Growing Income Inequality and the Education Gap

Edward Lazear and Katherine Baicker of the President's Council of Economic Advisers say the growing disparity in wage income between skilled and unskilled labor is not the result of globalization, immigration, or administration policy. The reason for growing income inequality, they say, is increasing returns to education for skilled labor, and this is an opportunity not a problem. "Having an economy that places a greater value on skills and education is a good thing."

They promote a solution to the problem of growing income inequality that attempts to take advantage of this opportunity by reducing the education and skill gap. Three particular steps are recommended as solutions, the No Child Left Behind education reform, the American Competitiveness Initiative, and more importantly they say as responsibility is shifted away from government, is the hope that families will do a better job to "provide the environment and encouragement that is so helpful in producing an educated population":

America at Work, by Edward P. Lazear And Katherine Baicker, Commentary, Wall Street Journal: There is no question that the U.S. is experiencing strong economic gains... The economy created about two million jobs last year, and Friday's jobs report for April showed that we are on track to add more than two million new jobs this year.

This job growth is undeniable, but some ... claim that the benefits of this economic boom are being enjoyed only by the relatively well-off, and that we have left the rest of our workforce behind. Is this true? Over the last 25 years, the wages of the skilled have continued to grow faster than the wages of the less skilled. For example, the wages of the college-educated have grown by 22% since 1980, while the wages of high-school drop-outs has fallen by 3%.

This does not mean, however, that the rich are benefiting at the expense of the poor. Instead, it means that the return to investing in education and training continues to grow. ... Having an economy that places a greater value on skills and education is a good thing. Our economy can grow more quickly when the returns to investment are high, and human capital investment is the most important form of investment.

This presents us with opportunities and challenges. We have the opportunity to increase our standard of living as our workers reap the benefits of the skills that they have acquired. We face the challenge of ensuring that all Americans have access to the education and training that the modern economy values so highly.

The data show that it is this greater return to investing in education that is driving the long-run widening of the income distribution. The cause is not increases in immigration or international trade, as some have alleged. First, wages for less-skilled workers have not declined with growing trade, even in sectors of the economy with the greatest import competition. Second, some of the groups that have experienced the highest wage growth have also seen increased immigration swelling their ranks. Silicon Valley is full of highly paid immigrants and native-born Americans ... earning very high salaries in the high-tech sectors ... Third, those who have examined the data systematically find that trade and immigration can account for at most a small proportion of the increased wage spread that has occurred over the past 25 years.

To make sure that the gains from technology are enjoyed by all, we must be vigilant in providing training and educational opportunity for all. Programs such as the No Child Left Behind ... and American Competitiveness Initiative are vital steps in that direction. Perhaps even more important are steps that families can take to provide the environment and encouragement that is so helpful in producing an educated population. The president's tax cuts have made the tax code more progressive, which also narrows the difference in take-home earnings.

Through education, hard work and entrepreneurship, there is great opportunity for Americans to improve their economic circumstances over their lifetimes. ... Those who invest in education increase dramatically the likelihood that they will enjoy these improvements in their standard of living. ...

Given the importance being given to education in explaining wage disparity, I would like to see a higher level of commitment from the administration to improving education at all levels than has been exhibited to date.

With regard to the claim that taxes are more progressive, see this recent report from the Center for Budget and Policy Priorities for a counterargument:

Recent Tax And Income Trends Among High-Income Taxpayers: Administration officials have consistently sought to portray the distribution of benefits from the 2001 and 2003 tax cuts as balanced or even progressive. Recently, for example, the Treasury Department released a ... fact sheet... The fact sheet makes two main points: that “the individual income tax is highly progressive ... higher income taxpayers pay most of the individual income tax...,” and that the burden these taxpayers bear has increased as a result of the tax cuts enacted under the Bush Administration.[1] These Administration claims are designed to counter arguments that the tax cuts enacted since 2001 are tilted to those at the top of the income scale. The claims, however, are misleading...

Update: Brad DeLong comments on the progressivity claim and on Greg Mankiw's response to the editorial in "Cue the Noisemakers."

Update: I should have linked this commentary by Paul Krugman on whether the returns to education explain the growing income gap, "Graduates and Oligarchs." Quoting, "But Mr. Bernanke did stumble at one point. Responding to a question ... about income inequality, he declared that "the most important factor" in rising inequality "is the rising skill premium, the increased return to education.""

Comments

[dryfly]

Same story I hear over & over - I reply with the same complaint... what do I tell my kids to study that will REALLY pay off - not just 'in theory'? They don't have to be rich but they'd like to stay middle class.

I have one studying Comp Sci now and he says you need 10 years experience or live in India to get a decent intro job. He says right now knowing how to run an espresso machine is more valuable than comp sci in a lot of ways.

I have another studying bio-med engineering... pretty hot field, right? There it appears you need masters AND five years experience... or go into sales (like pharma or device sales). Good thing she's good looking besides being pretty smart.

The 'education' argument is a 'lagging indicator'... great looking backward but not so hot with conditions today. Looking backwards well educated boomers like me did a LOT better than many of my blue collar buddies (I came from a rural blue collar town & saw both sides).

However their kids & my kids and all their friends are in the same boat - there aren't many good jobs for any of them. The big difference though is if you go to school today (unless daddy is loaded) the kids come out terribly burdened with debt... So the kids that didn't go to school at least aren't as deep in the hole as the others... and none of them have good jobs.

Don't get me wrong - I'm NOT saying education is the problem. I'm saying education isn't the solution. In fact the issue of 'education' is 'orthogonal' to the problem of opportunity... it is right angle & running off on a completely different axis/dimension.

Our 'competitiveness' problem isn't that we aren't well enough educated... its that we don't work cheap enough. And its damned hard to pay off a $40K student loan, rent an apartment, commute, live in America and be as cheap as a programmer in Bangalore or an engineer in China... no matter who is the smarter.

The wonks who cite these 'studies' need to get their heads out and talk to real people. That would be a start at getting us 'more competitive'.

