What’s Wrong Today:

Last week, Jesse Eisinger at ProPublica had an article co-published with the NYT Magazine questioning our Department of Justice’s (DOJ) efforts to prosecute bankers for wrongdoing in the 2008 financial crisis. He shows that only one banker went to jail for his actions.

This proves we have a two tier legal system that dovetails nicely with our two tier economic system. The top 1% earn more and also abide by different rules than the rest of us. The banks play by different games, but they are still held by certain standards and terms, for example this current expected credit loss model compliance requirements in 2019.

The only Wall Street “executive” to go to jail for the financial crisis was Kareem Serageldin, the head of a trading desk at Credit Suisse. Serageldin pleaded guilty to holding mortgage-backed securities at artificially high marks in order to minimize reported losses on his trading portfolio.

“High marks” refers to the requirement that banks “mark to market” assets in their portfolios every day. Marking crappy mortgages that had lost much of their original value to market would cause the banks to show higher losses on their loans, and would simultaneously lower the bank’s capital ratios. As James Kwak of the Baseline Scenario says:

The Financial Standards Accounting Board (FASB) changed its rules in April 2009 to make it easier for banks to inflate their marks. And the Obama administration’s “homeowner relief program” (HAMP) was really designed to allow banks to delay realizing losses on their mortgage loans by dragging out—but generally not preventing—foreclosures.

This was a deliberate strategy called “foam the runway”.

Dave Dayden quotes Neil Barofsky’s book Bailout about a meeting between Elizabeth Warren (then Head of the Congressional Oversight Panel) who asked (then Treasury Secretary) Timothy Geithner about HAMP. After trying to avoid an answer, Geithner finally said:

The picture you get isn’t pretty. It’s a picture of the immense resources of the American criminal justice system deployed against bit players, with no consequences for the people responsible for the financial crisis. The judge in Serageldin’s case called his conduct:

Why hasn’t the Justice Department tried to convict anyone at a bank with any significant responsibility? What about Standard Chartered, where manually typing over data fields to circumvent money laundering controls was a written procedure? 

Serageldin’s former employer had revised its past financial statements to account for a loss of $2.7 billion that should have been reported. Lehman Brothers, AIG, Citigroup, Countrywide and many others had also admitted that they were in much worse shape than they initially allowed. Merrill Lynch, in particular, announced a loss of nearly $8 billion, three weeks after claiming it was $4.5 billion.

According to Eisinger, there was a change in strategy about pursuing individual prosecutions starting during the Bush administration, when Michael Chertoff initially went hard at companies like Enron’s accounting firm, Arthur Anderson. Anderson closed after its conviction costing nearly 10,000 jobs. Subsequently, the DOJ decided to seek large fines from corporations for wrongdoing rather than put executives in jail. From Eisinger:  

So the record is clear, they reached financial settlements in 9 times as many cases in 8 years than they had in the prior 12 years. This occurred in part because of a persistent effort to reduce prosecutorial power:

No change was momentous on its own. Indeed, some may have legitimately restored the rights of defendants, but taken together they marked a significant, if almost unnoticed, shift toward the defense.

Then there is the revolving door, which prosecutors and regulators walk through on their career climb up the corporate ladder. Moving from government to Wall Street or the big law firms that serve Wall Street keeps the prosecutions from getting too personal. As James Kwak says:

The erosion of the DOJ’s actual trial skills soon became apparent. In November 2009, the US attorney’s office in Brooklyn lost the first criminal case of the crisis against two Bear Stearns executives accused of misleading investors.

The prosecutors rushed into trial, failing to prepare for the exculpatory emails uncovered by the defense team. After two days, the jury acquitted the two money managers. The fear of losing put a chill on future efforts to prosecute.

Are the bank executives inoculated against lawsuit? Maybe. The prosecution and conviction of global financial institutions and their top executives is believed by the Fed and the Treasury Department to pose systemic risk to the world financial system, so we get spun, and the DOJ asks the banks for fines, not scalps.

All of this has made American banks view the rules of the game the same way that they look at rules in football. There is a rule in football against offensive holding. But nobody considers holding to be cheating, because holding comes with a penalty which is assessed as part of the game:

• It is the offensive lineman’s job to open holes for runners and to protect the quarterback
• It is the referee’s job to observe infractions of the rules and to assess the stipulated penalties

So holding in football is a part of the game which carries a certain risk. The lineman rolls the dice and holds if the situation seems to demand it, and attempts not to get caught, but nobody considers this cheating.

