Too Proud to Beg?

In the middle of reading this New York Times article about the sad story of a town whose workers lost their pensions, I stopped at this quote, about one of the people who was affected and ended up dying, because he was also too young to collect Social Security:

“When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

There is something so sad and deluded and kind of American about the idea that someone who does not try to get help from the government when in a dire situation is being proud or honorable. I hate to say it, because this man’s situation was awful and could happen to any of us in these tenuous times, but it is stupid not to try to get help from the government if you have been rendered destitute. This country’s largest automakers recently got help from the government, as did its largest banks. Individuals get help from the government every day, in the form of disability checks, welfare, unemployment benefits, tax exemptions on home mortgage interest, free school lunches, etc. We pay taxes in part to insure ourselves if we fall into hard times, so we can collect say, Medicaid or disability. I don’t consider this man “too proud;” I consider him sadly deluded about how things work in this country.

Another way to think of it is that Americans — even those who are too proud to go to the government — do go to banks to borrow money in hard times. Most people are not too proud to do that, and many of them, even if they feel like they will eventually pay down the debt, are frankly not in a position to do it. So maybe it is best for someone who considers himself or herself above collecting government welfare to think about whether it is better to be psychologically indebted to his or her fellow Americans or actually indebted to a bank that charges an 18% interest rate.

Would we hear such boldness this today from leaders?

As I read a book about Franklin D. Roosevelt and how he dealt with his political enemies, I wonder again and again whether any of our political leaders today would say anything nearly as bold as what he said in response to the “economic royalists” of the 1930s. Such as this analogy he made between them and a once-sick patients on the campaign trail in 1936:

Some of these people really forget how sick they were. But I know how sick they were. I have their fever charts. I know how the knees of all our rugged individualists were trembling four years ago and how their hearts fluttered. They came to Washington in great numbers. Washington did not look like a dangerous bureaucracy to them. Oh no! It looked like an emergency hospital. All of the distinguished patients wanted two things — a quick hypodermic to end the pain and a course of treatment to cure the disease. They wanted them in a hurry; we gave them both. And now most of the patients seem to be doing very nicely. Some of them are even well enough to throw their crutches at the doctor.

Save these people from their self-delusion

From a New York Times article that touches on the incredible contradiction of the people who volunteer for the Tea Party movement getting by on government benefits.

A Tea Partier named Jeff McQueen:

He blames the government for his unemployment. “Government is absolutely responsible, not because of what they did recently with the car companies, but what they’ve done since the 1980s,” he said. “The government has allowed free trade and never set up any rules.”

And here’s another one:

Mr. Grimes, for his part, is thinking of getting a part-time job with the Census Bureau.

NY v. Ill. Politics: The excitement never ends

What is more exciting: politics in (my home state of) Illinois or politics in (my adopted home state of ) New York?

Illinois: Rod Blagojevich co-stars in “Celebrity Apprentice” in two weeks, the lieutenant governor dropped out of the Ill. lieutenant governor primary about a month ago because he was arrested for domestic abuse, Republican Rep. Mark Kirk has a good shot at the senate (though hopefully not as good as Alexi Giannoulias)

New York: Embattled Gov. Paterson is out, Harold Ford is not running for Senate (relief), Rep. Charlie Rangel has been fingered for taking corporate-sponsored trips to the Caribbean (and was found in 2008 to rent four rent-stabilizied NYC apartments, like so many other well-off people in this city who certainly don’t need it), maybe Eliot Spitzer will run again and the mayor  of White Plains was arrested this past weekend on charges he beat his wife.

New York wins this round, if you’re one who likes political excitement at the expense of good government, that is. I’m willing to take nominations for other Illinois events, since I am not as in tune with goings-on there.

The Senate’s bipartisan jobs bill…

This is probably why it is bipartisan (New York Times):

The jobs bill emerging in the Senate is pathetic, both as a response to joblessness and as an example of legislation deemed capable of winning bipartisan support.

