Fix economic inequality? — Yes, we can.

If there’s one thing Joseph Stiglitz wants to say about inequality, it’s that it has been a choice, not an unexpected, unfortunate economic outcome. That’s unnerving, but it also means that citizens and politicians have the opportunity to fix the problem before it gets worse.

In his new book, Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity, Stiglitz, a Nobel-prize winning economist, professor at Columbia University, and the chief economist at the Roosevelt Institute, asks the question “Can the rules of America’s economy be rewritten to benefit everyone—not just the wealthy?” The answer, he insists, is yes.

Stiglitz describes the current situation as “a stark picture of a world gone wrong”: He notes that 91 percent of all income growth between 2009 and 2012 was enjoyed by the wealthiest 1 percent of Americans. In the first half of the book, Stiglitz focuses on the practices and policies that have gotten the country to this point. It is a familiar story: The demise of labor unions, the increasing financialization of the economy, and the lack of wealth-building opportunities in minority communities have made the rich richer while leaving everyone else to flounder. He lists off a bevy of other contributors too: weak wages, ineffective regulation and federal oversight, and a focus on short-term versus long-term growth, which embodies a preference for rewarding shareholders over workers and consumers.

Stiglitz also notes that despite advancements in technology, which should — in theory — increase efficiency and lower costs, consumers are paying more in fees for financial services, which enriches big banks and companies while siphoning money out of the middle class. All of these things, he says, have created a society with a gaping hole, not only in its economic makeup, but in its morality.

Stiglitz spends the latter portion of the book laying out how to fix things. Like his primer on how inequality came to be, the solutions cover everything from fiscal policy to corporate boardrooms to retirement savings. His overview doesn’t prioritize pragmatism: A solution that only involves overhauling the few things that everyone agrees need to be overhauled is no solution at all, he argues.

Instead, he swings for the fences, suggesting a massive revision in the way the U.S. economy does business. First up is the attempt to tame what is called rent-seeking—the practice of increasing wealth by taking it from others rather than generating any actual economic activity. Lobbying, for example, allows large companies to spend money influencing laws and regulations in their favor, but lobbying itself isn’t helpful for the economy besides creating a small number of jobs in Washington; it produces nothing but helps an already rich and influential group grow more rich and more influential. Stiglitz suggests that reducing rent-seeking is critical to reining in inequality, especially when it comes to complex issues such as housing prices, patents, and the power that large corporations wield.

RTFA for an outline of recommendations from Joe Stiglitz. Nothing you haven’t heard of – or who is affected the most. The rich and powerful who own Congress and your state government.

Read his book. Get your butt in gear to avail yourself of what little political power you have. It’s sad that our only choice – at the moment – is removing power from the evil of two lessers. Kick Republicans and Blue Dog Democrats out of office. Elect liberal and progressive Democrats. Fight to get them to adopt an electoral platform based on a complete overhaul of our tax system, a reform of our education system focussed on standards from students to teachers and administrators, rejuvenating infrastructure.

It ain’t going to happen from the top down. That will be the promise from both political parties. Crap propaganda. We need to shovel away the opportunists who chose political life for profit and power. That’s as much hard work as anything else.

China on the move – first steps

The debate is over. After six years of weighing the options, China is now firmly committed to implementing a new growth strategy. At least, that’s the verdict I gleaned from the just-completed annual China Development Forum, long China’s most important dialogue with the outside world.

There were no surprises in the basic thrust of the strategy – a structural shift in China’s investment- and export-led growth model toward a more balanced consumer-based and services-led economy. The transformation reflects both necessity and design.

It is necessary because persistently weak global growth is unlikely to provide the solid external demand for Chinese exports that it once did. But it is also essential, because China’s new leadership seems determined to come to grips with a vast array of internal imbalances that threaten the environment, promote destabilizing income inequality, and exacerbate regional disparities.