When Wall Street bankers are arrested, they do what is known in finance as an expected-value analysis: They weigh the cost of fighting, how long it would take and the chances of the best and worst outcomes. And they consider the fines to be just a cost of doing business.

How apparent does the death of the rule of law have to become before the little people catch on? Meanwhile, the “little” taxpayers fund these regulatory agencies whose primary purpose is to provide cover for executives involved in corporate criminal enterprises.

The Divide by Matt Taibbi details how the high-income investment banker types pay a fine, admit no personal wrong-doing, and walk away to do it again. It is worth your time and money.

Our society has become really good at punishing the little guy (sometimes for nothing at all) and abysmal at taking on the big fish who are perpetrating economic crimes against society.

“The two greatest obstacles to democracy in the United States are, first, the widespread delusion among the poor that we have a democracy, and second, the chronic terror among the rich, lest we get it” – Edward Dowling

Wealth disparity, a subject we used to not talk about, is now being talked about because of Thomas Picketty and his book, Capital in the 21st Century. The subject was ignored, mostly on purpose, for decades while the cash piled up, much of it offshore. That wonderful outcome was aided and abetted by US bankers and tax lawyers:

If millionaires in the United States formed their own political party, that party would make up just 3% of the country, but it would have a majority in the House of Representatives, a filibuster-proof super-majority in the Senate, a 5-4 majority on the Supreme Court and a man in the White House

After the dust cleared from the Great Recession, we finally saw that the rich had built themselves an impregnable fortress. The rich, and the Congress members they bought and paid for, now lecture the rest of us on how to create jobs, how to cut the deficit and how to get along on a $7.25 minimum wage.

Congress says wages of little people are just enough:

And now they want us to thank them for their concern by electing Republicans to majorities in both Houses of Congress:

Of course, not everyone will have an easy time voting:

But the little people better pay their taxes. We need their money to project power around the world. Well, maybe not in Ukraine.
There is a joke in Latin America: “Why has the USA never had a regime change? Because it doesn’t have an American embassy.”

Europe seems cool with feeding the Bear:

Justice John Roberts spreads the word; some Americans hear the message:

The NBA has a much better understanding of our world than the Supremes:

What’s
Wrong Today:

As of April
21, the Afghan war had cost 2,314 Americans their lives and wounded 19,701. It
is very early for a complete debrief, but the press has started offering
several under-reported stories for Americans to think about.

First, the
revisionist history has started. According to Andrew Peek at the Fiscal
Times:

Win?
Where’s the win? As soon as we leave, the place will go back to where it was.
All that is visible today is a near-trillion dollar expenditure, with limited
benefit to Americans.

Second, we are beginning to see
in-depth studies of what went wrong in Afghanistan. Neil Gordon, of the Project on Government Oversight (POGO) reports on just how concentrated US funding
of Afghan reconstruction projects was. Nearly 90% percent of State Department’s
reconstruction funding—$3.5 billion—was obligated in 55 contracts awarded to just
19 recipients. The Special Inspector General for Afghanistan Reconstruction
(SIGAR) found that, between the beginning of fiscal year 2002 and
March 2013, more than two-thirds of the money ($2.8 billion, or 69%) will go to
just one company—DynCorp.

Readers may
be familiar with DynCorp
International’s colorful history in Afghanistan,
which includes instances of labor smuggling, weak performance and overpayments on a base support services
contract, botched construction work on an Afghan Army garrison, and lawsuits filed by disgruntled
subcontractors.

The second
largest contract recipient is PAE Government Services, which received 15% of
all State Department reconstruction funds. PAE was a subsidiary of Lockheed
Martin until 2011. It
had issues as well:

The law
requires the federal government to award contracts only to responsible vendors—those with satisfactory
records of past performance, integrity, and business ethics. Do these contractors sound like they should
be qualified to you?

There
should have been an outcry in Congress. Why no outcry? Follow the money!

