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The woman who gives the kids their music lessons
The guy who takes care of all the leaves in your yard in the fall.
The waitress at the local diner.
The woman who watches the kids for a couple hours after school.
The doctor who gives us our weekly allergy shots.
The owner of the coffee shop on the corner.
The tutor who helps your kids understand math.

We are all dying the economic death of a thousand paper cuts, dealing with customers and clients making rational economic decisions not to spend money because of an irrational cadre of ideologists in the House of Representatives who don’t care for how a bill became a law, how the Supreme Court said the law was OK, or how the American people re-elected the man after whom the law was colloquially named.

Those rational people aren’t just customers or clients. They are our friends, our neighbors, and our family. Thousands of them, furloughed and faced with the loss of their paycheck, with no sense of when that paycheck may resume, make numerous choices on what things they’ll cut back to stretch their budget. I truly empathize. We’ve all been there before. I get it.

Each individual choice is a little nick which by itself is tolerable. It’s not as if we’ve never lost a client before due to a change in economic circumstances. It happens with a sad regularity. All we can do is wish them well and hope to see them back on their feet again soon – knowing full well that we’ll probably never see half of them again.

But this time is different. It isn’t just a handful of people from a local company that is downsizing. This time it is thousands of people who live and work within 5 miles of my business who’ve been furloughed for no good reason. And all of these people are making the choice not to spend money at the same time. Each individual decision may make only a little nick, but it’s too many nicks all at once. I worry that the bleeding isn’t going to stop in time.

We are dying the death of a thousand Congressional paper cuts.

I’ve got payroll to meet, utilities to pay, and rent due at the end of the month. I’ve got suppliers in the same boat who are trying to live with smaller orders than normal. Just because Congress chooses to quit doesn’t mean the private economy can hit pause and wait to see how this Tea Party temper tantrum ends. I just hope my rainy day fund lasts longer than they do.

So please excuse me if I’m a little too quick to shout in anger at every this-shutdown-is-good-for-this-party story I read. Please excuse my desire to smack every smug politician who appears on my TV screen upside his damn head. We aren’t pawns in this game you are playing. We aren’t tallies on some political scoreboard.

We’re just the rabble that does most of the working and paying and living and dying in this community. All I ask is that you do your damn job so we can get back to our wonderful lives.

UPDATE October 11, 2013 8:42 AM EDT NBC News posted a list of federal employee density by Congressional district. Check it out to get a sense of what impact the shutdown may have in your community.

I draw customers from MD-3, 2, and 7. They are the 1st, 8th, and 73rd densest Congressional districts for federal employees.

Neighborhoods of color with similar crime rates as white neighborhoods have much higher rates of stops and frisks.
Among New York City precincts with similar levels of crime, precincts with a high proportion of minority residents experience significantly higher rates of stop and frisk than whiter precincts.
Last Friday, New York City filed an appeal of the US District Court ruling that the City’s Stop & Frisk policy, as practiced, utilized “indirect racial profiling” and was, therefore, unconstitutional. Mayor Michael Bloomberg and Police Commissioner Ray Kelly initiated their media defense that same weekend. Kelly made the rounds on the Sunday talk shows, and Bloomberg took to the OpEd pages of the Washington Post to defend Stop & Frisk.

This PR blitz gives insight into the line of defense the City will take in its appeal, which gives us an opportunity to refine a rebuttal. What follows won’t be a legal rebuttal, rather it will be a data rebuttal. First I’ll summarize Bloomberg’s and Kelly’s positions. Then I’ll present the data which may be helpful in supporting the legal rebuttal.

While the Mayor’s and the Commissioner’s defense of Stop & Frisk revolved around a number of issues, I'd like to highlight a couple where hard data can be clarifying.

1. Benchmarking - Bloomberg and Kelly insist that witness and victim descriptions of a violent crime suspect's race or ethnicity should be the benchmark against which race-neutrality should be measured. This isn’t exactly new, as it has been an ongoing defense used by the Mayor. The New York Times reported on a Bloomberg statement back in June indicative of both his defense of Stop & Frisk and his scorn for those who oppose him.

“They just keep saying, ‘Oh, it’s a disproportionate percentage of a particular ethnic group,’ ” [Bloomberg] said dismissively of the practice’s critics. “That may be, but it’s not a disproportionate percentage of those who witnesses and victims describe as committing the murder. In that case, incidentally, I think we disproportionately stop whites too much and minorities too little.”

He added: “It’s exactly the reverse of what they say. I don’t know where they went to school, but they didn’t take a math course. Or a logic course.”

2. Diverse Institutions Can't Be Biased – The Mayor and the Commissioner both insist the NYPD can’t be engaged in “indirect racial profiling” because they have black and Hispanic cops. As Kelly described how the judge's decision was an unfair indictment of hard working officers protecting the City, he told Bob Schieffer on Face the Nation, "It’s also ironic, here, that the New York City Police Department is the most diverse police department in the United States. We have police officers born in eighty-eight countries." Bloomberg wrote:
As a black Brooklyn detective with nearly 20 years on the job recently told the Daily News, "Stop-and-frisk is never about race. It's about behavior." If an officer sees someone acting in a manner that suggests a crime is afoot, he or she has the obligation to stop and question that person. That's Policing 101, and it's practiced all over the country.
The Mayor need not worry. Math will be involved. First, we will examine the problem with the Mayor's benchmarking standard. Then, we will examine the social science regarding bias to establish that diverse institutions can indeed be biased. Finally, we will review the data that shows it. I compiled the data that follows from the NYPD’s 2012 report on Crime and Enforcement Activity in New York City, their 2012 Reasonable Suspicion Stops report, plus the invaluable New York Civil Liberties Union 2012 dataset of UF-250 Stop, Question and Frisk Reports.
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Recently, Bill O'Reilly hosted the NAACP's Hilary Shelton to ostensibly engage in a conversation on race. What transpired, instead, was an attempted lecture by O'Reilly and an utter dismissal of Shelton's authority to speak as a black leader. It is emblematic of a strain of conservative white reaction to any attempt to discuss race and inequality in the United States. It blackwashes society's ills by attempting to isolate problems as uniquely black and frame solutions as burdens the African American community must bear on its own. It rejects context and whitewashes history by marking Brown v The Board of Education, the Civil Rights Act, and the Voting Rights Act as the end of racism, absolving from sin future generations of whites.

