Category Archives: Economics That Matter

A Generation Hobbled

I found this article  an interesting confirmation of the times we live in. According to to ”A Generation Hobbled by the Soaring Cost of College”, by Andrew Martin and Andrew W. Lehren, 94% of students who earn a bachelors degree borrow to pay for higher education. For all borrowers, the average debt was $23k, with 10% owing more than $50K.

According to the article, Ohio Northern and many of Ohio’s more than 200 colleges, its graduates carry some of the highest debts in the country. Rajeev V. Date, Deputy Director of the Consumer Financial Protection Bureau compares excessive to risky mortgages that helped bring the economy down.

College marketing targets the hopes, dreams and desires of students and families looking to education as a leg up, with strategies not terribly different from banks who bet against borrowers by securitizing mortgages. And despite that enrollments are up in state colleges, public subsidies have been cut, which threatens the idea of education being a foundation for low and middle class people.

Higher profile private schools, with a better capacity for financial aid are also leaving an untenable gap for potential students. NYU, my alma mater, was recently cited for rendering attendance at its Tisch School of the Arts a near impossible dream for middle class students.  One student hit the lotto of qualifying for admission, but found it impossible to attend.

People who do actually graduate from NYU join the ranks of the most heavily indebted graduates in history. ($11k higher than the national average) One such graduate, Lindsey, found that she will be 54 years old before her debt is repaid.

So the question is, can a basic college education, even from a prestigious school like NYU,  catapult a student into a higher socioeconomic register?

The simple answer is, not so much right now and very likely not at all going forward, because of two reasons. First, most low and middle income academically promising students, can’t get over the initial hurdle of cost. According to Thomas B. Edsall’s, “Production of Privilege”, scholarships and grants based on need have dramatically declined relative to costs. According to Education Week, Pell grants have gone from covering 99% at a community college and 77% at a private college to 36% and 15% respectively. Further, according to a 2005 College Board study,  there has been a distinct shift by colleges to attract more affluent students who score high on standardized tests, rather than rewarding students with high scores, but who come from lower income groups. Second, as Lindsey the NYU Film graduate who incurred $156k in debt found, the current job market which has downsized and outsourced jobs and wages, requires 2 jobs to barely make ends meet.
Many college graduates who form a core constituency in the Occupy Wall Street movement now realize that their grasp on “The American Dream” has been significantly diminished.  Not only are there barriers to entry to higher education, but now, even being armed with a college degree represents a clear burden when facing diminished job prospects and lowered wages. Over time these circumstances will, despite studies that show college educated people are significantly better paid, diminish the hope for upward mobility through education in low and middle income demographics.

Not mentioned in this conversation, are the forgotten efforts to encourage underachieving students to excel. In effect, our higher education system and our funding priorities seems to reinforcing class stereotypes against those seeking upward mobility.

Clearly this is not the America I grew up in.

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“A House is not just a Home”

That “A House is not just a Home” resonates for more reasons that the wonderful Luther Vandros song. The house we live in, is often far more than a location to which mail is delivered. It creates memories that will ultimately last a lifetime along with family, friends and the communities surrounding the places we call home.

Of course, a significant back story typically begins long before one can idealize about the benefits of owning one’s own home or renting. Issues like kids having their own rooms, wanting room to entertain or having relatives or friends staying over, being financially stable, finding the right house in an affordable neighborhood are factors. Being able to secure financing and a mortgage is key. Honest and sustained financial sacrifice is where it starts.

These are the circumstances, often known as the “rights of passage” along the path to having a share of “The American Dream”. Once a share of The Dream is secured, it often becomes a matter of managing the accrued resources of home ownership to make The Dream manifest.

Home ownership can be a commitment to strengthening families and good citizenship, because it provides people with more responsibility and control over their living environment. The individual and local incentives to maintaining property and public spaces become clear with the qualitative and financial benefits of attending better schools and having higher aspirations, amongst people who share the same goals.

Home value appreciation, mortgage interest deduction, property tax deductions, low interest equity loans, capital gain exclusions and preferential tax treatment add up to far more than a current year financial gain.

These are the essential starting points to passing on wealth from one generation to the next. The current financial stress we all face does not make this an easy task. However, our parents didn’t have a “walk in the park” and they still managed to overcome, in order to help our generation achieve some of our goals. Despite the ongoing housing mess, the current low interest rates makes ownership a compelling opportunity to create wealth for the next generation. Accordingly, I think the legacy our parents left us informs our responsibility to make similar or greater efforts, on behalf of our kids and their kids.

Ultimately, the decision to rent or own are individual choices that have their own consequences. Nonetheless, the following is a bit of a historical primer that applied yesterday, as much as it does today, on how some helped create opportunities for those to come. For those who have wondered about this issue, this is a worthwhile look:

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Who’s Afraid of Reality Politics

Who’s afraid of Reality Politics?