The strategic shift is also a deliberate effort by Chinese policymakers to avoid the dreaded “middle-income trap” – a mid-stage slowdown that has ensnared most emerging economies when per capita income nears the $17,000 threshold (in constant international prices). Developing economies that maintain their old growth models for too long fall into it, and China probably will hit the threshold in 3-5 years…

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Dealing with Alzheimer’s disease, dementia among aging criminals

Secel Montgomery Sr. stabbed a woman in the stomach, chest and throat so fiercely that he lost count of the wounds he inflicted. In the nearly 25 years he has been serving a life sentence, he has gotten into fights, threatened a prison official and been caught with marijuana.

Despite that, he has recently been entrusted with an extraordinary responsibility. He and other convicted killers at the California Men’s Colony help care for prisoners with Alzheimer’s disease and other types of dementia, assisting ailing inmates with the most intimate tasks: showering, shaving, applying deodorant, even changing adult diapers.

Their growing roster of patients includes Joaquin Cruz, a convicted killer who is now so addled that he thinks he sees his brother in the water of a toilet, and Walter Gregory, whose short-term memory is ebbing even as he vividly recalls his crime: stabbing and mutilating his girlfriend with a switchblade…

Dementia in prison is an underreported but fast-growing phenomenon, one that many prisons are desperately unprepared to handle. It is an unforeseen consequence of get-tough-on-crime policies — long sentences that have created a large population of aging prisoners. About 10 percent of the 1.6 million inmates in America’s prisons are serving life sentences; another 11 percent are serving over 20 years.

And more older people are being sent to prison. In 2010, 9,560 people 55 and older were sentenced, more than twice as many as in 1995. In that same period, inmates 55 and older almost quadrupled, to nearly 125,000, a Human Rights Watch report found.

While no one has counted cognitively impaired inmates, experts say that prisoners appear more prone to dementia than the general population because they often have more risk factors: limited education, hypertension, diabetes, smoking, depression, substance abuse, even head injuries from fights and other violence…

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Nonsense posing as wisdom – time for an economics lesson


“We’re going to cooperate with who?”
Daylife/Getty Images used by permission

Those who said after President Barack Obama’s speech last week to Congress that government does not create wealth, does not create jobs and cannot stimulate the economy spoke nonsense. So do those who say that only private business creates wealth, as if any revenue going to taxes destroys wealth.

Adam Smith, who figured out market capitalism in his 1776 book “The Wealth of Nations,” could set them straight. We have plenty of equally competent economists who understand these issues today. They just do not get the attention that the news media lavish on high-profile politicians and pundits who speak with absolute certainty on matters about which their words show they know nothing.

So why are politicians and commentators who speak economic nonsense treated as sages? And why do so many journalists uncritically repeat their nonsense?

Sadly, the answer is that too few people in public life understand economics, numbers or algebra. Too few people learned, or remember, the crucial concept underlying matters of economics and finance known as accounting identities.

Accounting identities are statements that must be true no matter how you arrange the components. Thus 2+1=3 just as 3-1=2. Likewise, net worth equals assets minus liabilities just as assets equal liabilities plus net worth and profits equal revenue minus costs. But water plus flour does not equal steak.

In economics, Gross Domestic Product equals consumer spending plus government spending plus investment plus the net of exports and imports. Or in its simplest form: Spending = Output = Income.

Economics is like a circle, as Smith figured out 235 years ago. More spending by government creates jobs, whether at war plants making smart bombs, dredging ports so cargo moves efficiently or stimulating the gray matter between young ears to create productive adults. Bombs ultimately destroy value, while ports and education add value.

Now…consider these statements by three prominent Republican lawmakers:

“We need to cut spending now in order to create jobs in America” — House Speaker John Boehner on the floor of the House of Representatives in July 2010. “If government spending would stimulate the economy, we’d be in the middle of a boom” — Senator Mitch McConnell in March 2011. “Government doesn’t create jobs, you do” — Representative Nan Hayworth, M.D., speaking in January to business leaders in her New York district.

