Saturday, July 21, 2012
My fellow Americans: WAKE UP!
Harder for Americans to Rise From Lower Rungs
By JASON DePARLE
WASHINGTON — Benjamin Franklin did it. Henry Ford did it.
And American life is built on the faith that others can do it, too: rise from
humble origins to economic heights. “Movin’ on up,” George Jefferson-style, is
not only a sitcom song but a civil religion.
But many researchers have reached a conclusion that turns
conventional wisdom on its head: Americans enjoy less economic mobility than
their peers in Canada and much of Western Europe. The mobility gap has been
widely discussed in academic circles, but a sour season of mass unemployment
and street protests has moved the discussion toward center stage.
Former Senator Rick Santorum of Pennsylvania, a Republican
candidate for president, warned this fall that movement
“up into the middle income is actually greater, the mobility in Europe, than it
is in America.”
National Review, a conservative thought leader, wrote that
“most Western European and English-speaking nations have higher rates of
mobility.” Even Representative Paul D. Ryan, a Wisconsin Republican who argues
that overall mobility remains high, recently wrote that “mobility from the very
bottom up” is “where the United States lags behind.”
Liberal commentators have long emphasized class, but the
attention on the right is largely new.
“It’s becoming conventional wisdom that the U.S. does not
have as much mobility as most other advanced countries,” said Isabel V.
Sawhill, an economist at the Brookings Institution. “I don’t think you’ll find
too many people who will argue with that.”
One reason for the mobility gap may be the depth of American
poverty, which leaves poor children starting especially far behind. Another may
be the unusually large premiums that American employers pay for college
degrees. Since children generally follow their parents’ educational trajectory,
that premium increases the importance of family background and stymies people
with less schooling.
At least five large studies in recent years have found the
United States to be less mobile than comparable nations. A project led
by Markus Jantti, an economist at a Swedish university, found that 42 percent
of American men raised in the bottom fifth of incomes stay there as adults.
That shows a level of persistent disadvantage much higher than in Denmark (25
percent) and Britain (30 percent) — a country famous for its class constraints.
Meanwhile, just 8 percent of American men at the bottom rose
to the top fifth. That compares with 12 percent of the British and 14 percent
of the Danes.
Despite frequent references to the United States as a
classless society, about 62 percent of Americans (male and female) raised in
the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility
Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom
fifth stay in the bottom two-fifths.
By emphasizing the influence of family background, the
studies not only challenge American identity but speak to the debate about
inequality. While liberals often complain that the United States has unusually
large income gaps, many conservatives have argued that the system is fair because
mobility is especially high, too: everyone can climb the ladder. Now the
evidence suggests that America is not only less equal, but also less mobile.
John Bridgeland, a former aide to President George W. Bush
who helped start Opportunity Nation, an effort to seek policy solutions,
said he was “shocked” by the international comparisons. “Republicans will not
feel compelled to talk about income inequality,” Mr. Bridgeland said. “But
they will feel a need to talk about a lack of mobility — a lack of access to
the American Dream.”
While Europe differs from the United States in culture and
demographics, a more telling comparison may be with Canada, a neighbor with
significant ethnic diversity. Miles Corak, an economist at the University of
Ottawa, found that just 16 percent of Canadian men raised in the bottom tenth
of incomes stayed there as adults, compared with 22 percent of Americans.
Similarly, 26 percent of American men raised at the top tenth stayed there, but
just 18 percent of Canadians.
“Family background plays more of a role in the U.S. than in
most comparable countries,” Professor Corak said in an interview.
Skeptics caution that the studies measure “relative
mobility” — how likely children are to move from their parents’ place in the
income distribution. That is different from asking whether they have more
money. Most Americans have higher incomes than their parents because the
country has grown richer.
Some conservatives say this measure, called absolute
mobility, is a better gauge of opportunity. A Pew study found that 81 percent of
Americans have higher incomes than their parents (after accounting for family
size). There is no comparable data on other countries.
