which the report tells us is the age range that primarily accounts for the US's life expectancy disadvantage. Indeed, after age 75, the life expectancy of Americans is higher than in peer nations. At 3.

One striking finding is that US death rates are higher than the mean of peer nations for almost all causes of death and is not near the best with respect to any cause of death. Table 1.2.

The report doesn't tell us what changed since 1983, but it does tell us which causes of death account for the poor showing of American females versus the mean of 16 peer nations in the 2006-08 time interval.  Fully 37% of the excess deaths of American females occur from accidents and homicides, which are not normally thought of as "medical problems" that a better "health care system" might ameliorate.  

On the other hand, American females also lag their peers in deaths due to perinatal conditions, cardiovascular diseases, and other non-communicable diseases. Do American females have higher incidences of those maladies, or are they not getting as good treatment as in the peer nations? I don't think this report answers that.  

Because the report provides only a snapshot from 2006-08, the report is unable to identify the causes of death most responsible for putting American females on their lower life expectancy trajectory in about 1983. Indeed, Recommendation 6 is to investigate how different policies may explain cross-national differences over time.

I'm sure this is not the most important health policy question of all time, but I found it intriguing and am glad to have partial answers. I'm even more pleased that the NAS and others are addressing in a thorough fashion what is making us sick and killing us and what policies have been found effective to improve our health.

None of this should distract us in any way from the disastrous growth since the early 1980s in per-capita health care spending that did not improve our lives. Well, I guess it improved the lives of health care vendors, but not my life.  Or yours. 

Update on Wednesday, February 13, 2013 at 01:36PM by Skeptic

I've continued to think about this and read some more of the report because the partial answer to the question I posed was not very satisfying. Perhaps it's not the best question to be asking because it appears we could learn a great deal about why US life expectancy gains slowed among females starting in about 1983 by examining differences among regions, states, and localities within the US. From Box 1-2 of the Report: 

The range of life expectancies across U.S. states, which is 7.0 years for males and 6.7 years for females, exceeds the cross-national range between the United States and peer countries, which is 3.7 years for males and 5.2 years for females . . . .  Although life expectancy is very low in Appalachia and the Deep South, some states in the northern Plains and along the Pacific coast and Eastern seaboard easily outrank many peer countries. . . . 

Even greater disparities are found at the county level. 

Update on Monday, March 4, 2013 at 03:05PM by Skeptic

The Associated Press reports on another study released today by the Journal of Health Affairs finding life expectancies for American females under 75 actually declining in some areas, while a much smaller effect was observed for men. The story reports speculations as to causes by the study authors and by other experts, but there is no consensus and no definitive evidence.  

[ADDED 4/7/13]  More detail in The Daily Mail and a graph on this study: Mortality rates for women are increasing in over 43% of U.S. counties compared to just 3.4% for men.  There are strong regional patterns, and this article points the finger of causation more directly at socioeconomic factors than at lifestyle factors (without suggesting why women should be affected more than men):

According to the research, counties with higher population densities saw greater reductions in female mortality rates, as did counties with high average household incomes and a higher percentage of college graduates. 

In areas where there was a high percentage of adult smokers there was an increased mortality rate.

Counties in the south and west had the highest increase in female mortality rates over the period. 

'Many people believe that medical care and individual behaviors such as exercise, diet, and smoking are the primary reasons for declines in health,' the study said. 

'We did find significant associations between mortality rates and some of these factors, such as smoking rates for both sexes. But socioeconomic factors such as the percentage of a county’s population with a college education and the rate of children living in poverty had equally strong or stronger relationships to fluctuations in mortality rates.'

Update on Wednesday, March 6, 2013 at 05:13PM by Skeptic

J. Paul Leigh at Economic Policy Institute says there is evidence that low wages alone contribute to morbidity and mortality in American females in several ways:  

But it is not just obesity that may be affected by increasing the minimum wage. Juan Du and I use the PSID to consider wage and hypertension correlations. We analyze data on roughly 5600 adults from 1999 to 2005. We find that low wages in baseline years predict whether respondents will be newly diagnosed with hypertension in subsequent years. We find these predictions to be especially strong for women and persons under age 40, and these two groups are more likely than men over age 40 to be employed in low-wage jobs. This study was recently published in the European Journal of Public Health.