After reading Don Peck’s truly depressing article in the Atlantic about how a new jobless era will be particularly devastating for those in my generation, who Peck says are ill-equipped in temperament and in job skills to deal with the years to come, I think we absolutely need a jobs bill that invests in me and my peers. Although I think that contrary to what Peck says in the article, my peers are in fact going to be able to deal with the road ahead, he is right that this recession has hit our group especially hard, as evidenced by the many people I know who have been unemployed for not insignificant periods.

Franklin Roosevelt often said in the early 1930s, when describing his forthcoming New Deal policies, that unemployment sapped the human spirit. Now, while I wouldn’t mind a little more vacation time, FDR was right that the infinite time without direction or money that is unemployment, is dis-spiriting. He also favored spending stimulus money on creating jobs rather than extending unemployment benefits (the latter is what the current Senate job bill proposes), because he said creating jobs for people was better for their spirits than was keeping them on the dole (However, he was not, unlike Republicans of late and New Democrats, a man who busied himself with vilifying people on welfare).

The problem with the current Senate job proposals is that it does not empower people who want to work, but instead focuses on providing tax credits and tax breaks. The problem is, these measures will barely make a dent, as the NYT says:

An even bigger problem is that the hiring credit is unlikely to work as intended unless it’s paired with other federal support to generate and maintain consumer demand — mainly extended unemployment benefits and more fiscal aid to states. No matter what Congress does to lower the cost of labor, employers won’t hire unless they believe demand will be sufficient to sell whatever the business produces.

So why isn’t our jobs plan focused on employing people who want to work? Why is it targeted mainly at incentivizing small businesses with tax credits that may not even give them enough money to hire people? And why is Max Baucus chairing this thing???

What is David Frum talking about?

In this excerpt from the Fareed Zakaria show on CNN – which otherwise features a surprisingly good group, with Eliot Spitzer, Naomi Klein and Stephen Dubner — former Bush speech writer David Frum somehow gets away with arguing that regulators should not overreact by setting stricter rules on financial instruments because such rules would stifle innovation.

It is pretty hard to believe that someone is still saying with a straight face that unregulated risky financial instruments like mortgage-backed securities were innovative. But Frum does, and  he reveals the speciousness of his assertion by basically  saying that technology innovations of the last decade prove that the private sector is creating innovative products all around. Frum does not tell us how developments like the smart phone and internet search technology have anything to do with banking “innovations,” and that is not the kind of precise question that is usually asked of a commentator on a cable television show.

Frum goes on to cite  interest-only loans as an example of innovation in the financial sector. Although it is very arguable that an interest-only loan represents anything more than an old-fashioned giant gamble on the part of borrower and lender alike , even if one accepts it is innovative, I do not see how financial regulation would prevent this product from being marketed. Regulation on such a loan, which would probably require measures like vetting a loan applicant’s ability to pay that loan and better disclosure of the risk of the product, would not fundamentally change the product itself. Of course, stricter regulation might cause more loan applicants to get rejected, resulting in less potential profit for the bank underwriters. But stricter regulation would prevent potential foreclosures and home loan defaults. David Frum’s assertion that regulation stifles innovation in this case does not really hold water. It leads me to wonder whether he knows what he is talking about, or if he does know, whether he cares, and how he still gets away with making this argument in the first place.

Will the Chinese and the Americans meet in the middle?

It is maybe a cliche at this point that China is ascending to a world power. In the latest article on that subject, Paul Krugman bemoans the country’s trade policies. Many end-of-decade articles pointed out that while the U.S. and other developed nations had basically zero growth on their nations’ stock indexes, and what I think is an even more dismal decline in salary, the markets in the “BRIC” nations–Brazil, Russia, India and China–grew explosively. There is no way this kind of growth will sustain itself–it never does, historically–but for the time being, I think it is important to take a certain perspective toward the growth of the Chinese economy in particular, as a lay consumer.