[Bruce Wilder]

Thanks for that, Dryfly.

One political party is committed to the welfare of the one half of one percent, and is perfectly willing to sacrifice the wages, the retirements, the health and, if need be, the lives of the rest. And, apparently, they will have the support of those willing to sacrifice intellectual clarity, and, very possibly, the liveability of the planet. And, of course, they will have the support of those, who believe the earth is 6000 years old and armageddon is a proper objective of U.S. foreign policy.

Political economy is what they used to call it. We make political choices, which frame the economic choices we make. Looking across the great sweep of American history, it is possible to see how the choices made in the 1860's and 1870's helped to created the gilded age (or, perhaps, I should call it, the first gilded age). It is possible to see how the choices made in 1930's and 1940's shaped all that followed.

For the last, nearly 40 years, at every opportunity, when given a choice, the American people have chosen blustering weakness, dependence on foreign oil, and increasing inequality. A political coalition of the resentful stupid led by the greedy gave us Nixon and Reagan and Bush II -- irresponsible corrupt fakes.

The incomes of the American middle class depend on being part of a highly efficient, highly productive economy -- part of a system, which works, where infrastructure and education mean there are few obstacles to innovation, and relatively little lost to error and waste. America has always benefitted, as well, from an abundance of natural resources, an abundance, which can tempt us to profligate abuse of nature.

The incomes of the American middle class also depend on institutional structures: support for education, a minimum wage, unemployment compensation and trade adjustment assistance, and labor laws and unions and a national committment to full-employment and low, but positive inflation, and various other protections against risks and ups-and-downs of economic life.

Focusing on globalization and trade is not completely wrong, but it is misleading in a way that can serve the interests of the corrupt and greedy. "Wages are slipping for people, who didn't graduate high school, because of competition from China and India"; it is a narrative, which conveniently side-steps the ever falling minimum wage, and, of course, blames the poor and ignorant, for being poor and ignorant, always a morally appealling stance. The worst thing that can happen would be protectionism, which would, of course, could have a devastating impact on the poor and middle class.

There are, potentially, ways forward. The internet, the advances in computing and communication and the gathering revolution in microbiology certainly point at opportunities ahead. We could push a broadband network out to the whole country, and begin restructuring power generation and transportation to radically reduce fossil fuel consumption.

Will we do it? I have serious doubts. An American electorate, who would re-elect George W. Bush, no matter who was running against him, has some serious deficiencies of judgement. It may be that we will be allowed only a choice between Economic Protectionism or Economic Rape; it would be hard to get that choice 'right' even for a voting public, which is alternately ignorant or given over to fantasy. The Economic Rapists of the Republican Party will find a way to accomodate, at least, some forms of protectionism, if they become convinced that is is the way to hold onto power.

The original blue states should probably secede and join Canada: national health care, two liberal parties, a rising dollar, and, if worse comes to worse, a warming climate, where such might not be all bad.

[save_the_rustbelt]

So the 53 year old laid off factory worker is going to benefit from NCLB?

The job market is finally picking up 4+ years after the end of the recesion. That is a fundamental problem way beyond the scope of education.

And given the number of college-educated who are under employed, this doesn't look promising.

Time for the pitchforks?

[save_the_rustbelt]

"First, wages for less-skilled workers have not declined with growing trade, even in sectors of the economy with the greatest import competition."

That statement is just bizarre. What kind of averages produce this kind or erroneous conclusion?

[dryfly]

The original blue states should probably secede and join Canada: national health care, two liberal parties, a rising dollar, and, if worse comes to worse, a warming climate, where such might not be all bad.

Would canada take us? Has anyone asked? I'd sign the petition.

[a]

Why Business Needs More Geeks

http://www.businesspundit.com/50226711/why_business_needs_more_geeks.php

Work sucks. It sucks because at its core it has become
impure. Business used to be about providing value to
the customer. Entrepreneurs captured a portion of that
value creation as profit. The more value they created,
the more profit they could make. But then along came
Wall Street. Obsessed with quarterly profit increases
and seeing them as disconnected from value creation,
Wall Street encouraged businesses to think short-term.
The things that led to value creation - things like
innovation, continued learning, employee development,
long-term focus - were replaced by pump-and-dump
management styles. What can we do to hit the target
next quarter regardless of the long term consequences?
After all, we just want to pump this baby up and sell
it off.

Once people gave up on the idea of greatness for
business, work changed. Now most people are working
out of necessity, not desire. Few companies provide
good working environments, because employees have come
to be viewed as expenses, not assets. Companies pour
money into maintaining and upgrading important
physical assets while they skimp on the less tangible
assets that are primarily tied up in the minds of
employees.

Over time, as business has taken a turn for the worse,
it has attracted the wrong people. When I was at the
University of Kentucky, business school was a refuge
for people that couldn't cut it in engineering school,
or students from the party crowd that wanted an easy
degree. These people get into the working world and it
easily corrupts them because it is a corrupt place. As
a result you get this strange American economy that
focuses on the short-term and ignores its real
strengths. The U.S. is driven by entrepreneurship and
small businesses, yet they get ignored while we obsess
over the daily stock prices of Fortune 500 companies.

Lest you think this is turning into some left-wing
rant, let me stop you right there. I am not
anti-business. I bring up these points only because I
am so pro-business. Business is like a game, and like
any other game, I hate to see people cheat. Nothing is
more exciting than the ongoing battle for profit
between two companies that are waging market wars
using real tactics like innovation, productivity
increases, better marketing, sounder strategy, solid
business models, and flawless execution. It's much
more exciting than watching them win by lobbying the
government for protection from competitors or pushing
money around financial statements until it looks good.
I love business and I want to see it return to the
days of true capitalistic competition. The days of
business by legal and/or customer manipulation should
come to an end.

So what can we do? How can business return to the
roots of capitalism? By embracing geeks. Here are the
top five reasons I think business needs them.