Since they require two generations of data, the studies also
omit immigrants, whose upward movement has long been considered an American
strength. “If America is so poor in economic mobility, maybe someone should
tell all these people who still want to come to the U.S.,” said Stuart M.
Butler, an analyst at the Heritage Foundation.
The income compression in rival countries may also make them
seem more mobile. Reihan Salam, a writer for The Daily and National Review
Online, has calculated that a Danish family can move from the 10th percentile
to the 90th percentile with $45,000 of additional earnings, while an American
family would need an additional $93,000.
Even by measures of relative mobility, Middle America
remains fluid. About 36 percent of Americans raised in the middle fifth move up
as adults, while 23 percent stay on the same rung and 41 percent move down,
according to Pew research. The “stickiness” appears at the top and bottom, as
affluent families transmit their advantages and poor families stay trapped.
While Americans have boasted of casting off class since Poor
Richard’s Almanac, until recently there has been little data.
Pioneering work in the early 1980s by Gary S. Becker, a
Nobel laureate in economics, found only a mild relationship between fathers’
earnings and those of their sons. But when better data became available a
decade later, another prominent economist, Gary Solon, found the bond twice as
strong. Most researchers now estimate the “elasticity” of father-son earnings
at 0.5, which means that for every 1 percent increase in a father’s income, his
sons’ income can be expected to increase by about 0.5 percent.
In 2006 Professor Corak reviewed more than 50
studies of nine countries. He ranked Canada, Norway, Finland and Denmark as the
most mobile, with the United States and Britain roughly tied at the other
extreme. Sweden, Germany, and France were scattered across the middle.
The causes of America’s mobility problem are a topic of
dispute — starting with the debates over poverty.
The United States maintains a
thinner safety net than other rich countries, leaving more children vulnerable
to debilitating hardships.
Poor Americans are also more likely than foreign peers to
grow up with single mothers. That places them at an elevated risk of
experiencing poverty and related problems, a point frequently made by Mr.
Santorum, who surged into contention in the Iowa caucuses. The United States
also has uniquely high incarceration rates, and a longer history of racial
stratification than its peers.
“The bottom fifth in the U.S. looks very different from the
bottom fifth in other countries,” said Scott Winship, a researcher at the
Brookings Institution, who wrote the article for National Review. “Poor
Americans have to work their way up from a lower floor.”
A second distinguishing American trait is the pay tilt
toward educated workers. While in theory that could help poor children rise —
good learners can become high earners — more often it favors the children of
the educated and affluent, who have access to better schools and arrive in them
more prepared to learn.
“Upper-income families can invest more in their children’s
education and they may have a better understanding of what it takes to get a
good education,” said Eric Wanner, president of the Russell Sage Foundation,
which gives grants to social scientists.
The United States is also less unionized than many of its
peers, which may lower wages among the least skilled, and has public health
problems, like obesity and diabetes, which can limit education and employment.
Perhaps another brake on American mobility is the sheer
magnitude of the gaps between rich and the rest — the theme of the Occupy Wall
Street protests, which emphasize the power of the privileged to protect their
interests. Countries with less equality generally have less mobility.
Mr. Salam recently wrote that relative mobility “is
overrated as a social policy goal” compared with raising incomes across the
board. Parents naturally try to help their children, and a completely mobile
society would mean complete insecurity: anyone could tumble any time.
But he finds the stagnation at the bottom alarming and warns
that it will worsen. Most of the studies end with people born before 1970,
while wage gaps, single motherhood and incarceration increased later. Until
more recent data arrives, he said, “we don’t know the half of it.”
Friday, July 20, 2012
U.S. recession's other victim: public universities
By Jilian Mincer
Reuters) - For generations, most college-bound Americans
paid reasonable fees to attend publicly financed state universities.
But the bedrock of that system is fracturing as
cash-strapped states slash funding to these schools just as attendance has
soared. Places like Ohio State, Penn State and the University of Michigan now
receive less than 7 percent of their budgets from state appropriations.