None of the comments makes sense. The first violates the accounting identity that spending equals income. The second assumes that the stimulus was big enough to make up for the fall in private sector jobs, when it was less than half what accounting identity algebra showed was needed. The third is just plain nonsense…

RTFA for a tad bit more Economics 101. I’m not going to turn this blog into an economics and history course. But, if you watched business news on business news channels – instead of the news as entertainment channels – you’d bump into a fair number of economists. Yes, there are a few who care more for ideology than history. Damned few compared to the clowns in Congress or the patent leather pundits on TV or cluttering up the Web.

Investors and business people need sound information. That’s why polls, surveys and interviews with people who are participating in the global market economy are more optimistic about the future of our economy, more positive about the remedies being advanced by Obama to resolve our jobs crisis – than the crap sources offered by TV talking heads. There are, after all, essential solutions that have been applied successfully since the Great Depression.

Dissent from folks with a modicum of economics education – like yours truly – is generally of the “you’re not trying hard enough, not committing enough to the fight!”

Dissent from people like the Republicans and their Tea Party brown shirts – is generally of the “Hoover was right, screw the working people and The South will rise again!”

Obama’s best plan that stands no chance of happening!


Republican Free Market version of a modern railroad

Vice President Joe Biden has announced an ambitious $53 billion U.S. program to build new high-speed rail networks and make existing ones faster over the next six years.

But the plan drew immediate fire from majority Republicans in the House of Representatives, who said building high-speed rail requires private investment rather than a government plan…

The ideological response doesn’t matter. They may as well have said their favorite Wall Street astrologer gets the whim-whams on train rides. They oppose the plan [1] because it’s a Democrat plan; [2] Obama probably thought of it; [3] it doesn’t especially increase profits for Big Oil.

This is about seizing the future,” he said, making the announcement at Philadelphia’s busy 30th Street station with U.S. Transportation Secretary Ray LaHood.

The United States should follow the example of Japan and China and build high-speed rail, Biden said. “If we do not, you tell me how America is going to be able to lead the world in the 21st century,” he said…

Advocates say U.S. investment in high-speed rail lags many other countries and point to China, which plans to invest $451 billion to $602 billion in its high-speed rail network between 2011 and 2015, according to the China Securities Journal.

China turned the portion of the Great Recession that affected their economy into an opportunity to expand and modernize infrastructure. This provided hundreds of thousands of jobs for unskilled workers and is laying the groundwork for an internal logistics system completely independent of highways.

Frankly, I don’t think there ever will be sufficient understanding or forethought in Congress to bring a comparable project to fruition in the United States. Add to that – the average American’s emotional dependence on automobiles and the project is screwed before it ever gets started. Americans land in a foreign country, the first thing they do is look for a rental car. They’re panicked over the idea of managing travel in public transport.

Meanwhile, traffic management – the serious end of the craft which concerns distribution, travel, timely and economic movement of goods and people – is a serious consideration in the political life of developing nations as well as Europe.

The rest of the world gets to look at these questions and how they’re managed in nations with sensible infrastructure vs. the United States and the answers are easy. Rapid freight movement involves trucks and air. Serious freight movement involves rail. Passenger travel can involve rail, road and air. The United States offers the worst case examples for modern solutions.

Dealing with risky food-safety behavior In commercial kitchens

How safe is the food we get from restaurants, cafeterias and other food-service providers? A new study from North Carolina State University — the first study to place video cameras in commercial kitchens to see how precisely food handlers followed food-safety guidelines –  discovered that risky practices can happen more often than previously thought.

