November 13, 2105--Uber

In Aftershock: The Next Economy & America's Future I think it was Robert Reich who wrote about how the middle class has struggled to adapt to the new service economy by a variety of responsive strategies.

In the old economy, with well-paying manufacturing jobs economically anchoring millions of families, it was men primarily who worked in factories and offices while women stayed at home and worked there to maintain the household and assume primary responsibility for raising the children.

At that time, for most the jobs available to middle-class men were enough to sustain their families and provided enough so the next generation could do better than their parents.

But then the compounding affect of inflation and the decline in the number of these good jobs made it impossible to maintain families' life style with only one job and only one person working outside the home.

So men added part time jobs to help them keep even. And more and more women began to work outside the home and struggled both to do that and continue to take primary responsibility for childcare.

But 10-15 years ago this also began not to work.

To compensate families next turned to debt financing.

The one appreciated asset many families had was the rising value of their homes. Those who owned one. And so to maintain their financial status millions refinanced their dwellings. The loose lending environment was such that it was easy to get financing for more than real estate was worth, and families used that extra money--extra debt--to finance their lives and life styles.

Then everything collapsed and millions found themselves under water.

Looking around, they couldn't figure out what to do. Some decided to defer or even not have children. Others turned to the underground economy. More depended on various forms of government subsidies.

And yet others found ways to turn their only two remaining assets into income--

They earned extra money by renting their homes, apartments, and spare bedrooms via Web-based operations such as airbnb and turned their cars into taxis via Uber.

When this no longer works to keep families afloat, what will be next?

September 5, 2013--Smart Piece From a Good Friend

I asked a good friend what he would do about Syria if he were commander-in-chief. As always with him, I got much more than I asked for. And, as usual, it was very smart--

I'm a little light on answers here. I think it is much more complicated now by Obama's red line that it was before. I'm also trying to sort out how to approach this. 

If you look at it from where we are right now, where we have a lot of involvement in the Middle East behind us, even with a lot of shaky results, the choices -- bomb or not -- look one way, within that framework. But if you think that such a level of involvement is too much or otherwise ineffective or ill advised, then you get different questions. What exactly should the US be doing outside its borders, anyway? As far into Middle Eastern affairs as we are now, it is harder to take a step back, much harder than it would have been even 10 years ago. I think Obama has produced a situation surrounding Syria with no really good options. 

My own preferences have long been running toward a much more modest role for the US in world affairs, and I'm very skeptical whether an attack has any real strategic effect in this environment. Chemical weapons are horrible, but I think more and more that we're better served leaving other countries to their own devices and horrors, rather than trying to intervene in conflicts where we can't even identify the players and issues. It's hard to watch a government kill its civilians -- this all started with peaceful, Cairo-style Arab Spring demonstrations -- but I don't feel comfortable with an intervention. Obama hasn't made a strong case for the strategic benefits of intervening or even that it would change anything in Syria. 

Another part of this whole development over many decades of involvement via the Executive branch is the terrible effect this has had on democracy in America. The Executive has seized a lot of power over a long period, and Congress has given away its prerogatives to the Executive with both hands. It can't seem to surrender its powers fast enough, even as many there rattle on and on about the sacred and perfect Constitution we are supposed to have. 

We seem to have built a national security state of huge proportions, capable of wiping out any and all parts of the Bill of Rights without even a challenge, taking us into wars on its own motion. The security/terrorism threat -- back to the Middle East -- has been the basis for changing how this country really works. Start adding some of the developments coming from corporate influence in politics and elsewhere into the mix, and the country starts to look way different from what we want to think. 

The security state has been bankrupting us, hurting the economy, damaging political freedom at home, and now has us trying to figure out whether another Middle East intervention is essential or not. Less empire, more focus on international trade and investment systems, standards issues, resolution of conflict, a better model for social justice at home -- that all seems more productive to me.

May 13, 2013--Student Debt

I know this idea is going nowhere; but, if we want to spend a trillion dollars wisely, we should forgive all undergraduate student debt.

It totals one trillion and the average debt burden for college gradates is $24,000. Typically, those fortunate enough to have well-paid jobs and thus able to pay back what they owe, take at least 15 years to do so. Of the 37 million former college students who have amassed debt, fully 11 million of them are between 30 and 39.

To make matters worse, unless Congress acts (and how likely is that?), interest rates on these loans will double July 1st to 6.8 percent. At a time when a mortgage rates are only 3.0 percent and banks can borrow money from the Fed for less than one percent (actually, about 0.75 percent). Senator Elizabeth Warren has proposed legislation that would set the student loan rate at the same level as the bank-borrowing rate. But we know where that is going--down the filibuster chute.

In the meantime, young people, overwhelmed by debt, are not marrying, not having children, not buying houses, and generally not spending money. They don't have any. And as a result, the economy, which continues to falter, is missing the boost that young people's spending would provide.

To forgive student debt, yes, would be by definition unfair. Why let these all of these young people off the hook while not doing very much to help, say, those with under-water mortgages? Unless we want to set up a big bureaucracy to means-test whose loans should be forgiven and who should pay (which in itself would cost a fortune) some who can pay would get away with a taxpayer subsidy they don't need or deserve.

But for once, about something this important, why don't we just do the right thing, and, forgetting all the caveats, get this mammoth problem out of the way and in the process release recent graduates from this usurious burden and help them get on with their lives and, in so doing, become taxpayers rather than dependents holed up, living in their childhood bedrooms or their parents' garages.

A final thought--who would be the "losers"? Who would have to "eat" the nearly $1.0 trillion in forgiven debt?

Basically, the banks who did the loaning. The same banks which for decades made hundreds of billions in interest that was guaranteed by U.S. taxpayers. The same taxpayers who will have to assume the cost of any unpaid interest if students default on paying back what they borrowed. Which, again because of the stalled economy, is more and more common. The banks that taxpayers bailed out a few years ago after they caused the Great Recession. All they would need to do would be to write off this debt the same way they write off foreclosed mortgages.