As a result, public universities -- which historically have
graduated the majority of U.S. college students -- are eliminating programs, raising
tuition and accepting more out-of-state students, who typically pay
significantly higher rates.
The upshot of it all? Students face greater competition for
admission, significantly higher tuition bills and bigger debt loads upon
graduation.
"I'm concerned about the costs of these
universities," said Mike Eskew, a former CEO of United Parcel Service, who
in 1972 graduated from Indiana's Purdue University without loans. "Those
institutions helped build this country. For people like me who grew up in small
towns, they were the ladder to the world."
The state cutbacks also mean students are attending larger
classes, frequently taught by part-time professors earning dismal salaries. In
2009, less than a quarter of all university faculty were full-time compared
with 45 percent in 1975, according to the American Association of University
Professors.
"The quality of education is a continuous worry and
focus," said Peter McPherson, president of the Association of Public and
Land-grant Universities and former president of Michigan State University.
"As state support has been reduced, states have been looking more to
universities even as they're cutting back."
Despite the decreasing
funding, he said, "You need to have these institutions feel as if they're part
of the state."
STATES TIGHTEN THE SPIGOT
State and local spending for public university students
dropped to a 25-year-low in 2011, the most recent inflation-adjusted numbers
available. On average, states provided $6,290 per student enrolled at a public
institution compared with $8,025 in 1986, according to the State Higher
Education Executive Officers.
Some of the biggest cuts have come since the 2007-2009 U.S.
recession as states have faced massive shortfalls. The cuts would have been
deeper if states did not have access to federal dollars through President
Obama's economic stimulus program.
"In tough economic times, some people think it is
easier to cut funding to higher education because it has a tuition revenue
stream that K-12 doesn't have," said Jim Palmer, a professor of higher
education at Illinois State University. "At some point tuition will get
too high."
The shift has been dramatic. Last year, Michigan provided
the University of Michigan a mere 4.5 percent of its budget. The school's $7.8
billion endowment funded $266 million, almost as much as it received in state
support.
Despite more than $235 million in spending cuts and
cost-saving measures to non-academic areas since 2004 -- ranging from limiting
the colors of Post-it notes to installing dual flush toilets to save water --
the University of Michigan is fortunate because it has a big endowment.
"We saw this coming," said Rick Fitzgerald, a
university spokesman. "We made strategic cuts ahead so we weren't pushed
into doing things we didn't want to do."
Other schools are not so lucky. New Hampshire cut funding
for its university system by about half in 2011-12, and the University of New
Hampshire now receives only 7 percent of its funding from the state compared
with 32 percent 20 years ago.
As a result, the school followed a similar game plan taken
by many schools. It froze hiring, laid off workers, hiked tuition and accepted
more out-of-state students. The percent of out-of-state students is expected to
climb in the new academic year to 56 percent, compared with 47 percent last
year and 39 percent in 1991.
PAIN IS GREATEST FOR STUDENTS
But for all the pain felt at the universities as state
funding shrinks, it is families that bear the brunt of the burden. Students
face rising costs and have taken on more and more debt in pursuit of higher
education.
Tuition and fees at public, four-year colleges have jumped
by more than 70 percent on average over the last decade. Those costs hit $8,240
in 2011-12, up from $4,790 in 2001-02, according to The College Board. Between
2008 and 2010, alone, those costs climbed by 15 percent because of state budget
cuts, according to the data released in June by the Department of Education.
Even with additional financial aid at many schools, students
are graduating with even more debt -- an average of about $28,700, according to
Mark Kantrowitz, publisher of FinAid.org.
Alicia Halberg, 22, was scraping by at the University of
Washington in Seattle with help from her grandmother and a 24-hour-a-week job
at a local candy story until tuition and fees soared almost 20 percent her
senior year.
"Everything went up every year, and it made it pretty
tough," said Halberg, who had to borrow about $8,000. But she says she's
luckier than many of her friends, who'll be attending an extra year of college
because crowded classes made it impossible for them to finish in four years.
"It's really depressing because it shows our state isn't investing in our
future," she said.