Although our economy is arguably abysmal right now and China’s is growing, I think Americans still enjoy standards of living the likes of which the Chinese or most other nations do not know. We have larger houses, more cars and did have more disposable income. Unlike millions of other people, we were, for many years, able to buy things on credit without proving that we could pay it back anytime soon. The current growth of China and decline of America is in some ways a leveling, where the Chinese move closer to what we have in this country just as we lose it.

This is not to say that I think what is happening is deserved. It is more that we should appreciate that for many years we had very favorable lending policies, could buy electronics and retail items for cheap (in large part, because of China) and could drive cars and live in homes that have great environmental and monetary costs (because of these lending policies), which most other people in this world could not do. We were not encouraged to live within our means, either. I think this way of life was egged on by an unfortunate mentality.

That is the Wal-Mart mentality–I’m as guilty of it as the next guy–of believing you should be able to get quality for cheap in areas like domestic services, infrastructure, schools. When they invariably do not see quality, many Americans immediately resort to blaming the local government or state governments or schools and insisting that they be deprived yet more money, and a vicious cycle of spending cuts continues.

Governments are not totally innocent–dishonest politicians have brought on massive tax cuts and freezes (see California, Colorado) and then people wonder why we have more congestion, worse public transportation, struggling schools and greater college and graduate school loans to shoulder. The answer is because we do not pay for quality. Quality–from health care to education to infrastructure–costs money and must be maintained. It is of course a question of priorities as to whether we want quality in these areas and whether we can pay for it all, but I hope in 2010 the American spoiled-ness that thinks we should get everything for less (see Wal-Mart) dissolves as our new economic reality becomes more clear.

My wishlist for 2010 is a total re-prioritization in this economy that would probably look un-American, or at least, un-American circa 1980-2009. This would mean…

Increase revenue from upper-income people, those who are still doing well by this economy, by…

  • Raising taxes on the very wealthy. More tax brackets, so that millionaires and billionaires pay a greater percentage of their income to the IRS than people who make around 300K per year.
  • As a corollary: greater enforcement of tax evaders (Fortunately, this has already begun).
  • For the love of god, tax ibankers’ bonuses, as they are doing in Europe.

Spend to create jobs, improve infrastructure and maintain public services.

  • Use this money to create jobs in areas that improve infrastructure and invest in American economies of the future.
  • Also use money to help out states, which are having a terrible time balancing their budget and keeping basic social service programs.

Our leaders need to challenge us to overcome the selfish economic mantras of the ’80s-’00s. That will not be easy.

Currently reading: The New Deal, the Real Estate Craze and the Mad Men Era

The economy has me reading about what exactly constituted the New Deal and its signature program the Works Progress Administration in Nick Taylor’s American Made: The Enduring Legacy of the WPA (When FDR Put the Nation to Work).

Before this, I finished the sprawling late-’90s novel Man in Full by Tom Wolfe, which depicts the fall of a grandiose real estate developer in Atlanta. Lately, I have found that reading things from the late ’90s evokes an almost foolishly  optimistic and unaware time, and this book’s depiction of a developer’s gluttony and false sense of self is more cheerful than grim. It is still compelling to read about the seeds of the kind of avarice we are today accustomed to from the latest news reports on investment banks profiting from the foreclosure crisis .

I also just began Kitty Kelley‘s biography of Frank Sinatra, His Way, which gives the exhaustive, warts-and-all account that she is known for. I picked up the book after watching the somewhat vapid musical High Society, which Sinatra starred in opposite Grace Kelley and Bing Crosby. Frank’s marriage to first wife Nancy is straight out of Mad Men (well, Mad Men, more likely was inspired by marriages like theirs). He is a consistent philanderer who is rarely home, and she is a jealous wife who nonetheless acquiesces to her role and wants above all else to prevent Frank from divorcing her. It is the kind of dispiriting story that is best read without attachment to either person.

But back to the New Deal book. As Taylor says on his website, “The WPA symbolized an impulse of government that before the 2008 election was under severe attack. But that impulse toward generosity and human dignity is poised to make a comeback.”