1. Geeks seek knowledge for it's own sake. Do you know
a geek that thinks it is fun to learn a new
programming language? Do you know a geek that builds
robots, tweaks car engines, upgrades computers or
builds websites just as a hobby? Geeks love to learn
new things. Geeks love to learn old things. Geeks just
love to learn - period. And it isn't the fluff stuff
that business people try to learn. I know an embedded
systems programmer that started working with Ruby on
Rails at home simply because he wanted to become
better at web programming. I know a web programmer
that learned C and wrote a device driver because he
wanted to understand how they worked. But in the
business world, marketers don't read up on financial
accounting, accountants don't know about strategic
analysis and the people in human resources often can't
define basic economic concepts. That's a problem.

Business is a broad knowledge area, and no one can be
an expert in everything. But exposure to different
areas is helpful to understanding where each part fits
into the big picture. Business needs people that
pursue business knowledge out of interest and passion.
Learning doesn't end with graduation any more.

2. Geeks like to experiment. I have sat in countless
business meetings that were all talk. Rather than
trying things to see what worked, we talked in circles
for weeks only to end up doing nothing. It is quite
different from my days as a digital circuit designer.

When I wrote VHDL for FPGAs, you could experiment. If
we didn't know the best way to do something, we could
try two different implementations. There was no shame
in failure or missing the mark because we were always
learning and iterating. No one ever nailed a design in
one try.

In business though, there are too many people afraid
to move forward. Failure can be a career killer, and
the inertia factor makes it easier just to keep moving
along the way you already are. An entrepreneur friend
of mine doesn't consider it a failure when he gets out
of a business, because as he says "I try businesses on
like most people date. I'm trying to figure out what I
like and what I'm best at." If business had more
geeks, there would be a more experimental culture in
business that would help make everything better by
focusing on what works and encouraging small scale
tests.

3. Geeks openly debate the merits of technical
ideas.You can find countless articles on the web and
in computing magazines about why Perl or Ruby or Java
or Lisp is better than C or Haskell or VB or PHP for
certain kinds of projects. Geeks like to talk about
best practices and debate the merits of various
approaches to programming or web design or hardware
development or system configuration. Business people
like to talk about who moved their cheese.

What would happen if the average manager was
interested enough in Sarbanes Oxley to read up on why
it is good or bad for business? In business these
discussions take place more by business journalists
than they do by actual business people. It isn't just
that we don't know enough to follow such discussions,
the problem is that most of us don't care because it
is just a job.

4. Geeks are concerned with doing good work just
because.. It was Voltaire who wrote "The biggest
reward for a thing well done is to have done it." If
you have worked in software development, you have
undoubtedly met a code nazi that will trash your code
and refuse to include it in the next release if you do
a sloppy job. In the hardware design world, if you
took shortcuts by not double sampling signals that
crossed clock boundaries or putting a lot of
non-clocked logic into a design, your laziness (or
ignorance) would be called out for sure.

The business world is much too full of the
just-enough-to-get-by types. There isn't always a
demand to do things is a solid systematic fashion. The
decision making process is often poorly understood and
not well documented, and later managers wonder why a
company did project X in the first place.

5. Geeks are about results, not office politics. It is
much easier to fake financial or marketing knowledge
than it is technical knowledge. Business people often
encourage bullshit, and don't hold each other
accountable by demanding that people back up what they
say. In the world of hardware design, you don't
promote friends or sycophants if their design skills
stink. In the business world, sometimes alliances
matter more than skills. Geek culture is more of a
meritocracy. It is more about who can really get
things done and make things happen. Talk is cheap if
you haven't proven yourself.

When I talk about geeks, I am not making blanket
statements about tech workers. Plenty of tech workers
are lousy at what they do. What I mean by geeks is
people that are fascinated with their work, enjoy it,
and are willing to do it for fun. These people are by
and large found in technology jobs. I think we need to
recruit more of them into the business world.

Imagine working in a company where the business
leaders embraced these geeky ideas. Imagine the impact
a company could have if filled with people who always
wanted to learn, debate, and do things the right way
instead of the easy way. Imagine working with business
geeks who love what they do because they believe
business itself is ultimately cool and fun.

"Thinking is easy, acting is difficult, and to put
one's thoughts into action is the most difficult thing
in the world." -- Goethe

Business is all about putting thoughts into action.
It's time to fix work and the business world by
bringing on the people who love thinking + action.
It's time to encourage more geeks to get into business.

[anne]

http://www.nytimes.com/2006/05/08/us/08poverty.html?ex=1304740800&en=20393d1c41b90f6b&ei=5090&partner=rssuserland&emc=rss

May 8, 2006

America's 'Near Poor' Are Increasingly at Economic Risk, Experts Say
By ERIK ECKHOLM

ANAHEIM, Calif. — The Abbotts date their tailspin to a collapse in demand for the aviation-related electronic parts that Stephen sold in better times, when he earned about $40,000 a year.

He lost his job in late 2001, unemployment benefits ran out over the next year and he and his wife, Laurie, along with their teenage son, were evicted from their apartment.

They spent a year in a borrowed motor home here in the working-class interior of Orange County, followed by eight months in a motel room with a kitchenette. During that time, Ms. Abbott, a diabetic who is now 51, lost all her teeth and could not afford to replace them.

"Since I didn't have a smile," she recalled, "I couldn't even work at a checkout counter."

Americans on the lower rungs of the economic ladder have always been exposed to sudden ruin. But in recent years, with the soaring costs of housing and medical care and a decline in low-end wages and benefits, tens of millions are living on even shakier ground than before, according to studies of what some scholars call the "near poor."

"There's strong evidence that over the past five years, record numbers of lower-income Americans find themselves in a more precarious economic position than at any time in recent memory," said Mark R. Rank, a sociologist at Washington University in St. Louis and the author of "One Nation, Underprivileged: Why American Poverty Affects Us All."

In a rare study of vulnerability to poverty, Mr. Rank and his colleagues found that the risk of a plummet of at least a year below the official poverty line rose sharply in the 1990's, compared with the two previous decades. By all signs, he said, such insecurity has continued to worsen.