Finally, scores of studies in economics and epidemiology link low income to health problems including diabetes, heart disease, arthritis, and premature mortality.

The mechanisms through which low wages adversely affect health are varied, but two stand out. First, low wages can result in financial stress. Workers and their families may face persistent hassles associated with finding funds to pay for rent, electricity, groceries, and gas for the car. Even if the low-income family has insurance, funds for blood pressure and cholesterol medicines may not be available if the family must make co-payments and pay deductibles. The stress and lack of medicines likely adversely affect health. Second, many people partially assess their self-worth based on their wage. Unrelenting, long-term feelings of low self-worth likely also have negative consequences for health.

Well, it's all plausible but not in my opinion proven that raising the minimum wage or otherwise aleviating poverty is a good way to get life expectancies for American females to start improving again at the pre-1980 rate.  For one thing, it isn't established that obesity, hypertension, and other health conditions don't cause people to gravitate to the bottom of the income scale instead of being caused by low income. Clearly all of these statistical measures are associated, but which causes what, and what's the best place to break into what is potentially a complex set of interactions?  

Update on Monday, June 17, 2013 at 02:21PM by Skeptic

In the previous update, I said it wasn't clear which way the arrow of causation flies--does poverty cause high morbidity and mortality, or does poor health cause poverty?  However, a randomized controlled study in Florida in the 1990s showed convincingly that welfare recipients in the arm with reduced welfare payments had shorter life expectancies than those in the arm with the more generous welfare scheme.  Robert Waldman has a story on that at Angry Bear.  

From 1994 to 1999, Florida randomly selected a group of welfare recipients into either the Family Transition Program (FTP), a program that included many features of the later PRWORA, or the then-standard Aid for Families with Dependent Children welfare program (AFDC). Muennig and his colleagues looked at Social Security Records for 3,224 participants in the experiment to establish whether participants had died in the 18 years following the randomization.

What they found was that participants in the experimental group had a 16 percent higher mortality rate than members of the control group (hazard ratio: 1.16; 95% confidence interval: 1.14, 1.19; p < 0.01). This amounts to nine months of life expectancy lost between the ages of thirty and seventy for people in FTP.”This was a surprise: Muennig et al. had expected that the increased employment associated with FTP would lead to improved health. Instead, FTP harmed the participants.

Update on Tuesday, November 3, 2015 at 09:13AM by Skeptic

NYT today has a front page article on a recent publication by Nobel laureate Angus Deaton and his wife Anne Case showing the increase in mortality among middle-aged Americans is largely due to suicide and drug and alcohol poisoning in white Americans with only a high school education or less.  This is the abstract of the publication: 

This paper documents a marked increase in the all-cause mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013. This change reversed decades of progress in mortality and was unique to the United States; no other rich country saw a similar turnaround. The midlife mortality reversal was confined to white non-Hispanics; black non-Hispanics and Hispanics at midlife, and those aged 65 and above in every racial and ethnic group, continued to see mortality rates fall. This increase for whites was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. Although all education groups saw increases in mortality from suicide and poisonings, and an overall increase in external cause mortality, those with less education saw the most marked increases. Rising midlife mortality rates of white non-Hispanics were paralleled by increases in midlife morbidity. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population. We comment on potential economic causes and consequences of this deterioration.

An earlier NYT article focused on increasing mortality among white non-Hispanic women but not specifically on an age group or particular causes of death.

The steepest declines were for white women without a high school diploma, who lost five years of life between 1990 and 2008, said S. Jay Olshansky, a public health professor at the University of Illinois at Chicago and the lead investigator on the study, published last month in Health Affairs. By 2008, life expectancy for black women without a high school diploma had surpassed that of white women of the same education level, the study found.

White men lacking a high school diploma lost three years of life. Life expectancy for both blacks and Hispanics of the same education level rose, the data showed. But blacks over all do not live as long as whites, while Hispanics live longer than both whites and blacks.