THE LURE OF FOREIGN STUDENTS
As schools grapple with the hard realities of less funding
from their states, some are looking overseas for students willing to pay the
much heftier out-of-state tuition rates.
The University of Missouri has struggled to adjust as its
appropriation from the state fell to $165 million in 2012, down almost 15
percent from 2001 at the same time that its enrollment climbed by 45 percent to
33,805.
Tuition accounted for 60 percent of its operating funds in
2012, up from roughly 25 percent in 1990, one reason the University of Missouri
has hired several recruiters in recent year, including someone to find
prospective students from overseas.
"We are focusing on countries with a rising middle
class and good schools," said Ann Korschgen, enrollment management vice
provost at the university. That includes places like Brazil, Korea, China,
India and Saudi Arabia.
It's just a sign of the times, say those who have remained
in public education.
"It's really kind of sad because we're the land grant
school," says Mary Jo Banken, a spokeswoman for the University of
Missouri. "The state does not adequately fund us so we have to look for
funding elsewhere."
(Editing by Walden Siew, Lauren Young, Leslie
Adler)
Pathos of the Plutocrat
By PAUL KRUGMAN
Published: July 19, 2012
[…]
It’s no secret that, at this point, many of America’s
richest men — including some former Obama supporters — hate, just hate,
President Obama. Why? Well, according to them, it’s because he “demonizes”
business — or as Mitt Romney put it earlier this week, he “attacks success.”
Listening to them, you’d think that the president was the second coming of Huey
Long, preaching class hatred and the need to soak the rich.
Needless to say, this is crazy. In fact, Mr. Obama always
bends over backward to declare his support for free enterprise and his belief
that getting rich is perfectly fine. All that he has done is to suggest that
sometimes businesses behave badly, and that this is one reason we need things
like financial regulation. No matter: even this hint that sometimes the rich
aren’t completely praiseworthy has been enough to drive plutocrats wild. For
two years or more, Wall Street in particular has been crying: “Ma! He’s looking
at me funny!”
Wait, there’s more. Not only do many of the superrich feel
deeply aggrieved at the notion that anyone in their class might face criticism,
they also insist that their perception that Mr. Obama doesn’t like them is at
the root of our economic problems. Businesses aren’t investing, they say,
because business leaders don’t feel valued.
Mr. Romney repeated this line, too,
arguing that because the president attacks success “we have less success.”
This, too, is crazy (and it’s disturbing that Mr. Romney
appears to share this delusional view about what ails our economy). There’s no
mystery about the reasons the economic recovery has been so weak. Housing is
still depressed in the aftermath of a huge bubble, and consumer demand is being
held back by the high levels of household debt that are the legacy of that
bubble. Business investment has actually held up fairly well given this
weakness in demand. Why should businesses invest more when they don’t have
enough customers to make full use of the capacity they already have?
But never mind. Because the rich are different from you and
me, many of them are incredibly self-centered.
They don’t even see how funny it
is — how ridiculous they look — when they attribute the weakness of a $15
trillion economy to their own hurt feelings. After all, who’s going to tell
them? They’re safely ensconced in a bubble of deference and flattery.
Unless, that is, they run for public office.
Like everyone else following the news, I’ve been awe-struck
by the way questions about Mr. Romney’s career at Bain Capital, the
private-equity firm he founded, and his refusal to release tax returns have so
obviously caught the Romney campaign off guard. Shouldn’t a very wealthy man
running for president — and running specifically on the premise that his
business success makes him qualified for office — have expected the nature of
that success to become an issue? Shouldn’t it have been obvious that refusing
to release tax returns from before 2010 would raise all kinds of suspicions?
By the way, while we don’t know what Mr. Romney is hiding in
earlier returns, the fact that he is still stonewalling despite calls by
Republicans as well as Democrats to come clean suggests that it could be
something seriously damaging.