For all age groups except those 70 and older, the odds of a temporary spell of poverty doubled in the 1990's, Mr. Rank reported in a 2004 paper titled, "The Increase of Poverty Risk and Income Insecurity in the U.S. Since the 1970's," written with Daniel A. Sandoval and Thomas A. Hirschl, both of Cornell University.

For example, during the 1980's, around 13 percent of Americans in their 40's spent at least one year below the poverty line; in the 1990's, 36 percent of people in their 40's did, according to the analysis.

Comparable figures for this decade will not be available for several years, but other indicators — a climbing poverty rate and rising levels of family debt — suggest a deepening insecurity, poverty experts and economists say.

More people work in jobs without health coverage, including temporary or contract jobs that may offer no benefits or even access to unemployment insurance. Medicaid is offered to fewer adults (though to more children). Cash welfare benefits are harder to secure, and their real value has eroded.

About 37 million Americans lived below the federal poverty line in 2004, set at $19,157 a year for a family of four. But far more people, another 54 million, were in households earning between the poverty line and double the poverty line.

"We don't track this group of people, and they are very vulnerable," said Katherine S. Newman, a sociologist at Princeton University who studies low-end workers.

Those suffering a nose-dive say the statistics do not begin to convey their fears and anguish....

[Robert]

I'm sorry, and slightly OT, but whenever I hear Bush Jr. speak the phrase "The No Child Left Behind Act", I immediately think of Ben Stiller's shallow, vacant, & idiotic character in "Zoolander", whose goal was to use his fame to establish the "School for Kids That Can't Read Really Good".

[Lee A. Arnold]

"The president's tax cuts have made the tax code more progressive"?!?!?

Lazear and Baicker "prove" that skills education is the key to lessening inequality, by disqualifying the effects of immigration and international trade? So it must be A, because it isn't B or C? What is the name of this fallacy? When did these three become the only possible culprits?

I think James Galbraith posed a more insightful analysis in the book Created Unequal (Century Fund, 2000): we need a policy of full employment and a raise in the minimum wage.

[a]

I was half joking about the Geek culture. If anything, the Bush administration mostly lacks the Geek culture.

While, there is truism in saying that education and hard working are the way to prosper, denying the impact of globalization and government policy is selective truism. I strongly believe conservatives in this country have tried very hard on all fronts to persuade people everything is personal, cultural; so ignore what the government has done and don't hold the current administration accountible for the future of our country. Everyone just thinks for themselves.

I recently read an interesting article by Prof.John E. Roemer of Yale University. Mathematical models are used to study the topic of "children's education" and democarcy:
some conculsion quote:
=============================
1) in the US "the prospects for children clearly depend on the education of the mother."
2) While in Demark, "the distribution of income of a cohort of workers is independent of the education of their mothers. "
"Now I do not think that the difference we see between the US and Denmark in this regard is due only to the systems of educational finance; cultural homogeneity and the solidaristic wage policy in Denmark are important factors as well. But educational finance surely makes some difference, because in Denmark, the same amount is invested in all children by the state, and there are no private schools, while in the US, educational investments are vastly different across the country because of local financing of schools from property taxes, not to speak of private schooling...

The Betts- Roemer econometric exercise leads us to believe that, even taking the educational technology as given, a radical redistribution of spending could substantially narrow the differences in predicted earnings of different socio-economic groups... It is quite another thing to inquire into the political feasibility of eliminating differences in wage-earning capacities among children from different socio-economic circumstances, through educational finance policy. Recently, I have worked on this question, and I would like to summarize some of the results for you...

Many people have associated democracy with economic equality. The model I have described is one exercise in a program to study this question: Will democratic political competition engender educational policies which will, eventually, eliminate the family imprint on the wages of children?

In brief, the results are the following:
1) If politics are sufficiently opportunist in every period, then the coefficient of variation of the wage distribution approaches in the limit a positive number, never zero;
2) If politics are sufficiently ideological in every period and the initial wage distribution is sufficiently skewed, then there is a positive probability, less than one, that the limit coefficient of variation of wages is zero;
3) If politics are ideological in every period and the initial wage distribution is insufficiently skewed, then the limit coefficient of variation of wages is surely positive.
The upshot is that democracy never guarantees the elimination of familial influences on wages: at best, it eliminates these influences with a positive probability, and that only under certain conditions.
This seems to be a quite pessimistic conclusion. There are, however, certain escape hatches. The model makes two important assumptions: that the returns to educational investment are purely private, and that each parent (voter) cares only about her own family. Suppose we relax the first assumption, and replace the educational production function ... Now, there is a positive externality to investment: my child’s future wage will increase if more is invested in all other children. There are a number of reasons that this technology might be more realistic than the earlier one: a more highly educated workforce increases the speed of technical progress, more highly educated children provide good neighborhood effects on other children, and so on... If we relax the second assumption, and assume that parents care about other parents’ children, then there is a similar effect. It is not surprising that solidarity, in this sense, will improve the tendency towards equality..."

[Live Wire]

"a", I enjoyed your thoughts. It sounds like you don't believe American companies are getting much value added from the surge in MBA graduates. Perhaps one reason for declining wages among low-skilled workers is an over-abundance of even lower-skilled business-school graduates.

[save_the_rustbelt]

Take a look at the faculty (most of them part-timers) at any two year community college.

Why is so much talent directed at part-time teaching with poor salaries?

1) some people (new moms and retirees) like the flexibilit

2) most however, have been dumped out of corporations (look at the IT department) or other employment - they are wildly underemployed

Many are over 40, andmany over 50, which is a real kiss of death in this economy for middle managers

[save_the_rustbelt]

"what do I tell my kids to study that will REALLY pay off - not just 'in theory'?"

dryfly:

Our new accounting grads (4 or 5 year degrees) are seeing 100% placement and starting at about $44,000 (higher in major urban areas). The "Big 4" firms work them to death, teach them a lot, and they tend to leave for the Fortune 1000 after about 3 years, creating more job openings. Lifetime security? Who knows?