One comment in this article suggests that the correlation may not be with education per se but with declining economic circumstances, which may occur despite adequate education and may not be ameliorated in the short-term (or ever) by more education: 

The five-year decline for white women rivals the catastrophic seven-year drop for Russian men in the years after the collapse of the Soviet Union, said Michael Marmot, director of the Institute of Health Equity in London.

Update on Saturday, August 20, 2016 at 05:12PM by Skeptic

Yves Smith has additional evidence and good analysis here.  Notably, most of the increase in US healthcare spending is concentrated in just a small percentage of patients. 

Education, the False God of Economic Recovery

No matter how much education your group has, or how little, your group's money income has been declining for 12 years, not just since the start of the Great Recession.

Yes, you need a good education to get a good job, but in the 21^st Century you also need a good education to get a bad job. A recent study found that 46.3% of the projected beneficiaries of an increase in the Maryland minimum wage from $7.25 to $10.00 per hour have at least some college education. Yes, college educated people working for minimum wage, many of them full time. See the comments on Mark Thoma's post What's the Cost and Financial Value of College.

For plutocrats and employers, declining wages is a feature, not a bug. They want taxpayers to train their workers so they don't have to, and they want labor costs to keep going down. They are apparently not even embarrassed by this assault on American workers. Lumina Foundation and the Bill and Melinda Gates Foundation funded a study at Georgetown University's Center on Education and the Workforce d[link updated 19 February 2020] to calculate how many more college graduates the US would need to turn out in order to drive down the college-versus-high-school wage premium from 74% to 46%! That's the goal—reduce the value of a college education by churning out an even bigger glut of degree holders. Even the study's authors question whether it will be feasible to get more Americans to complete college when they have to pay/borrow more as the incremental value of the degree is declining.

So here's my modest proposal: Declare a moratorium on hand-wringing about how to improve our educational system and instead focus serious national attention on creating tens of millions of jobs. Then we'll have the money to pay for more education for more people and a rising financial incentive for people to pursue higher education.

Why have we had for 12 years a chronic shortage of jobs up and down the education scale? Recently there has been a spate of punditry to the effect that American workers are being displaced by robots (shorthand for all sorts of automation). Well of course they are, and have been since the beginning of the industrial revolution, but I'm willing to bet that in the last 12 years many more American workers have been displaced by ill-treated Chinese teenagers than by robots.

Hat tip to Anne for the link to Census data. 

Update on Monday, June 10, 2013 at 02:16PM by Skeptic

Nancy Folbre has a post on Economix that discusses much of this same subject matter and comes to similar conclusions: 

As the economist Richard Freeman points out, developing countries have invested heavily — and successfully — in their higher education systems. In 2005 Chinese universities awarded five times as many bachelor’s degrees as they did in 1999.

This global expansion of the educated labor force is likely to put downward pressure on the college premium in the United States.

. . . .

Certainly students are now encouraged to think more strategically about their majors and to specialize in more technical fields. This is good financial advice, but it won’t guarantee success. Unlike financial capital, which can be easily moved from one investment to another, investment in human capital represents a sunk cost.

. . . .

The evolution of the global human capital market has momentous political implications. Like many Democrats, President Obama is bullish on human capital. He favors increased public investment in education, ranging from early childhood to post-secondary programs. The assertion that such spending will generate a high individual and social rate of return is based on the optimistic expectation that demand for better-educated workers will remain strong.

On the other hand, many critics of public-education subsidies are bearish on human capital. The economist Richard Vedder, for instance, warns against both private and public overinvestment in education, pointing to the growing tendency for college graduates to land in jobs that don’t actually require the credential they hold.

. . . .

Those who believe, as I do, that education has intrinsic value both to individuals and to society as a whole should reconsider their habit of relying on market-based private rate-of-return rhetoric.

Rather than bowing to market forces, an intelligent, well-educated citizenry would bend those forces toward better ends, including the best possible development of human capabilities.

Well, the last sentence is pretty subtle, but I think she is calling for policies that create domestic jobs and protect them from the worst possible outcomes of pure laissez faire global labor markets.  Even if she isn't calling for that, I am.  