Anyway, what’s now apparent is that the campaign was
completely unprepared for the obvious questions, and it has reacted to the
Obama campaign’s decision to ask those questions with a hysteria that surely
must be coming from the top. Clearly, Mr. Romney believed that he could run for
president while remaining safe inside the plutocratic bubble and is both
shocked and angry at the discovery that the rules that apply to others also
apply to people like him. Fitzgerald again, about the very rich: “They think,
deep down, that they are better than we are.”
O.K., let’s take a deep breath. The truth is that many, and
probably most, of the very rich don’t fit Fitzgerald’s description. There are
plenty of very rich Americans who have a sense of perspective, who take pride
in their achievements without believing that their success entitles them to
live by different rules.
But Mitt Romney, it seems, isn’t one of those people. And that discovery may be an even bigger issue than whatever is hidden in those tax returns he won’t release.
Sheriff Joe Arpaio, Arizona's 'Bull' Connor
With his racial-profiling policing, Maricopa County's
sheriff and his thugs in badges recall the civil rights violators of the 1960s
By Peter Morales, guardian.co.uk
Sheriff Joe Arpaio faces legal action, yet again, on charges that he
has violated the rights of Latino citizens in Maricopa County, Arizona.
Already, the county has paid out something like $50m in damages over the years.
The American Civil Liberties Union (ACLU) and the Mexican American Legal
Defense and Education Fund (MALDEF) are bringing suit in federal court on
behalf of several plaintiffs.
Poor Joe has become something of a caricature of late. He is
a symbol of mean-spiritedness, cruelty and racism. He proudly promotes his
actions designed simply to humiliate prisoners. The US department of justice
has accumulated a mountain of evidence against him, yet drags its legal feet
while the racial profiling and arrests continue.
Less than a month ago, I, along with several other religious
leaders, were treated to a tour of Arpaio's infamous "Tent City"
jail. There, prisoners are kept in tents that reach 130F heat in the Arizona
summer.
The other religious leaders, including the Rev Geoffrey Black, president of the United Church of Christ and the Rev Dr William Schulz, president of the Unitarian Universalist Service Committee (and former president of Amnesty International), and I were appalled. The Maricopa sheriff's department has become a collection of thugs with badges.
The other religious leaders, including the Rev Geoffrey Black, president of the United Church of Christ and the Rev Dr William Schulz, president of the Unitarian Universalist Service Committee (and former president of Amnesty International), and I were appalled. The Maricopa sheriff's department has become a collection of thugs with badges.
Several thousand of us – Unitarian Universalists from across
the country working mano en mano with local activists and religious
leaders – held a vigil outside Tent City last month. It was profoundly
moving to see a sea of thousands of people wearing their "Standing on the
Side of Love" T-shirts, waving candles and singing in protest. They are
taking that determination to work for justice and compassion across the
country.
What is happening in Maricopa County must be seen to be
believed. I am ashamed that this is happening in my country, that the people of
Maricopa County continue to re-elect this tyrant, and that the legal system of
my country does little more than scold like an inept parent.
Two years ago, I was arrested along with more than 20 fellow
ministers from across the country and a number of local activists. We were
protesting Arpaio's "sweeps" in defiance of the ruling of a federal
judge. A year ago, I stood trial for that act of civil disobedience. During
that trial, I saw deputies of the Arpaio's perjure themselves so blatantly (and
artlessly) that the judge disregarded their testimony.
While I applaud the courage of MALDEF and the ACLU, and wish
them every success, I am more convinced than ever that the fundamental issues
before us are not legal. Arpaio continues to break the law with impunity not
because there is a lack of conclusive evidence. Arpaio continues unchecked
because some people are afraid and because decent people who know better are
timid. This is what always occurs when tyrants rule.
What is truly frightening is that the fear and racism that feeds
Arpaio is not limited to Maricopa County, or to Arizona. Arpaio is a hero to
the extreme right. Arizona's law is being copied elsewhere.
No American my age can watch what is happening in Arizona
and not have flashbacks to Alabama and Mississippi of the 1960s and law
enforcement officials like the infamous "Bull" Connor. I would
think no European can see sweeps and racial profiling and not recall images of
the 1930s.