The curriculum is miserable so there is little chance of an oversupply any time soon.

Personally I wish engineeers were hotter than accountants (chemical eng's. are apparently) but that it not what is happening.

The last time I was in Orlando several of my waiters were (educated) young people from Ohio and Michigan, they were making more money and having more fun than being coporate grunts in Detroit.

[Richard]

I keep seeing these articles about the economy growing. Just once, I'd like one of those articles to reference

* The rate of growth of the top 0.1% of income
* The rate of growth of the top 0.5% of income
* The rate of growth of the top 1.0% of income
* the rate of growth of the top 5.0% of income
* The rate of growth of median income

An education skew would make sense if the top 5%, or top 10% were outgrowing the rest of the population. But it isn't. On an inflation-adjusted basis, it's the top 0.1% that is getting the bulk of the gains. The educated population of the U.S. is larger than that. It is the owners and the affluent who are taking in the gains, not the educated.

One tradition which we once held in this country was at least a modest level of redistribution, in the form of social security, public houseing, medicare, public health. Those benefits were largely paid for by a progressive tax, and is a very modest form of income redistribution.

It would be quite the irony if Grover Norquist's dream (shrinking government to the point of strangling it in a bathtub) came true, but not in the way he intended. What if some day the military were forced to shrink due to budget constraints, and entitlement programs were preserved due to fierce populist demands?

Prudent wealth supports entitlement programs not just because it is right but for selfish reasons. Some income redistribution supports stability in society, which in turn supports future cash flow to the wealthy. The greedy ignore populist sentiments at their own peril.

[Bruce Wilder]

save_the_rustbelt: the last two accounting audits I saw in large corporations left me despairing of the profession, altogether. In one, the chief auditor spent nearly all of his time exploring the niceties of the executive car allowance, and ignored entirely the absence of systematic accrual in accounts payable, and the fundamental deficiencies in the system of accounts receiveable, which left upwards of $5 million unrecoverable -- a write-off, which was continuously delayed for several years, waiting for a bad year, which could be made worse. He also failed to notice that the chief financial officer was a numbskull. It was the latter observation, or lack of observation, I expect, upon which his fee depended.

[JS]

Spot on, dryfly. And did you know, according to the Fed, the best job for your kids is Asset Inflation Speculator(or AIS worker or support staff.)

Eventually the education canard will be debunked in the popular media, and the real facts of a competitive world, inept trade policy and misguided monetary policy will be trumpeted by nationalistic populists (and then, I might point out, it will be way too late.) America already has plenty of over-educated and underemployed in an increasingly structurally unsound serial bubble economy. What we do not have are viable trade, Dollar, fiscal and monetary policies. Talk about sewing the seeds of one’s own demise.

[Michael Cain]

STR: "So the 53 year old laid off factory worker is going to benefit from NCLB?" and "Many are over 40, and many over 50, which is a real kiss of death in this economy for middle managers."

In my public policy classes, I maintain that THE policy issue regarding the Boomers for the next 10-15 years is not whether the country can afford the bills when they retire, it's where and how to find meaningful jobs for them before they retire. And in many cases, after they reach retirement age as well, because as a group we Boomers have done a miserable job of saving for retirement.

[NinjaPlease]

The irony...

Is that no one in the general public buys this crap. No matter how hard bill o'reilly, sean hannity, rush, et. al, proclaim that the economy is booming, people are recognizing that unless they work in the financial sector, the highest raise they could hope to get this year is one that will match inflation.

When theory and reality are so disconnected, why do they still proclaim the theory as truth?

[save_the_rustbelt]

Bruce Wilder: my opinion of the big audit firms is even lower than yours - I think KPMG (the firm) should be indicted for tax fraud, but that would leave only the Big 3.

Regional CPA firms do much better work, but generally aren't big enough for the Fortune 500 jobs. Being a CPA is still an honorable and valuable profession, most of the time.

Michael Cain: you are soooo right with that analysis, I'm luckier than many of my peers, especially the IT geeks.

A friend of mine (IT geek) was given a gold watch for 25 years of service to a big oil corporation on a Wednesday, and then "retired" on Thursday to make way for younger geeks. It was an incredible act of cruelty.

[Holly W.]

Dryfly, your kid may say you need 10 years of experience in computer science to get an entry level position, but my unemployed husband keeps getting told that he'd look better if he had a recent degree. Why do I get the feeling a person can't win for losing under these circumstances?

[slink]

is there dangerously circular reasoning here

"The reason for growing income inequality
increasing returns to education "

a fact (maybe)
but whats the explanation
like the drop in productivity growth in the 70's

or the inflation triggering rate of un-employment
in the 90's

my eyes behold this trinity hanging from sky hooks

and it leaves me feeling fast talked

[slink]

"those who have examined the data"

"...... systematically ......"

love the over sell lingo

"find that trade and immigration can account for"

" at most a small proportion "

" of the increased wage spread
that has occurred over the past 25 years"

sounds like the tobacco industry
on our national lungs
a few decades back

i'll say thison the side of the econo con
pseudo research

the underlying sciences involved
are not equally
convincing

[slink]

anne cites:

"For all age groups except those 70 and older, the odds of a temporary spell of poverty doubled in the 1990's..."

"For example, during the 1980's, around 13 percent of Americans in their 40's spent at least one year below the poverty line; in the 1990's, 36 percent of people in their 40's did,"

nice catch mystery gal

[slink]

is there dangerously circular reasoning here

"The reason for growing income inequality
increasing returns to education "

a fact (maybe)
but whats the explanation
like the drop in productivity growth in the 70's

or the inflation triggering rate of un-employment
in the 90's

my eyes behold this trinity hanging from sky hooks

and it leaves me feeling fast talked

[slink]

" He also failed to notice that the chief financial officer was a numbskull. It was the latter observation, or lack of observation, I expect, upon which his fee depended"

amen

[camille roy]

"The data show that it is this greater return to investing in education that is driving the long-run widening of the income distribution. The cause is not increases in immigration or international trade, as some have alleged... some of the groups that have experienced the highest wage growth have also seen increased immigration swelling their ranks. Silicon Valley is full of highly paid immigrants and native-born Americans ... earning very high salaries in the high-tech sectors ..."