Update on Sunday, February 23, 2020 at 11:01AM by Skeptic

It’s working.  An excess of recent college grads is driving down their wages and forcing about half of them into jobs for which no college is required.  https://www.bloomberg.com/news/articles/2020-02-14/in-hot-u-s-jobs-market-half-of-college-grads-are-missing-out 

 For the first time in decades, recent college graduates are more likely to be out of work than the population as a whole, according to the New York Federal Reserve. And for the lower-earning half of college grads, the wage premium is shrinking fast.

. . . .

But in recent years, while high-school graduates have seen a sharp pickup in earnings, the lower-earning half of college graduates haven’t -- and the gap between them is now the smallest in 15 years.

While a lot of low-wage jobs are being created, there are not enough good-wage jobs to absorb the bottom tier of college grads. 

More than four in 10 recent graduates are working in jobs that don’t usually require a college degree, the New York Fed says. And roughly one in eight is working in a field where typical pay is around $25,000 a year or less.

The economy is creating a lot of jobs like that -- and it’s expected to create even more. In the occupations that are forecast to grow fastest over the next decade, according to the Bureau of Labor Statistics -- from home care to restaurant cooks -- typical salaries range from $24,000 to $26,500.

Obama’s Legacy—If Any

With President Obama's second inauguration just two weeks away, the pundits are talking about Obama's legacy. In an MSNBC interview with Michael Beschloss, for example, Alex Witt posts this list of Obama's first term accomplishments and calls them significant.

Lilly Ledbetter Act

Student Loan Reform

Auto Industry Rescue

Stimulus Bill

Healthcare Reform

Financial Reform Bill

Repealing DADT

Killing Osama bin Laden

To that we could add withdrawing troops from Iraq (pursuant to an agreement between his predecessor and the Iraqi government) and, of course, the facts that he is our first non-white President and was reelected. Are there other significant accomplishments that will impress historians a few decades hence? I don't think so, and if he had died yesterday in a prosaic, non-political way, such as by choking on a pretzel, he would be remembered 25 years from how for just one thing—being black.

Some might argue that he will be remembered for "Obamacare," officially the Affordable Care Act, but we don't seem to be remembering George W. Bush for the Medicare prescription drug plan, which is about as significant and a great deal more popular. Maybe the auto industry rescue will be remembered by some, but does anybody remember that President Carter rescued Chrysler in 1979, that President Ford bailed out New York City in 1975, or that President Nixon rescued Lockheed in 1971? (Other government bailouts are listed here.) No? Didn't think so.

It seems to me that none of the other accomplishments on the MSNBC list (or any others to date) are going to be remembered for long, let alone thought of as legacy material. So, if Obama is going to be remembered as other than a seat-filler, it's going to have to be for something he does in his second term.

Others have noticed this, of course, and describe Obama as having been so far a "transactional" President who would like to be a "transformative" President but isn't doing what he would need to do to get there. Tom Friedman nails the problem in yesterday's NYT op ed, More Risk-Taking, Less Poll-Taking: Obama is not articulating a vision of what America should and could be in five or ten years or a generation. He has been content to advocate for what he judges can be achieved under current political realities. He is not attempting to change how voters think about themselves and America. He's going with the flow. Friedman says this (emphasis added):

Maybe Obama has a strategy: First raise taxes on the wealthy, which gives him the credibility with his base to then make big spending cuts in the next round of negotiations. Could be. But raising taxes on the wealthy is easy. Now we're at the hard part: comprehensive tax reform, entitlement cuts, radical cost-saving approaches to health care and new investments in our growth engines. This will require taking things away from people — to both save and invest. A lot of lobbies will fight it. The president will need to rally the center of the country and the business community to overcome them. He'll have to change the polls, not just read the polls. He will have to take on his own base and the G.O.P.'s.

I'm sympathetic to the argument that transforming the American mindset is very difficult and perhaps impossible, but if Obama thinks that's reason enough not to try, then he's giving up the possibility of having a transformative position in history. I hoped for more, but I didn't really expect it. By the way, my agenda for transforming the nation would not be the same as Friedman's; in my opinion the transformational changes we most need are getting money out of politics and restoring full employment.