No one should be treated the way Arpaio treats people. No
one.
I hope this lawsuit is successful. More importantly, I pray
that people will turn away from fear and demagogues. I pray that we will see
our common humanity and embrace our common future.
Foreclosure crisis hits older Americans hard
JOSH LEDERMAN, Associated Press
WASHINGTON (AP) — More than 1.5 million older Americans
already have lost their homes, with millions more at risk as the national
housing crisis takes its toll on those who are among the worst positioned to
weather the storm, a new AARP report says.
Older African Americans and Hispanics are the
hardest hit.
"The Great Recession has been brutal for many older
Americans," said Debra Whitman, AARP's policy chief. "This shows
that home ownership doesn't guarantee financial security later
in life."
Even working two jobs hasn't been enough to allow Jewel
Lewis-Hall, 57, to make her monthly mortgage payments on time. Her husband has
made little money since being laid off from his job at a farmer's market, and
Lewis-Hall said her salary as a school cook falls short of what she needs to
make the payments on her home in Washington.
Lewis-Hall and her husband have been making their payments
late for about a year, but panic didn't set in until recently, when the word
"foreclosure" showed up in a letter from the bank.
"You're used to living a certain way, but one thing
leads to another," Lewis-Hall said. "It's not like I have a new car
or anything. I'm driving one from 1991."
According to AARP:
—About 600,000 people who are 50 years or older are in foreclosure.
—About 625,000 in the same age group are at least three
months behind on their mortgages.
—About 3.5 million — 16 percent of older homeowners — are
underwater, meaning their home values have gone down and they now owe more than
their homes are worth.
AARP said that over the past five years, the proportion of
loans held by older Americans that are seriously delinquent jumped by more than
450 percent.
Homeowners who are younger than 50 have a higher rate of
serious delinquency than their older counterparts. But the rate is increasing
at a faster pace for older Americans than for younger ones, according to AARP's
analysis of more than 17 million mortgages.
Americans who are 50 or older are hard-pressed to recover
from the collapse of the housing market that started in 2006 and was compounded
by the recession that started in 2007. Eight in 10 of them own homes, but many
live on fixed incomes, have little savings or have already burned through much
of their retirement savings. They also have fewer working years left to build
back what they may have lost.
And those who are forced to re-enter the workforce often
find they can't command the same salary that they did in the past.
Older minorities are facing foreclosure rates that are
almost double those faced by white borrowers of the same age, mirroring a
nationwide trend seen in other age groups as well. Among older African
Americans, 3.5 percent were in foreclosure at the end of 2011, and the rate was
3.9 percent for Hispanics. Just 1.9 percent of white homeowners were
in foreclosure.
The issue has become so dire in Rep. Elijah Cummings'
Maryland district that he has assigned one of his 20 staffers to work full time
to help struggling homeowners, and his office holds regular foreclosure
prevention workshops. He said the federal government can do its part by
promoting principal reduction and loan modification programs.
"These are people who in many instances have never
missed a payment in 20 years," Cummings, a
Democrat, said in an interview.
"You see grown men crying because of the potential loss of
a home."
Among older homeowners, those who are 75 or older are in the
worst shape when it comes to foreclosures, the report showed. In 2007, one out
of every 300 homeowners 75 or older was in foreclosure. Five years later, about
one in 30 face that same fate.
Many of those oldest homeowners may have lost income they
were counting on, such as the retirement benefits of a deceased spouse. In the
meantime, their mortgage payments have stayed the same.
The situation is likely to get worse before it gets better,
AARP officials predicted, because of a housing market that is recovering at a
snail's pace.
"This crisis is far from over," Whitman said. "We need to think about more creative solutions now that we have this data."
quote from It Can't Happen Here, by Sinclair Lewis
"But he saw too that in America the struggle was
befogged by the fact that the worst Fascists were they who disowned the word
'Fascism' and preached enslavement to Capitalism under the style of
Constitutional and Traditional Native American Liberty."
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