Inequality sucks, Who's Afraid of Reality PoliticsThe GOP Presidential primary has been quite an interesting sideshow of personalities. First the shadow of Sarah Palin preceded the comedy of Herman Cain. Mixed amongst Jon Huntsman, Rick Santorum, Mitt Romney and Newt Gingrich, we were also treated to the intellectual distraction of Michelle Bachmann and Rick Perry.

Now that were are left with Santorum, Romney and Gingrich its clear that there is something very wrong with the party of Abraham Lincoln. The recent Republican debates reveal ideals that run counter to the social and financial interests of most people. Sadly, most of the candidates supporters seem to applaud policies that further separate people from maintaining or attaining a portion of The American Dream.

Case and point, Mitt Romney says that when these points are raised, its because people are guilty of “envy or class warfare”. When these questions are posed at debates, GOP candidates have been allowed to brush aside these issues with crowd-pleasing one liners that have no substance in fact. Citizens paying for government sponsored corporate bailouts seems to have obscured the fact that corporations, ought to have a government mandated responsibility to citizens. Certainly this issues should warrant more courage on the part of moderators at debates and the media in general.

As per Bill Moyers suggests, inequality isn’t something that simply happens by accident.
“America has woken up to the Reality: Inequality Matters” is a worthwhile look:

Another issue that is the elephant in the room is the matter of Newt Gingrich’s race baiting narratives on food stamps. Utilizing tried and true tactics from the Southern Strategy that generally targets people of color, stokes the fears of right wing conservatives, while undermining initiatives and programs that benefit society as a whole. No matter that most recipients of food stamps, housing assistance, etc. are not people of color. A large majority are, in fact, retirement age seniors and children. Republicans have succeeded in creating racial stereotypes of the beneficiaries, to the detriment of the entire country. Fundamental economic issues such as downsizing and outsourcing are not addressed, simply because our media pundits and journalists are not willing to call out Gingrich or his apologists. “Gingrich won’t win the Presidency, but he may always be the GOP’s #1 Racist” is a worthwhile read:,_but_he_may_always_be_the_gop%27s_%231_racist/

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Middle Class being held hostage by Corporatists unemployment statistics being reported today come as no surprise to most people. As a 55 plus male, educated with multiple degrees and formerly employed in the IT industry, I know what many of my contemporaries understand.

Nearly, 7 out of 10 people in the 50 plus age demographic have been downsized, layed-off or forced into early retirement. Further, corporate downsizing and outsourcing has been going on, in earnest, for the past 15 years during both up and down markets. Armed with incentives for globalization, tax cuts and technological advances, domestic corporations have been operating with virtual immunity. Rather than providing work and business taxes to the communities that give them permission to do business, corporate oligarchies have become the norm.

People in the primes of their careers, typically at the top of the wage scale and before retirement benefits kick in, are typically cut first. Sadly the insatiable corporate vampire no longer sleeps during the day, and younger workers in their mid 20’s to early 40’s are also being targeted. If people are rehired at all, it is often at an unsustainable wage, despite education and experience. We are in the midst of all out re-definition of the middle class and an assault on the American Dream.

The unhealthy relationship of corporate interests and our elected officials has reached epic proportions. However, it appears that our citizenry has yet to fully respond with activist reactions. Clearly, party-line divide and conquer strategies are at work. It will be interesting see how long the Democratic party believes it can sustain interest in a symbolic, but ineffective, leadership that does not respond to the real needs of the country.

As such, this is a worthwhile read:

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Corporatism gives rise to a Corporate Police State?

Interesting thoughts from David Sirota, who analyzes the progression of events and statues that have enabled corporate entities to operate far beyond the framework of “equal protection”.  Paradoxically limiting corporate liability for fraud and unlawful activity, while dis-proportionately penalizing the citizenry has become an alarming anti-democratic norm.

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My taxes, your taxes…but no corporate taxes

As our tax deadline approaches, its a fair question to ask just who is, or isn’t paying for essential local, state and federal services. If you’re surprised to know that many corporations pay little of no taxes, then perhaps this article will provide some perspective on just how this happens. A worthwhile look…


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Worst Days Over?

Most people may have thought that housing market has already seen its worst days. However, persistent emerging data suggests that 2011 will even more difficult.


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Pres. Obama’s Speech

On the eve of President Obama’s speech regarding the the budget and the economy, Republican House Speaker Boehner has indicated that “raising taxes for the rich would be too much  to bear”.  He says, ““We don’t have deficits because Americans are taxed too little, we have deficits because Washington spends too much,” Mr. Boehner says in the statement. “And, at a time when the American people face skyrocketing prices at the pump, energy tax hikes are a particularly bad idea.”

Hmmn, seems to many of us that this has been the only group that isn’t being asked to sacrifice. Real wages have declined for most people, yet the rich have prospered in spite of the economic downturn.It may be a worthwhile look to consider the trends of income inequality n the U.S.:

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