While Some Cities Conquer Economic Issues with High Tech Masters Programs, Others Struggle. (Guest Post)

[Realitybase has posted about the grim job prospects for recent college graduates and the failure of a trained labor force to cause the creation of jobs. Education researcher Bree Hernandez brings some new numbers and subtlety to these issues in this guest post. According to Bree, jobs are growing in certain sectors and in certain places, but the shift is by no means universal. Bree most often compiles statistics on accredited graduate education for interested students, and has a comprehensive knowledge of higher education today.]

In recent years, analysts have noted a connection between universities that offer cutting-edge, technology-oriented academic programs and thriving economic activity within the surrounding community. Likewise, universities that emphasize traditional industries often correspond to cities that are not conducive to tech-savvy businesses and organizations.

A 2011 report published by the Brookings Institute highlighted the long-standing relationship between economic prosperity and technological innovation. According to a recent survey of 120 countries over a 26-year period, each broadband penetration increase of 10-percent contributed to a 1.3-percent increase in a country's GDP. Additional studies have shown a strong link between "telecommunication investment and economic growth," particularly during post-recession periods. Many of today's industrial sectors are heavily reliant on technology. Physicians and nurses use telemedicine to exchange ideas and information with one another, energy companies supply power using smart grids; and higher learning institutions allow students to enroll in e-courses, among other things. "Technology fosters innovation, creates jobs, and boosts long-term economic prosperity," the report states. "By improving communication and creating opportunities for data-sharing and collaboration, information technology represents an infrastructure issue as important as bridges, highways, dams, and buildings."

According to an April 2012 report by IBISWorld, the U.S. GDP is expected to increase annually by 3.3 percent over the next five years; comparatively, the GDP grew by an average of 0.6 percent between 2007 and 2012. Much of this projected growth is attributed to industrial sectors that are concentrated in the fields of science, technology, engineering and mathematics (or STEM). One burgeoning field is 3-D printing technology, which grew 8.8 percent between 2007 and 2012, and is expected to increase 14 percent over the next five years.

Online technology and social media is another sector expected to grow considerably between now and 2017; this is especially true of the social network game development sector, which grew 128 percent in the last decade and is projected to increase another 22 percent in the next five years. Other STEM-related fields with high projected growth include pharmaceutical manufacturing, green construction, and solar panel development/manufacturing.

In order to succeed in the tech sector, Forbes contributor Jacquelyn Smith urges college and graduate students to choose programs that correspond to fields with high levels of projected job growth. Computer science majors, for example, earn a median mid-level salary of $109,000, while the sector is expected to grow 22.3 percent over the next eight years. A similar field, information systems, awards a median mid-career wage of $95,000, and is expected to grow 23.3 percent between now and 2020. Other lucrative programs include electrical engineering, mathematics and physics. "In a technology driven world, the need for those who not only understand, but can improve upon technology is high," said Katie Bardaro, a lead economist for Payscale.

However, the college or university a student chooses to attend can be just as crucial as the major he or she chooses. Academic experts advise students to choose their campus based on the strength of the local tech sector. A July 2012 report by Simply Hired found that two established tech hubs – Seattle and Portland, Ore. – were among the best cities in which to find a job related to the field of technology. Other cities, such as Newark and Birmingham, Ala., were listed among the "worst cities to find a tech job," due to a low ratio of available technology positions to workers who are currently employed in that field. Not surprisingly, the local economies of these cities reflect the strength of their tech sector. The unemployment rates of Seattle and Portland average around 7.1 percent, while the averaged unemployment rate of Newark and Birmingham exceed 12 percent. Furthermore, businesses in Seattle generated taxable income worth $58.6 billion in 2011, while Portland's job market grew by more than 10,000 jobs between September 2011 and September 2012. Meanwhile, the Newark labor force has been in decline each month since July and the Birmingham job market has lost roughly 2,700 jobs over the previous year.

A recent report by Rick Mattoon highlights the role that colleges and universities play in local economic development and prosperity. He notes that academic institutions are often the catalyst for regional economic shift. In some cases, a local school is the genesis point for a form of technology that evolves into an emerging industry. Other times, academic research and development aid an existing industry and enable it to further expand. In recent years, the University of Washington has exemplified this latter point within the city of Seattle; cutting-edge technology and engineering programs have yielded graduates who are able to contribute to the existing local workforce, while software development and business management programs have allowed graduates to thrive within the city's expansive startup sector. In Newark and Birmingham, on the other hand, academic programs are more geared toward traditional industries because the respective local economies have such weak tech sectors.

