brainiac conspiracy

Occupying Mortgage Debt

Good intentions aside, I've kinda tended to think it's a bad idea---not simply for any potential tax liabilities that might accrue to the debt forgivers---but also because it's transferring risk from the legally assignable parties (banks/collection agencies) onto the shoulders of people who bear no responsibility for the debt in the first place. Put another way: any financial institution that is willing to sell you someone's indebtedness for only five cents on the dollar obviously has little if any hope of retrieving any of that debt. So why bail them out? That's essentially what Occupy is doing, and while I can see the moral case to be made for this, you really can't see this buyback initiative accomplishing much more beyond extracting a few drops of water from a very big bucket. There's just no way to scale up a voluntary initiative to the funding levels needed (i.e., trillions of dollars) to have any meaningful impact on our various debt crises (housing, medical bills, student loans).

A more effective alternative strategy, to my mind, would be a series of organized rent strikes, in which large pools of people---millions, ideally---simply refuse to make their mortgage or student loan payments at the same time. The goal, of course, would be to starve the financial system into submitting to customer demand to renegotiate the terms of home-loan and student-loan debt, and as an act of mass civil disobedience, it seems to me like a good fit for people who cut their teeth on organizing sit-down strikes. Either way, though, using your money to buy up uncollectible debt seems like a poor use of resources, and it tends to incentivize bad behavior by lenders; why should they ever write down debt of any kind when they know that some sucker will eventually be wiling to take it off of their hands?

---Baron V

America's Skills Deficit

It's a matter of accepted wisdom to our leaders, that we have an undereducated labor force. If only we could teach these poor people the skills they need to survive in a 21st Century economy, it would put a really big dent in the unemployment numbers and speed our economic recovery:

Throughout the campaign, President Obama lamented the so-called skills gap and referenced a study claiming that nearly 80 percent of manufacturers have jobs they can’t fill. Mitt Romney made similar claims. The National Association of Manufacturers estimates that there are roughly 600,000 jobs available for whoever has the right set of advanced skills.

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour.

There is no shortage of skilled labor. There is a shortage, however, of skilled laborers who are willing to work for sharecropper's wages. Raising the minimum wage would have surely helped, and still would. Also too, that union card-check thing. But more worker retraining programs? They might prove an asset if it could be firmly established that markets pay a premium for highly educated workers. But as things actually work in the real economy, they seldom do.

---Baron V

The LBO of You

Someone's not getting asked to speak at the Aspen Ideas Festival:

Every time you read someone extolling the dynamism of the modern economy, the virtues of risk-taking, declaring that everyone has to expect to have multiple jobs in his or her life and that you can never stop learning, etc,, etc., bear in mind that this is a portrait of an economy with no stability, no guarantees that hard work will provide a consistent living, and a constant possibility of being thrown aside simply because you happen to be in the wrong place at the wrong time.

This is also a recipe for social dislocation/unrest and the unraveling of communities, as people have to pull up stakes every few years and go wherever the jobs are, or move out of their houses and into smaller apartments because they can no longer afford their mortgage payments, or postpone home-buying and raising families because they can't afford the commitment. It's an economy of renters and rent-seekers who are in a constant state of conflict with each other in a zero-sum game, and if you can figure out a way to strengthen social bonds in a laissez-faire economy that fosters social disintegration, there's a Nobel prize waiting for you.

Simply put, you can't preach communitarian social values and libertarian economic values in the same manifesto. The two belief systems are simply incompatible, which is why columnists like Douthat and Brooks---not to mention Friedman, who more or less peddles the same snake oil, minus the Calvinism---often seem so confused and contradictory in their thinking. Granted, it's always easier to flail the sins of indolent minorities, licentious women or greedy workers than it is to acknowledge the flaws in your own ideology, but it shouldn't blind the rest of us from recognizing the rhetorical bait-and-switch for what it is, i.e., a sign of a lazy and/or dishonest intellect. That's bad enough, but the greater tragedy for our culture is the fact that these people are taken seriously at all.

(Via.)

---Baron V