Third, Bloomberg just got its hands on a previously undisclosed Pentagon study
that says in part that the US government:

The details
are surprising. Analysts for the US Joint Chiefs of Staff said in a 65-page
assessment dated Feb. 28 that:

The
Pentagon analysts found that the US coalition “was slow to understand the
integrated and pervasive threat corruption posed” to their mission:

The assessment
found that the initial US focus in late 2001 on defeating the Taliban and Al-Qaeda “created mutually dependent relationships” that “empowered” warlords,
and “expanded their [warlords] opportunities for financial gain and impeded
later” efforts to counter corruption:

The
widespread use of Afghan trucking companies, which employed security
contractors, became a primary engine of corruption, according to the report:

Bloomberg
speculates that once the report is released, it might undercut any remaining
support by Congress and taxpayers for the diminished mission. The war has cost
the US more than $710 billion since 2001, according to the National Priorities
Project, which studies federal spending.

The report’s
money quote may be that the US federal
acquisition system is “more suitable to Peoria than Kabul”. Gee whiz.
Modern nation state meets feudalism; fails at playing feudal lord.

For the US
government to say that it was unaware of the extent of corruption in Afghanistan
is startling. If any of them had bothered to read the history of Afghanistan,
they should not have been surprised.

What an
affront to the intelligence of American citizens.

Finally,
the Fiscal
Times reports
that the US has spent $7.5 billion on counter-narcotic programs in Afghanistan.
The result? Record high opium-poppy
production. A report to Congress by the Special Inspector General
for Afghanistan Reconstruction detailed figures from the United Nations Office
of Drugs and Crime estimating that opium-poppy cultivation in Afghanistan this
year will reach an all-time high, jumping up 36% from just two years ago:

Afghanistan
produces about 75% of the world’s opium, which is estimated to account for 4%
of the country’s GDP. That share of GDP climbs to 14%, factoring exports such
as heroin and morphine. Nice work! We got the exact opposite of what we thought
we were paying for.

Americans should
be saying: “I’m mad
as hell, and I’m not gonna take this anymore”.

Then they need to ask: All that money spent in Afghanistan,
and for what?

If Americans aren’t distracted by missing planes and racist team owners, they
might also want to focus on questions like:

• Why
  aren’t our bridges getting replaced?

• What
  happened to the money to fund our schools?

• Why
  are returning Afghan veterans begging on street corners?

• Why
  are there empty houses down the block?

• Why
  can’t their son or daughter get a job and move out?

• Why
  can’t they retire?

Has anyone
actually seen their congressperson lately? Why is he/she running the same ads
he/she ran two or four years ago?

Then they
need to ask themselves: How will I make a difference in all of this?

What’s
Wrong Today:

It’s May
Day in the US, May Day was celebrated by early European settlers. International Workers’ Day began in the
US as a commemoration of the Haymarket Massacre of 1886 in Chicago. After the
1917 workers’ revolution in Russia, May Day
became a widely celebrated holiday in industrial areas of the US.

So, with
workers on today’s radar, it is appropriate we continue yesterday’s discussion of how low-wage jobs are driving
our recovery from the jobs lost in the Great Recession. Reader Linda S. called
out an article in the Wall
Street Journal about the decline in apprenticeships available from US
corporations. From the WSJ:

Here is a WSJ chart that describes the current apprenticeship
situation:

Most of us
are unaware that there is a National Apprenticeship Act that was passed in 1937, an earlier
poor economic environment. It is administered by the Department
of Labor (DOL), and
establishes minimum standards for apprenticeship programs. The Act was later
amended to permit the DOL to issue regulations protecting the health, safety
and general welfare of apprentices, and to encourage the use of contracts in
the hiring and employment of them. Subsequently, additional regulations banning
racial, ethnic, religious, age and gender discrimination in apprenticeship
programs became part of the Act.

Earlier
this month, President Obama set aside $100 million to go toward apprenticeships
in high-growth industries, and recognized a few new programs in health care,
information technology and supply-chain management. Whilst in the UK people can get cips level 4 apprenticeships, this is at least a start towards diverifying the options over here in the States.

So, with
government assistance and oversight, why are these programs declining in usage?

Perhaps the
biggest obstacle is that two-thirds of
apprenticeship programs in the US are in the construction industry, and
jobs in construction have just not recovered:

Construction
jobs are down by 1.2 million since the start of the Great Recession.

Apprenticeships
involve more industries than the handful of trades that embraced the
earn-and-learn model that began in 1937: Wastewater technicians and
computer-system administrators are among the positions for which apprentices
can now train.