In order to bolster the local economy through technological innovation, city officials should encourage colleges and universities under their jurisdiction to adopt cutting-edge tech programs. Not only will these programs yield skilled graduates who are able to productively contribute to the city's workforce, but these institutions can also aid local industries through research and development, as the University of Washington has done in Seattle. Technology is a standard of modern business – no longer a mere luxury – and the varying economic strength between American cities effectively reflects this shift.

Offshoring manufacturing was a critical strategic blunder by the US.

When manufacturing is offshored, related technical talent, R&D spending, and innovative success tend to go with it. I've written about that unfortunate process here. Annie Lowrey reports the same story with additional examples in this NYT piece.

A growing chorus of economists, engineers and business leaders are warning that the evisceration of the manufacturing work force over the last 30 years might not have scarred just Detroit and the Rust Belt. It might have dimmed the country's capacity to innovate and stunted the prospects for long-term growth. "In sector after sector, we've lost our innovation edge because we don't produce goods here anymore," said Mitzi Montoya, dean of the college of technology and innovation at Arizona State University.

GE is trying to reverse that loss in advanced battery production.

The idea is to knit together manufacturing, design, prototyping and production, said Michael Idelchik, vice president for advanced technologies, who holds a dozen patents himself. "We believe that rather than a sequential process where you look at product design and then how to manufacture it, there is a simultaneous process," Mr. Idelchik said. "We think it is key for sustaining our long-term competitive advantage."

MIT Professor Susan Berger, a founder of the Production in Innovation Economy project was interviewed by Lowrey.

Thus far, she said, the anecdotal evidence from about 200 companies has proved striking, with company after company detailing the advantages of keeping makers and thinkers together. That does not mean every business, she stressed. Companies with products early in their life cycle seemed to benefit more than ones with products on the market for years. So did companies making especially complicated or advanced goods, from new medicines to new machines.

Update on Saturday, February 23, 2013 at 11:04AM by Skeptic

The MIT Production in the Innovation Economy working group has issued a report on its findings.  From the press release announcing the report-- 

"It has been suggested by previous reports that sustaining the strength of U.S. manufacturing is essential to America’s future; a strong advanced-manufacturing base is crucial to national security, and it represents a key source of good-paying jobs,” MIT President L. Rafael Reif says. “But as the PIE report makes clear, local production is very important to sustaining a vibrant innovation ecosystem in a region. Thus, we must also take steps now to regain U.S. manufacturing momentum if we want to sustain the nation’s signature economic advantage: innovation."

Update on Saturday, February 23, 2013 at 01:45PM by Skeptic

Harvard Business School professors Gary Pisano and Willy Shih make the case at length and in detail in their recent book Producing Prosperity: Why America Needs a Manufacturing Renaissance. The Harvard Business Review summary:  

Manufacturing's central role in global innovation... Companies compete on the decisions they make. For years--even decades--in response to intensifying global competition, companies decided to outsource their manufacturing operations in order to reduce costs. But we are now seeing the alarming long-term effect of those choices: in many cases, once manufacturing capabilities go away, so does much of the ability to innovate and compete. Manufacturing, it turns out, really matters in an innovation-driven economy. In "Producing Prosperity," Harvard Business School professors Gary Pisano and Willy Shih show the disastrous consequences of years of poor sourcing decisions and underinvestment in manufacturing capabilities. They reveal how today's undervalued manufacturing operations often hold the seeds of tomorrow's innovative new products, arguing that companies must reinvest in new product and process development in the US industrial sector. Only by reviving this "industrial commons" can the world's largest economy build the expertise and manufacturing muscle to regain competitive advantage. America needs a manufacturing renaissance--for restoring itself, and for the global economy as a whole. This will require major changes. Pisano and Shih show how company-level choices are key to the sustained success of industries and economies, and they provide business leaders with a framework for understanding the links between manufacturing and innovation that will enable them to make better outsourcing decisions. They also detail how government must change its support of basic and applied scientific research, and promote collaboration between business and academia. For executives, policymakers, academics, and innovators alike, "Producing Prosperity" provides the clearest and most compelling account yet of how the American economy lost its competitive edge--and how to get it back.