Earth to economist, urgent bulletin:
It is no longer valid to trumpet the high salaries in Silicon Valley. This region lost 400,000 jobs since 2000, and is adding them back in drips and dabs. Salaries in many areas have plummeted, and job insecurity has soared.

If you are using Silicon Valley as a model to give heart to workers suffering the slings and arrows of declinging wages and job loss, do not REPEAT do not REPEAT do not use Silicon Valley as a model or you will undercut your own case.

[pgl]

On the progressivity of the tax cuts, Jane Galt is basically asking "What Tax Cut"? So am I as I point to a paper by William Gale et al. (over at Angrybear). Janes says progressive tax shift, while Gale et al. demonstrate it's likely a regressive tax shift. The opening and close of this WSJ oped reads like something Karl Rove wrote. Alas.

[John Konop]

The truth is this is a definition game. Employers via our visa rule re-defines the skill sets for a worker at 13k cheaper for the exact same job.The analyst take the false data ,which is manipulated to get cheaper workers for the corporations wanting cheap foreign workers. All of you set around and debate false data( garbage in garbage out) ,while wages are declining and saving rates.Many of you scratch your head wondering why 1 million I.T. workers are looking for jobs. To add injury to insult tax payers and the laid off worker pay for more training ,while the above cycle continues.This is a race to the bottom.

[cm]

John: Money is only one (albeit an important) part of the equation. Another is that companies would like qualified people who are confident in the area of their subject matter, but not so confident about themselves, and their position on the game board. That is, competence without "attitude". Hence the preference for "unspoiled" recent graduates with quite above-average credentials for the nominal experience at hand. Alas, that's difficult to have.

What also helps defray "attitude" are the shackles of work visas, and in some foreign nations or people hailing thereof a trait of (at least by appearances) more modest manners.

[John Konop]

cm,

cm,

I have successfully built or did turn around 4 companies in the financial service industry in Chicago,Texas,Atlanta and South Dakota. I have never had a problem finding good workers of all races sexes and ages to work for me. The failures of most companies are due to bad management not workers.Americans are working harder and longer.The problems at Enron,Delta,Tyco........ BAD MANAGEMENT PERIOD NOT WORKERS!!!!

[cm]

John: So far we are not disagreeing. I tend so speak sloppily, and I meant by "attitude" the opposite of malleability, and by "unspoiled" unspoiled by skepticism and realistic assessment of corporate structures and political games. I thought using scare quotes was enough.

[John Konop]

cm,

Sorry , I do enjoy reading your post.

[Jordan Fogal]

Arbitration: The privatization of the American justices system.

Do you think arbitration laws do not apply or concern you? Do you have a new home, a car, visa, master card, discover card, american express, storage room, cellular phone, or have signed any kind of contracts, then you are bound by arbitration. You no longer have seventh amendment rights.

Most people do not realize these seemingly insignificant leaflets in there bills, are not privacy act nonsense or marketing offers. These little, well written legalese flyers are informing you ... that by continuation of services, you have just given up your right to a trial by jury and access to the courts

Because jackpot justice and lawsuit abuse needed to be contained, big business saw it's opportunity. Using this as it's madra, big business has taken over consumers lives with the ease of a stealth bomber. Frivolous lawsuits stop being frivolous when they happen to you.

Consumers were spoon fed an egregious spin on the arbitration process. Torte refrom/arbitration was going to: free up the courts, lower insurance rates and be faster and cheaper. Have you noticed how none of these things happened? Big business now has a built in clause to protect them from any responsibility.

No where is the public informed that most cannot afford arbitration. The costs are astronomical. Private companies like the American Arbitration Association, (AAA) now have complete and unrelenting power over every facet of citizens lives. No longer can consumers avail themselves of the court system, a system they pay for in their taxes. Subterfuge, half truths and lies abound when trying to get straight answers about arbitration. Can you afford fifty to a hundred thousand dollars to protect yourself? Most consumers can't ... big business knows this and uses it to their decided advantage.

In arbitration the rules of law do not apply. It is a secret kangaroo court held behind closed doors. No media is allowed. Most victims of arbitration come out in shock, many are under gag orders, referred to as secrecy agreements. Consumers are lambs to the slaughter and clueless when they meet this big bad wolf.

In arbitration the burden of proof is on the consumer. Consumers must pay for an attorney, expert testimony, case service fees, filing fees, arbitrators fees (sometimes up to $3000 dollars a day) and even the rental on the room and the stenographer. If you do not have the ready cash... you will be ask to provide your credit card information ....so they can charge to your account as costs accrue. Then you can be paying off arbitration fees forever. With the new bankruptcy laws that protect big business and the rich, consumers can no longer get relief there either.

Consumers who study the arbitration process learn quickly not to file. This sets up the
win-win for the perpetrator. They also know if you complain to loudly they can threaten to file on you. You will never be free of this insidious clause. Consumers are trapped by any dispute rising from claims, past, present or future. In arbitration even blatant, fraudulent activities are protected.

Big business has the arbitration system down pat. Their legal teams, lobbyist, arbitrators and wealthy cohorts protect each other. These businesses are the repeat clients of the arbitrators and AAA, this alone comprises fairness. Most consumers, after arbitration find themselves in bankruptcy, foreclosure and emotionally as well as financially devastated. They won't be repeat customers.

We have been in arbitration and speak from first hand experience. The courts uphold arbitration decisions. There is no appeal. Until the public becomes aware and educated this privatization of the legal system will continue.
We the people are the collateral damage of torte reform. Jordan Fogal

jfogal281@aol.com 3003 Memorial Court #2402 Houston, Tx 77007

[Jordan Fogal]

never ending story.