“Meals prepared outside the home have been implicated in up to 70 percent of food poisoning outbreaks, making them a vital focus area for food safety professionals,” says Dr. Ben Chapman… “We set out to see how closely food handlers were complying with food safety guidance, so that we can determine how effective training efforts are…”

“We found a lot more risky practices in some areas than we expected,” Chapman says. For example, most previous studies relied on inspection results and self-reporting by food handlers to estimate instances of “cross-contamination” and found that cross-contamination was relatively infrequent. But Chapman’s study found approximately one cross-contamination event per food handler per hour…

Cross-contamination occurs when pathogens, such as Salmonella, are transferred from a raw or contaminated source to food that is ready to eat. For example, using a knife to cut raw chicken and then using the same knife to slice a sandwich in half. Cross-contamination can also result from direct contact, such as raw meat dripping onto vegetables that are to be used in a salad…

Cross-contamination has the potential to lead to foodborne illnesses and has in recent outbreaks” Chapman says. “And it’s important to note that the food-service providers we surveyed in this study reflected the best practices in the industry for training their staff…

“This study shows us that each food handler is operating as part of a system,” Chapman says, “and the food-safety culture of the overall organization – the kitchen and the management – needs to be addressed in order to effect change.

Not to wax too philosophical; but, the study addresses essential questions at the root of most social discourse starting with the industrial revolution. Alienated individuals who are socialized by the workplace, set aside from the completion of normal work processes by the “efficiencies” of specialized tasks.

If you can lead people into an understanding, a reasonable feeling of being part of a real team – perhaps you can overcome the inattention and carelessness resulting from alienation.

Please don’t expect that to be easy.

Naturally clever – Class of 2009


Chimpanzees recall exact location of a single tree in a forest

If you thought animals and plants were not particularly smart, then it is time to think again.

This year, we were wowed by the previously hidden talents of counting chimps, decoy-building spiders and tool-using octopuses.

We learnt how rooks are clever enough to solve a fabled problem, plants will feign illness while female bowerbirds find intelligent males especially sexy.

RTFA. Earth News presents 10 of the smartest species revealed in 2009.

Simple and easy measures can reduce greenhouse gases

Try telling that to a Republican/Libertarian/No-responsibility Neocon.

Basic actions taken by everyday people can yield fast savings at low cost, according to MSU Professor Thomas Dietz and colleagues.

Cutting consumer energy waste is a good place to start, said Dietz, a professor of sociology and environmental science and policy at MSU. Household energy consumption accounts for 38 percent of carbon emissions in the United States and 8 percent of world emissions, he said.

Activities such as home weatherization, routine vehicle maintenance and opting for the clothesline instead of the dryer could cut total U.S. carbon emissions by 5 percent over just five years and 7.4 percent in 10 years, Dietz said. That’s the equivalent of France’s total carbon output, or of total emissions by the U.S. petroleum refining, steel and aluminum industries…

We can make great progress with the technologies we already have if we pay attention to behavior – how people use the technologies they already have.”

Dietz and collaborators…didn’t base their estimates on a best-case consumer behavior scenario. Instead, they used the best available information to calculate how many families could reasonably be expected to take such measures if they were provided information, offered financial assistance and could interact with others doing so…

“I’ve seen many analyses that make wild assumptions about how hard or how easy it is to get people to change their behavior, without any basis in science,” he said. “Our analysis is based on science. We look at what has been feasible in bringing about changes in energy consumption behavior…”

“We know from a lot of research that most people, companies and governments are most likely to change behavior when they see their peers change. So someone will weatherize their houses when they see others do it, and governments are most likely to develop policies when they see other governments doing it.”

Now, the example up top is what Professor Dietz is talking about. What follows on – is that the nutball response to this involved Republicans dragging one or another conservative motorhead who said Obama is wrong – it ain’t 3-4% oil consumption reduction, it’s only 3-4% increase in gas mileage!

Once again, these clucks are so hungup on ideology they avoid Math 101. US average gas mileage for a new car is less than 25mpg. An improvement of 3-4mpg isn’t 3-4% reduction in petroleum consumption. They’re right. It’s a minimum reduction of 12%.

Point still remains that conservatives used to be conservationists – not copouts.