Hat tip to Simolean Sense.  

Most read Realitybase posts in December

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The Recession is Coming! The Recession is Coming! December 2007 post with charts showing America's middle class had been in recession for 7 years and asking if we really care.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

US health care efficiency did not go off the rails until about 30 years ago. Updates to this post show that the rate of increase in US life expectancy at birth, especially for females, abruptly slowed in 1982 and that this was apparently unrelated to healthcare spending which continued rising at a very steady rate.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

Most read Realitybase posts in November

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

California has the highest paid K-12 teachers in the nation and the largest classes. Just publishing some data without discussing policy implications.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by the devastating loss in 10 years of all gains made in the previous 20 years.  

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

Those greedy bastards!

The recent Presidential election campaign involved much rhetoric from the right about "makers" and "takers." A paper published in February by UC Berkeley researchers gives us another way to think about who the "takers" are. The reported studies found that upper-class individuals had more favorable attitudes toward greed and were observed to be more likely to take what isn't theirs according to broadly accepted norms.

From the press release:

In seven separate studies conducted on the UC Berkeley campus, in the San Francisco Bay Area and nationwide, UC Berkeley researchers consistently found that upper-class participants were more likely to lie and cheat when gambling or negotiating; cut people off when driving, and endorse unethical behavior in the workplace.

The increased unethical tendencies of upper-class individuals are driven, in part, by their more favorable attitudes toward greed," said Paul Piff, a doctoral student in psychology at UC Berkeley and lead author of the paper published today (Monday, Feb. 27) in the journalProceedings of the National Academy of Sciences.

The abstract of the paper published in the Proceedings of the National Academy of Sciences:

Seven studies using experimental and naturalistic methods reveal that upper-class individuals behave more unethically than lower-class individuals. In studies 1 and 2, upper-class individuals were more likely to break the law while driving, relative to lower-class individuals. In follow-up laboratory studies, upper-class individuals were more likely to exhibit unethical decision-making tendencies (study 3), take valued goods from others (study 4), lie in a negotiation (study 5), cheat to increase their chances of winning a prize (study 6), and endorse unethical behavior at work (study 7) than were lower-class individuals. Mediator and moderator data demonstrated that upper-class individuals' unethical tendencies are accounted for, in part, by their more favorable attitudes toward greed.

So, it seems the rich really are different from you and me, not in the way F. Scott Fitzgerald imagined, but in the way Oliver Stone presented Gordon Gekko and, of course, in Ayn Rand's Atlas Shrugged hero John Galt and in her The Virtue of Selfishness. George Monbiot discusses Rand's poisonous and currently fashionable ideas in a Manifesto for Psychopaths.

Excessive greed and lack of empathy bordering on psychopathy could explain much of what goes on in the world of high finance and in public company CEO compensation, could it not? Clive R. Boddy develops that idea in The Corporate Psychopaths Theory of the Global Financial Crisis in the Journal of Business Ethics. About 1% of the population consists of psychopaths (20% in the prison population) and it could be that Wall Street traders are selected in part for their remorseless greed, likely making the population of these types in leadership positions atypically large in some organizations, instead of being weeded out as one might hope.

From an earlier paper by Boddy, Ladyshewsky, and Galvin, The Influence of Corporate Psychopaths on Corporate Social Responsibility and Organizational Commitment to Employees:

Leaders who are Corporate Psychopaths often create the illusion of being successful leaders. However, they are attracted to these positions of leadership because of the access to rewards and power that are vested in these senior management positions.

One implication of these ideas is that the rest of us may be at the mercy of powerful people who can only be controlled by strict laws and vigorous enforcement, and not, as Alan Greenspan erroneously thought, trusted to police themselves or subjected to subtle adjustment of incentives.

Hat tip to Yasmin Anwar at Real-World Economics Review Blog, where most of the Berkeley press release is quoted.