Arbitration From the prefix ar- to arrive and traitor-to betray anothers trust

My husband and I are still in the arbitration process. We have been having depositions, preparing documents, time lines...many going back to April of 2002, and getting all ready for discovery. It is a monumental task. As the builder and AAA, the American Arbitration Association know. It is also cost prohibitive ... no matter what kind of spin they try to put on arbitration ...as being cheaper than court, my husband and I write the checks we know better.

This is why most new home owners with defective houses, repair their own homes ... even though they have warranty papers, (slick booklets that are enclosed in the decorative folder they are handed in exchange for their check).

If their defects are extensive they are forced into foreclosure and many into bankruptcy.
(Houston's foreclosures have more than doubled in one year and the numbers are not accurate.)

Arbitration: Is the privatization of the "justice" system that is the protection of bad builders.It assists shoddy builders, with bulging pockets, preying on the public. It is easy to see why all the adds, for new homes and the multitude of thrown up housing is so rampant. There is no protection for the purchaser. You are paying for eye candy, these houses will never make the historical register.

So far we have paid over $10,000 dollars in arbitration costs for the privilege of being made homeless in Houston, and this is just the beginning. New home buyers are surpose to buy and shut up. And you had better shut up or under the new laws you are considered a "dispute" and will be dealt with accordingly by the builders, their lawyers and if necessary the Arbitration process.

The Process You are not going to be a repeat offender in AAA. You will be broke after one visit. The builders will be back . Now, ask yourself ... if you were an arbitrator would you rule against your continuous meal ticket or against one poor homeowner who will probably never be able to afford another home in their lifetime? Do you think if perhaps the arbitrator ruled in favor of a new homeowner that they would be chosen by the builder as an arbitrator ever again? Do you know that law firms like the one defending my builder have a AAA arbitrator in the firm. Do you think if you go to AAA and get our builder's AAA arbitrator.... he will rule against his biggest client and in YOUR favor? These are just thoughts I ponder.

Tort Reform My husband and are seeing how tort reform really works, up close and personal. I refer to tort reform as the deformed privatization of the justice system. The system that continues to favor big business. We the people, are forced to conform and be the collateral damage of tort reform. Big builders employ big law firms, pricey lawyers, lawyers the majority of us could never afford. Lawyers that have become proficient in this tort refrom/arbitration process....because they get so much practice.

.
Protection for the homebuyers There is no protection for the homebuyers. If he buys a defective home with a bad roofs, water intrusion, buckling floors, leaking windows installed upside down, mold, pluming that is not connected or cracked foundations it is truly a buyer beware market and a buyer be dammed situation.

No one will help you. You will however be referred , referred to an unbelievable anomaly of acronyms. Acronyms that have tried this one woman's' soul: DTPA, AAA, BBB, TRCC, SIRP, RCLA, the DA, and the AG.
After none of these abbreviations help you, you are told to go to your city council, the mayor, to Austin, to the legislature, your representatives, your senators and your congressmen and congresswomen.
Lewis Carol's imaginary rabbit hole. Everyone passes the buck, and it is your buck.

Not one of these agencies or representatives will take action, give you a straight answer or guidance ... they will however pat you on the head and give you a raft of papers to occupy your time. They will also provide you with a list of the fees for their non services and insincerity and send you some where else. I was even sent to the health department and they were the nicest of all. They at least offered to find us temporary housing.

We were filed on in arbitration last year by a notoriously bad builder Tremont/Stature. After 8 months we were dismissed ... only to find out we still had not earned our seventh amendment rights back ... and still did not have the right to sue. We were compelled back into arbitration, again ...and back in arbitration is where we find ourselves today. Even with the over whelming evidence in our own builders words of his admitted fraud the burden of proof is on us.

The date for the culmination of this cunning, criminal activity will be September 21.2006. For your information and possible education I hope you will follow our case. If you are planning to buy a new home in Houston realize you may be the next victim. Our numbers are increasing at an alarming rate.

In a case pending in the courts #2003-16820... Stature Construction Company, our builder's CEO, Jorge L. Casimiro states, under oath about our subdivision Hydepark

"project damage includes roofing systems...resulting in water damage,penetration to interior of the units, the interior units damage includes sheet rock, insulation, wall studding, electrical wiring and boxes, pluming, A/C duck work, flooring...both hard wood and carpet and interior painting."

Yet, unbelievable as it sounds ... the burden of proof is on us, the homebuyers ... and at our expense. We have to prove what the builder has already admitted and has documented expert testimony.

( Mr. Casimiro is on the Harris County Housing Authority to assist with the building of homes for the poor and the elderly) He was appointed by long time friend Judge Robert Eckels. Judge Eckels is aware of Mr. Casimiro's continued transgressions.)

The city of Houston inspected these houses? Are these inspections like drive-bys? We are senior citizens we wanted to buy a new home so we wouldn't be bothered with repairs things wearing out, breaking.and constant upkeep. We could never have imagined the first night in our new home, when my husband pulled the drain in our new garden Jacuzzi tub, that 100 gallons of water would come crashing though our dining room ceiling and flood the living room and dinning room then seep though the hardwood floors and flood the garage below. We had no way of knowing this was just previews of coming attractions...for the next 29 months.

Everyone wants their own home. We are senior citizens and we earned ours. My husband is seventy-one years old. We continue to live in an apartment. Our things are in storage while we continue to spend our days tormented by the same people who made us homeless.

Jordan Fogal 713-802-9727
3003 Memorial Court Apt #2407
Houston, Texas 77007
.
Please google my name, Jordan Fogal for national articles and media written on the travesty of justice occurring in Houston. Thank you.

[Jordan Fogal]

Texas started the foreclosures, the scandals...and the economic down turn.

Texas Torts and Tyrants

Once upon a time, in the land of pay and play, a wicked story began. It did not commence with a secret or clandestine meeting. There was no cloak and dagger stuff, like in a game of CLUE. There were no whispers of a deep throat. Nevertheless, this horrible story is repeated all over Texas. Misdeeds are committed without shame. They are cruel, open, arrogant, and ongoing. Peoples' lives are destroyed as if they are inconsequential. Their numbers grow and are reported on a daily basis like the body bag count from a war.