Another damper is a widely held view that young people should
stay in school and then get a job. Advocates of apprenticeships say this
thinking is misguided. The WSJ quotes
Brad Neese, director of Apprenticeship
Carolina, a program of the South Carolina Technical College System:
(brackets by the Wrongologist)

South
Carolina has had great success increasing the number of apprenticeships.  The number of SC businesses offering
apprenticeships has grown from 90 in 2007 to 647 today. Some 4,700 people who
trained in South Carolina’s apprentice program are now fully employed. To get
employers involved, the state offers a $1,000 annual tax credit for each
apprentice on the payroll. More from Mr. Neese:

Apprenticeships
are very much alive in the professions, we just call them something else. What
is a MD’s residency but an apprenticeship? (albeit paid for by Medicare) Accounting and Law work the same
way, you leave school and work like a slave for a few years in exchange for paying
tuition (in the form of longer hours and lower wages) while getting real world skills.

Universal
acceptance of apprenticeships in corporate America is not an easy problem to
resolve. Our current educational system poorly serves the need for skilled
workers. Schools regularly push their students (especially the
“smart” ones) towards college education and many parents, perhaps
unaware of other options, go along with this line of thinking.

The
desire by parents for their kids to have a gradual “socialization” experience by attending college, is likely another contributing factor.
The other side of the problem is that companies are often reluctant to offer
apprenticeship programs because they fear (often with good reason) that the graduates
of such programs will be quickly “poached” by other companies who do
not offer training programs. (See our High Tech Collusion column which describes the
prevalence of “no-poaching” agreements in Silicon Valley.) 

Germany’s success, as the chart above shows, might be a model for US apprenticeships.
Their strategy, apart from producing skilled workers, also provides options for
further education. In that system, a skilled toolmaker can go on to earn a
doctorate in engineering. The political and social structure required by such a
system would probably not be welcomed in the US as it would involve interlocking arrangements between government
industrial policy and corporate strategy, which US conservatives would
label as “excessive interference” in markets or, as “socialist”.

Thirty
years ago, throughout the US, it was quite typical for a company to pick up
tuition costs for part-time attendance at major public or private universities
or at community colleges, provided that the courses were work-related and part
of a technical degree program.

As soon as corporate America sold the
concept of H1B visas to Congress that policy started to evaporate. Many
American companies don’t train their workers (so much) anymore. Most of those
companies treat employees as disposable assets and focus more on short-term profits
than building skill sets and loyalty by their employees.

Our industries would work better if
more schools offered technical courses for interested students. In past years,
students in industrial schools completed their apprenticeship while in high school.
That allowed them to enter the working world as journeymen, able to earn a good
living.

And despite
what corporate America says they want, there’s NO such thing as finding the
“ideal” employee, one that is young, without unreasonable salary demands, but
with a complete skills set.

That is unrealistic,
just like searching for the “ideal boss”.

What’s Wrong Today:

The news today comes in two flavors. Bad and awful. Some of you probably saw Sunday’s New York Times article By Annie Lowrey in which she quotes from a National Employment Law Project (NELP) study. The study showed that in the last recession, the economy lost more higher wage jobs than it has gained since then, and it has created more low wage jobs than it had previously lost.

The study found especially strong growth in restaurants and food services, administrative and waste services and retail trades. Those industries — which often pay wages at the federal minimum — accounted for about 40% of the increase in private sector employment over the past four years.

In essence, America’s economy has replaced good jobs with bad ones:

That’s the merely bad news. The awful news is that this is how we have finally regained all of the jobs lost in the recession that began in 2007.

The next day, the Times published a rebuttal by Justin Wolfers:

Sure. Mr. Wolfers must be a charter member of the Society of Apologists for Plutocrats (SAPs).

Retail employed 15.26 million people (seasonally adjusted) last month. 13.049 million retail jobs were non-management (production and non-supervisory). For those keeping score, that is 85.5% of retail jobs. Those jobs averaged 29.9 hours/week, down a half-hour from a year ago and pay an average of $14.26/hour. That’s a yearly income of less than $22,000. Most jobs in retail are not in management. And most of those working in retail are going to earn less than the poverty level for a family of 4 in the US.

The larger point is that, using the NELP study, 22.4% of the jobs lost in the 2007 recession were in the lower-wage category, but 43.9% of those created since then are lower wage. This trend must be seen not just against the backdrop of the deteriorating quality of American jobs but the country’s growing inequality.

It is clear that hard work and integrity are no longer guarantees of upward mobility in America. We could easily see a corrosive class envy coming to a boil. Here is an illustration of the point:

It’s clear that the top 10%–the class of finance guys, hedge fund managers, technocrats, professionals, and entrepreneurs, have managed to increase their wealth in the past 20 years, while the 90% have just been treading water. A household income of $150,000 a year qualifies as a top 10% income.