Update on Wednesday, November 21, 2012 at 09:13AM by Skeptic

In the first comment below, Jazzbumpa supplies a YouTube link to an RT segment aired yesterday and a good summary of its content.  For convenience, I've embedded the video here:   

You can follow JzB's blog here.  

Most read Realitybase posts in October

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

Crony Capitalism is the common enemy of the Tea Party and the Occupy Movement. Excerpts from a Chicago business school prof's op ed and a link to an earlier Realitybase post making a similar point.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by the devastating loss in 10 years of all gains made in the previous 20 years.  

Mitt Romney loves Big Bird.

Most read Realitybase posts in September

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.  

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

Two hypotheses for why US CEO pay is so high Charts show that US CEO pay is about double that in other advanced countries, meaning there is either a shortage of talent in the US or the US CEO pay market is broken.

One chart refutes three myths about US foreign trade. About Smoot-Hawley, the post-WWII export "boom," and "self-balancing" trade.

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson, Joseph Stiglitz, and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Most read Realitybase posts in August

The Dysfunction and Corruption of Our Healthcare System, Its Damage to the National Economy and other Basic Healthcare Matters (Guest Post) Describing a system that is destroying global competitiveness of American business, that violates fundamental insurance risk principles, and that has inherent conflicts of interest preventing quality national health care delivery and cost efficiency; and proposing a solution.

The Citigroup Plutonomy Memos With key quotations from documents that are being disappeared. This post has been the #1 response to a Google search for "plutonomy memo."

U.S. aircraft carrier and 15 other Navy ships sunk in the Strait of Hormuz in 5-10 minutes Results of US war games when attacked by large numbers of speed boats and missiles such as Iran has in the hands of Revolutionary Guards reputed to be "cowboys," and suggesting still other ways we might accidentally get into a war with Iran.

The American Dream died in February 1973. With graphs showing stagnation of inflation-adjusted middle class incomes since the 1970s after strong and steady post-WWII growth

The history of US per-capita petroleum consumption will surprise you.  A graph and other data show US per-capita consumption of petroleum is down substantially from the 1970s, has been very stable since 1983 because of CAFE standards, and has fluctuated only slightly with retail price changes.

US job creation has been declining since April 2000 and is now in freefall. Discussion around a dramatic graph showing the US employment-to-population ratio strongly increasing until 2000 followed by a devastating loss in 10 years of all the gains made in the previous 20 years.  

The US trade deficit is tribute paid to foreigners. And it's big. Nobel laureates Paul Samuelson and Paul Krugman and other prominent economists including Dani Rodrik, Alan Blinder, Martin Wolf, Larry Summers, Joseph Stiglitz, Dean Baker, and even Alan Greenspan have said that the US middle class is net worse off as a result of persistent trade deficits averaging 3% of GDP.

Wages for college graduates in the cross hairs of US business. How US employers are driving down domestic wages by offshoring, importing guest workers, and deliberately creating an oversupply of American college grads.

Comparative Advantage—The Unicorn of Free Trade Collection of sources and analyses demonstrating that the assumptions of classic Ricardian trade theory rarely if ever align with real-world conditions.

American Exceptionalism, shake hands with Inconvenient Facts. Presenting data, and links to other data, showing USA ranks near the bottom of 30 OECD nations by a wide variety of middle class metrics including health, family, education, income, wealth, leisure, freedom and democracy, public order and safety, generosity, and access to internet and wireless technology.

If the Ryan plan had been in effect in 2010, Romney’s tax rate would have been 0.82% instead of 13.9%.

Paul Ryan's budget plan, which Mitt Romney has endorsed and now fully embraced by putting Ryan on the ticket, would eliminate all taxes on capital gains, dividends, and interest and lower the top marginal rate on earned income from 35% to 25%. Romney's 2010 income included over $21 million from capital, and he would pay no taxes on that. He had $0.6 million income from author and speaking fees that would have been taxed, but at a rate lower than his actual 2010 rate. Altogether his effective federal tax rate would have been 0.82%. Matthew O'Brien has the story at The Atlantic. Hat tip Mark Thoma. Can Romney/Ryan possibly win the November election without publicly disowning this tax proposal?