American Made describes a program that was arrived at not only because the unemployment rate was 25 percent when Franklin Delano Roosevelt entered office in March of 1933 but also because he and the chief administrators of the program made no bones about the fact that the government would create a comprehensive jobs program. There was no love lost between them and those who FDR referred to as “economic royalists.”

Though it had its share of inefficiencies and infighting, the good of the New Deal and Works Progress Administration seems to far outweigh the flaws. It left the nation with national facilities, bridges, parks, schools, art and civic buildings that have sustained us since. Although I’m pessimistic a similar program will be enacted soon, what with the prevailing skepticism of powerful people toward the government’s role in job creation, convincing arguments have been made that no one else will.

Right now, the Obama administration seems to be averse to political risk. As Paul Krugman says in a recent blog post about Obama’s administration:

[T]hey have to propose new initiatives that might not pass, and be prepared to run against the do-nothing Republicans if the initiatives fail.

Now consider what FDR said during the 1932 election, as quoted in American Made:

The country needs and unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something.

Of course, things have changed under Obama

Like many people, I hope to see President Obama, his administration and a Democratic Congress achieve reform of financial regulations and health insurance, but I think it is truly preposterous of anyone to suggest Obama has not done much or for people to get their panties in a bunch over him winning the Nobel Peace Prize. As my friend said, it’s as if he awarded it to himself.

It’s also worth recounting how much has changed since George W. Bush was president. Remember when George W. Bush was president. Remember what that was like??

A few things that would not have happened one year ago:

Proposed rules to limit greenhouse gases from industrial plants would not have been introduced.

A federal “no-match” rule that threatened employers with prosecution if they continued to employ a person with inconsistencies between their social security and employment records would not have been rescinded.

California would not be allowed to enforce stricter standards for greenhouse gas emissions after the EPA grants it a waiver of preemption under the Clean Air Act. (California had fought the Bush administration EPA on this for years).

The EPA would not take a closer look at mining permits as part of a stricter review of surface mining projects to ensure that they comply with the Clean Water Act.

(Seriously, just do a google news search of “EPA” to see how much has changed in the past nine months).

Rich people who put their money overseas to evade taxes would not be faced with the threat of prosecution if they did not own up and pay fines, providing the U.S. government with an untold amount of revenue.

One could not walk through Bedford-Stuyvesant in Brooklyn and see photos of the sitting president of the United States in nearly every store.

The president of the United States would not have even been a contender for the Nobel Peace Prize.

There are probably many other “administrative” decisions, rules and regulations that have been changed since January 20, 2009, most that we do not even realize, and whose impact will at least initially go little noticed. However, the good kind of change is one that incrementally betters our lives rather than jolts us suddenly. That is change we can believe in.

Remember…Bush era smugness?

I’m reading an interesting albeit aggravating article in GQ by a former George W. Bush speechwriter named Matt Lattimer who has decided that now is the time to come out and admit that the former president’s financial policymakers did not know what they were doing and that working on behalf of the Republic revolution and the Bush White House was a disappointment, “not at all what I envisioned.”

And yet, this guy still makes room for a jab at Jimmy Carter, which is pretty funny, considering Bush appears to have been ten times worse a president than Carter. Carter for all his faults, inherited a bad economy along with the after-effects of bloated defense spending on the unpopular Vietnam war.  Plus, he happened to be in office during an oil crisis well beyond his own control at a time when the United States had fewer sources of oil than we do today.

Bush, on the other hand, inherited a relatively stable economy–the tech bubble had burst, but it certainly did not bring down the whole economy. There were no major defense issues facing the United States when Bush became president, and the U.S. actually had a budget surplus. It seems really hard to remember that fact, but when Bill Clinton left office, things were pretty good.

So maybe, maybe, this Bush speechwriter could show a bit of humility about his own disastorous former boss, but no:

First the administration had had to seek out Carter’s help, and then the White House had been schooled on the economy by the president who’d brought you gas lines, an energy crisis, and high unemployment.

Why don’t they just start by saying “I’m sorry, America”?


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