One would assume that this state would have learned something from its history and not allow it to keep repeating itself. Past events include the 1954, $100 million, Veterans’ Land Board Scandal that was entangled in attempted murder, bribery, and political intrigue. This debacle involved none-other-than the governor, the attorney general, senators, and representatives; there were over 250 indictments handed down. How can things be allowed to get this out of control? Who says they don't do it bigger in Texas? Have we so soon forgotten Enron? The ill-effects of Texas greed and corrupt politics are not so easily forgotten by those whose lives are ruined. And now once again, this same sort of pond-scum is allowed to take control. Do all of this state's mistakes have to reach Texas-size portions to be addressed?

These moneychangers are lead stories in magazines, written about in the Newspapers, and some make the 6 o'clock news. Then there is silence and nothing more. It is as if everyone develops amnesia, right after the information is disseminated. It is as if no one can acknowledge what is right-in-front of his or her eyes. The culprits and henchmen continue: as if no one sees anything is wrong, and God is in his heaven, and all is right with the world.

Sitting here, reading Texas Monthly Magazine, I am stunned. The article is titled, Bob Perry Needs a Hug. It is a powerful piece on the housing crisis, political power, intimidation, and injustice. It is all spelled out clearly; and it is written simply so, no matter what your level of education, you cannot miss the point. The story is actually a postscript to the November 2005 issue, Hurt? Injured? Need a Lawyer? Too Bad!, by Mimi Swartz. No one got sued because these articles told the truth. It is in black and white for anyone to read; and no one seems outraged, or even ashamed. Worst of all, it is ongoing; and no one is even stopped or punished. It is just dually noted in the text.

In another venue, is the new book, Blocking the Courthouse Door, by Stephanie Mencimer, Chapter Three; Mess with Texas: George W. Bush and the Texas Tort Moguls. It reads like chapter one from the starship, Enterprise ... but it is all true! It is an eye-popping look at the people in power, who spun tort reform like cotton candy and handfed it to us. This exposé is an in-depth assessment of the incredulous and ongoing assault on the American consumer. An assault that began right here in the great state of Texas. Is this state now the breeding ground for infamy? ( Infamy: evil reputation brought about by something grossly criminal, shocking, or brutal 2: an extreme and publicly known criminal or evil act 3: the state of being infamous) How well defined must these actions be?

Government agencies are bought and paid for, and the owner's name is mentioned as off-handedly as if it were in the society page. The same names appear that are found in the magazines and the newspapers, and these people are allowed to continue to stomp down any fear of reprisals with their checkbooks? Have we, the people, just given up? If we no longer think we matter then we don't.

It is all so absurd; it makes me think it is a bad dream or has to be make-believe. It brings to mind a fairy tale by Hans Christian Anderson called "The Emperor's New Clothes". Remember it? The emperor is narcissistic, powerful, and vain. He struts around in new clothes to gain the admiration of his subjects. His only passion is his attire. He is so bad that he attracts swindlers to his court, and they play on his vanity. They sell him on the idea that they, for a price, can weave cloth so magnificent and elaborate... that it has special power and is completely invisible to everyone who is stupid or not fit for his post. The emperor, even-though he cannot see this material, cannot admit it because he would be, in essence, admitting he is stupid and unfit for his post. So he sends for his 'yes men'. They, fearing reprisal, tell him what he wants to hear. They assure him they see the fabric, and it is as magnificent as befits a man of his station. He somehow has convinced himself that their approval of his preening, condones his ridiculous behavior.

His aids suggest that he should have new clothes made from this splendid material for the great procession that was the following day. Throughout the night, the swindlers made motions of looming and weaving, cutting and sewing... nothing. All the while, attesting to the king that it was the most exquisite outfit every to be worn. There was great excitement in the kingdom as every one had heard of the emperor's unbelievable threads. The rascal swindlers lifted up their arms to the emperor as if they were holding something. They proceeded with their scheme and asked the king to remove all his clothes so they could help him on with the new ones. They gave him the make-believe trousers and mantle. They remarked that the fabric was so light, it was as if he were wearing nothing, but remarked that - was the beauty of it.

All of his ministers cried out in unison, "Magnificent." The emperor looked at himself side to side in the mirror as if to observe the clothes that were not there. No one dared tell him the truth, as they would have declared themselves stupid and unfit for their posts. A canopy was held above him as he strolled out to greet his admiring public. They oohed and aahed along the route as he waved and smiled, confident of his importance. But all at once, a hushed little voice shockingly spoke up from the crowd. A small child gasped, "But he is not wearing any clothes." People began to whisper to one another what the child had said, 'til everyone was saying, "But he isn't wearing any clothes." The emperor himself had the uncomfortable feeling that what they were saying might be true, but he had to go through with the procession. So, he drew himself up and walked with his head higher than before; and the courtiers held onto the train that wasn't there.

The moral of the story ... there are a lot of naked people strutting around in Texas, desperately in need of a child's honesty.

There is a real sickness in today's society when we have to search for that small child's voice in the masses to shed light on the horrendous, disgraceful truth, and finally get some kind of movement started. – Something has to done about defective, atrocious, uninhabitable housing; and stop the homebuilders who shamefully erect them, ignore new homeowners' complaints, change the company name, and go right on building. Something has to be done NOW to protect consumers, the very fabric of the American dream, and halt the resulting wave of decimation throughout our nation's economy. Something has to be done about reversing "Tort Reform" so the system is fair again.

Jordan Fogal
jfogal281@aol.com
713-802-9727
Houston Texas 77007
google my name for more information

[How to Remove ANY Negative Item on your Credit Report]

many still use them. All you need is a name and a SSN and you are on your way to getting a credit card or a loan. So if there are any students out there check your credit reports carefully and BE CAREFUL