Breaking out of the bottom 90% has become only a dream for the average person.

If recent college grads can only find jobs in retail, hospitality and food service, or underpaid/unpaid internships just to cling on to their “dream career”, how can we expect them to get married, purchase a home, purchase a car, purchase the goods and services that will sustain our economy’s fragile recovery?

We are in the late stages of the recovery from the Great Recession. There is a good ch
ance that that the “job creators” will do nothing that brings about any change to the current crapification of our economy.

There has been no blogging since Sunday, as the Wrongologist has been upgrading his computer system. Restoration of data is now complete, and aside from the occasional misplaced file, we are able to begin blogging tomorrow.

We are unlikely to mention LA’s Donald Sterling, but you already know what you think about that hot, steaming pile of wrong.

“All you need in this life is ignorance and confidence, and then success is sure” – Mark Twain

“I never listen to debates. They are dreadful things indeed. The plain truth is that I am not a fair man, and don’t want to hear both sides. On all known subjects, ranging from aviation to xylophone-playing, I have fixed and invariable ideas. They have not changed since I was four or five” – HL Mencken

These quotes apply to two people in the news this week who look ignorant even if they are not. Chief Justice John Roberts is clearly a follower of Mencken. The Chief says” “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race”:

Here is what Justice Sotomayor said in her dissent:

“The way to stop discrimination on the basis of race is to speak openly and candidly on the subject of race, and to apply the Constitution with eyes open to the unfortunate effects of centuries of racial discrimination. As members of the judiciary tasked with intervening to carry out the guarantee of equal protection, we ought not sit back and wish away, rather than confront, the racial inequality that exists in our society.”

Then we have Cliven Bundy, who demonstrates Twain’s quote perfectly. He justifies his 20-year refusal to pay the Bureau of Land Management for grazing rights on the public land where he runs his cattle by claiming his ancestors gained livestock water rights in the 1870s:

Not true. KLAS, the Las Vegas CBS affiliate checked out the Bundy family’s history with that land. Although Bundy says water rights were handed down to him, records show that Bundy’s ranch was not purchased by his family in 1948. In 1998, a federal judge ruled that whatever inherited rights Bundy claimed were specious since the Bundys did not even begin grazing on the (then) public lands until 1954. The judge said Bundy should be barred from grazing his cattle on federal range land until he paid his fees to the BLM, just like everybody else.

Bundy sees things differently. He believes he has some special inherited right that cannot be proven in court. Therefore, he does not accept that the US government has any legal authority over Nevada.

And in other news, more followers of HL Mencken showed their colors, starting with the FCC:

The FCC’s idea of a level playing field:

News about Obamacare not good for Republicans:

Plutocrats say there is a ladder of opportunity for everyone:

 

What’s Wrong Today:

The principle that all Internet content should be treated equally as it flows through cables and pipes to consumers (called net neutrality) looks all but dead. From the NYT:

These proposed changes end net neutrality — the idea that no providers of legal Internet content should face discrimination in providing offerings to consumers, and that users should have equal access to see any legal content they choose.

Today consumers can pay Internet service providers for a higher-speed Internet connection, but at whatever speed they choose, under the new FCC rules, they might get some content faster, depending on how much the content provider has paid the service provider.

Tim Wu at the New Yorker offered some insight: (emphasis by the Wrongologist)

The new rule gives broadband providers what they’ve wanted for about a decade: the right to speed up some traffic at the expense of others. The motivation is not complicated. The broadband carriers want to make more money for doing what they already do. Never mind that American carriers already charge some of the world’s highest prices for a service that costs less than $5/month to provide. To get cheap broadband that actually delivers, you could take a look at HTTPS://WWW.EATEL.COM/ for some of the best plans on the market.

It is troubling that the FCC is caving in only three months after a federal appeals court struck down agency rules intended to guarantee a free and open Internet. After all, it was in January, in response to the court decision that Tom Wheeler, FCC Chair, said: (emphasis by the Wrongologist)

So, Mr. Wheeler changed his mind. Why? Jan Brodkin of Ars Technica speculates that the revolving door at the FCC may help explain it:

He also outlines the career of Meredith Baker: (brackets by the Wrongologist)

Here is a graphic illustration of the revolving door at the FCC:

The history of regulation is that large firms in an industry buy politicians and use them to extract rents, raise barriers to entry, erect tariff barriers, and do other things to pad their bottom lines. Most of the time, the sales window is open and everyone just looks the other way. Who got bought? The man who appointed Mr. Wheeler in 2013 will never again run for reelection.

Big business groups like to say that they are against regulation because of free market, big government, economic efficiency, consumer choice, blah, blah, blah.

The need to pay access fees for faster service will make it harder for new entrants on the content and services side; in the long run, paying these fees will be good for Netflix, since it won’t have to worry as much about competition. The ultimate result will be to lock in the current set of incumbents that control the Internet, ushering in the era of big, fat, incompetent monopolies.

This is another case where the regulators support the regulated, the corporatists and the pl
utocrats.

In case you haven’t noticed, there is a war going on. Small businesses and individuals with less than multimillion dollar bank accounts are in the cross-hairs. The average American must pay for and account for every little thing we do, while the mega corporations are able to make what are for them, small payments to big lawyers and accountants to limit access for the rest of us.

All while avoiding paying their fair share of taxes.

The whole money-politics-power crowd has deployed a well-oiled model of how political corruption actually works.

What’s
Wrong Today:

From Ben
Casselman at 538:
(brackets by the Wrongologist)

Among all
16- to 24-year-olds, college enrollment experienced its biggest decline in at
least two decades. The report echoes other evidence that college enrollment has declined after
surging during the recession:

Enrollment was on a
general upward trend, but peaked in 2012 and has since dropped in each of the
last two years. The fact that this is a two-year drop suggests that it isn’t
just a one-time fluke in a volatile series. The drop in college attendance by recent high
school graduates is concentrated among groups most likely to be
deciding between going to school and joining the labor force: Part-time and
community college enrollments saw the sharpest decline. Meanwhile, the
enrollment rate increased for four-year colleges, where costs have been rising
the fastest. For-profit colleges, which have been subject to mounting criticism over their high costs and
inconsistent educational value, have also seen enrollment decline.

Many
analysts have attributed the slowdown in college attendance to the rapidly
rising cost of a higher education. That may be true, but the decline in
enrollments may have as much to do with obverse, the perceived value of the degree. Charles
Hugh Smith has looked at the rapid growth in student loans vs. the growth
in median income for people with bachelor’s degrees:

Higher education is busy turning students into debt-serfs via student
loans, while our economy provides a diminishing return on the investment.

Despite
the recent downtick, college enrollment remains above pre-recession levels. In
1982, 26.6% of 18- to 24-year-olds were enrolled in college; in 2012, that
figure stood at 41%. In some ways, America’s higher education model reflects
supply and demand: The more demand for a degree, the higher its cost. The
greater the supply of degreed graduates, the lower is the market value of the
degree.

According
to Heidi Shierholz of EPI:

According
to Ben Casselman, the recent decline
was concentrated among women. Women still attend college at a higher
rate than men, as they have for decades. But the gap is narrowing: In 2013,
68.4% of female high school graduates enrolled in college, versus 63.5% of male
grads. In the class of 2009, by contrast, 73.8% of women attended college,
versus 66% of men.

Less than
60% of African-American and Hispanic members of the class of 2013 were enrolled
in college last fall, compared to 67% of white graduates. The numbers are
volatile from year to year, but neither gap has narrowed meaningfully over the
past 20 years. Moreover, young black and Hispanic Americans also have a higher
unemployment rate than whites, suggesting they aren’t choosing to skip college
because of strong job prospects.

Choosing
not to go to college can have long-term consequences. The unemployment rate for
16- to 24-year-old high school graduates with no college education was 18.9% in
2013, versus 8.3% for college graduates.

And those
who do manage to find jobs earn less than their college-educated peers: Among
25 to 34-year-olds employed full-time, year-round, college graduates earn 50%
more than those with a high school diploma.

Despite
the lifetime earnings argument, increasing costs and decreasing benefits of a
college degree pose a barrier for many kids from families with lower incomes,
who are going to college in lower numbers than those in the higher income
distributions.  

What’s
Wrong Today:

One outcome
of the political struggle between Democrats and Republicans is the parties’
continuing efforts to game our voting rules. Nothing makes voters more cynical
than seeing political leaders seemingly supporting or opposing election laws
based solely on their partisan impact — from redistricting reform
to fights over whether to allow early voting. ­

New York
this week became the 10th state (plus DC) to join the National Popular
Vote Interstate Compact, (NPV). The compact is a clever workaround to the
Electoral College. The Compact seeks to guarantee election of the presidential
candidate who wins the most popular votes in all 50 states and the District of
Columbia. The states that have approved NPV so far come in all sizes. Four are
small (Rhode Island, Vermont, and Hawaii, plus the District of Columbia), three
are medium-sized (Maryland, Washington, and Massachusetts), and four are large
(New Jersey, Illinois, California, and now New York).

By signing
on to the Compact, states agree they will award their electoral votes to the
winner of the national popular vote. However, the measure will only be
triggered once states accounting for a majority of electoral votes have joined.
Right now, the states that support
the Compact total 165 of the 270 electoral votes necessary to activate the
national popular vote. There are 538 electoral votes, so a majority is 270.

If states
with an additional 105 electoral votes pass it, the US will hold a presidential
election in which, for the first time in US history, every vote in every state would count equally. The candidate who
receives the most votes will win.

We don’t
need a constitutional amendment to achieve this goal. The Constitution gives
each state power over how to allocate its electoral votes and the ability to
enter into binding interstate compacts. As
Hendrick Hertzberg said in the New
Yorker:

And it
does this without changing a word of the Constitution. Can it happen? As Nate
Silver’s
chart below indicates, the relationship between whether a state has joined the
Compact and how it voted in the 2012 presidential election is nearly a 1-to-1
relationship:  

The 7 states where
President Obama won by the widest margins, along with DC, have joined. So have
three others — New Jersey, Illinois and Washington — where Obama won by at
least 15 percentage points. But none below that threshold have done so.

The Compact may be able to add Delaware, Connecticut
and Maine, where Obama also won by 15 percentage points or more. But they
account for only 14 total electoral votes (and Maine already has a unique way of apportioning electoral votes).

Oregon and
New Mexico also re-elected Obama by double-digit margins — and those two states
have become increasingly off-limits to Republican presidential candidates — but
have just 12 electoral votes between them.

After
that, you get to states like Michigan and Minnesota, which are blue-leaning but
that are competitive for both parties.

Their
votes might not be quite as influential in the Electoral College as the campaigns
presume — a Democrat who lost Minnesota would probably be in too much trouble
elsewhere to cobble together a 270-vote majority. And what about the swing
states, such as Ohio, New Hampshire and Colorado? Those states, along with
Florida, Virginia, Nevada, Iowa, Wisconsin and Pennsylvania, collectively had a
98.6% chance of determining the Electoral College winner in 2012, according to Silver’s
538 blog. In other words, these nine states are 70 times
more powerful than the other 41 (which collectively had a 1.4% chance of
determining the winner) combined.

That’s part
of the reason that many Americans object to the Electoral College. But states whose voters
have a disproportionate amount of influence may be in no mood to give it up. In
theory, recent history shows that states that want a Republican in the White
House might have an incentive to join the Compact. That’s because in the 2008
and 2012 elections, the Electoral College helped Democrats.

That means
that even if Mr. Obama had lost the national popular vote, he could have still
won in the Electoral College. The Electoral College has the potential to elect
a non-winner in the popular vote, something that is contrary to basic
democratic principles. It can render a major state like New York, California or
Texas irrelevant to presidential decision — without adding a corresponding
benefit.

As
Hertzberg says, it’s instructive that all 50 states have an independent
executive and 49 states have also chosen to copy the bicameralism of Congress, but
none has copied the electoral college. And no other liberal democracy uses it
either.

Under
the National Popular Vote, every voter would be politically relevant and equal
in every presidential election. Every vote would be included in the state
counts and national count.

Today,
there is no meaningful competition
in more than two-thirds of states and in even more congressional districts. As
soon as a state has an underlying preference of more than eight or nine
percentage points for one party — no amount of money or voter mobilization can
influence that state’s presidential outcome in a nationally competitive year.

For the
last few presidential cycles, more
than 98% of general election campaign spending and campaign events took
place in only 12 states. Meanwhile, at least
35 states — small and large, Eastern and Western, Democratic and Republican
— received less than one-hundredth of a percent of the attention they would
likely receive under a national popular vote for president.

This makes
a mockery of the idea that in presidential elections all states and all voters
matter. Our all-consuming focus on swing states makes their voters’ concerns
infinitely more important to presidential campaigns than the concerns of the
other two-thirds of Americans.