It is rather stunning how quickly O'Reilly went from praising Shelton as someone concerned with the plight of all people to lumping him in with the "race hustlers". O'Reilly initially said of Shelton, "You're a gentleman, and you are someone who I believe sincerely wants to help poor people, not just poor black people, but more people in general. And I respect that. You're not hating." But whenever Shelton brought up history or context, O'Reilly interrupted by saying, "You're wrong!" and arrogantly insisting that Shelton agree with him. Shelton had the temerity to disagree with O'Reilly's view of "What's Wrong With Black People"™. And because Shelton disagreed and tried to address problems bigger than the African American community, O'Reilly no longer saw a gentleman, but just another race hustler.

I have studied this issue for thirty years, and my sincere belief is that the African American community it is being devastated by the collapse of the family. That's your root, that’s your core. That drives poverty. It drives violence. It drives resentment. It drives everything. And you guys are just not acknowledging it.
It's not quite a "you people" moment, but the blackwash drips from O'Reilly's broad brush.

It's also plainly obvious that O'Reilly doesn't see white society's role in creating, perpetuating, or solving these issues he's spent so long studying. While Shelton uses the inclusive pronoun "we" 12 times in the interview, O'Reilly utters it once (and only as signifying appreciation for Shelton appearing on the show). O'Reilly concludes the interview by dumping everything in Shelton's lap.

[Y]ou’re never going to improve the situation until you acknowledge that... the out of wedlock birth rate... is a catastrophe. And income inequality, violence, it all stems from that. And you've got to start there.
O'Reilly seems to say, Hey, look, white America didn't make this mess, so black America needs to clean it up.

So let's look at the data.

Between 1970 and 2010, births by unmarried black women as a proportion of total births by black women nearly doubled. Contrary to O’Reilly’s theory, however, the gap in median income between black and white families shrank. In 1970, the median income for black families was just 50% of the median income for white families according to US Census data. By 2011, the median income for black families rose to 63% of that for white families. It isn't parity, it isn't where it should be, but it is progress and it clearly contradicts O’Reilly’s narrative.

High school dropout data doesn't support O'Reilly's claim either. According to the US Department of Education, 72% of African Americans between the ages of 18 and 24 had their high school credentials in 1972. By 2009, that number jumped to 87%, representing an increase of 21%.

Not surprisingly, violent crime statistics do not support O’Reilly’s theory either. After homicide rates for men (both black and white) reached a peak in 1993, they’ve steadily declined since then. According to FBI statistics, homicide offending rates for black men ages 18 to 24 are down 52% since 1993. They are down 38% for white men ages 18 to 24 during the same time period.

In the United States, neighborhood rates of single parent households are correlated with lower education attainment, lower income, and higher crime. But correlation isn't necessarily causation. While this relationship holds for distinct snapshot at different points in time, adding a continuous time element confounds the relationship.

O'Reilly gets it wrong because he has a prejudicial view of society. While it is true that the proportion of births by unmarried black women nearly doubled between 1970 and 2010, there is a large chunk of context missing from his narrative. By framing out of wedlock births as a particularly vexing problem for the African American community, O'Reilly missed that the proportion of births by unmarried white women rose 414% during this same period! If O'Reilly spent those past 30 years studying more carefully, he would've found that the increase in births by unmarried women isn't just a black issue. It's not even a uniquely American issue. A 2009 CDC report on nonmarital childbearing noted, "The United States is not unique, nor does it outpace other countries, in nonmarital childbearing... The upward trend in nonmarital childbearing seen in the United States is matched in most developed countries, with levels at least doubling or tripling and in some cases increasing many multiples between 1980 and the mid-2000s." The following chart from the CDC report illustrates this quite well.

Whatever effects - good or bad - nonmarital childbearing may have on society, the impacts will be global in scope and will neither begin nor end with the African American community. Without context, O'Reilly mistakes correlation as causation. But a larger view of the data suggests this change isn't distinct or unique for African American communities.  

Rather than viewing the rise in out of wedlock births as simply the cause of other problems, O'Reilly should try to understand how this rise is symptomatic of other, larger structures of society. Society is complex, so looking at single variables seldom paints an accurate or complete picture. Context matters. This is what Shelton was trying to tell O’Reilly. This is what O’Reilly refuses to hear. Until O'Reilly acknowledges this, the situation will never improve.


Thu Jul 18, 2013 at 05:48 PM PDT

White folks, we need to talk

by D Wreck

Like many of you, I’ve been thinking a lot about the acquittal of George Zimmerman in the death of Trayvon Martin. I knew I wanted to eventually write something about it, but I wasn’t sure where to begin. As I sat and stared at the blinking cursor on my screen, uncertain exactly what I wished to say, I decided to voice what was giving me pause: I am afraid to talk about race.

I don’t think I’m unique among white allies. Mind you, I’m not afraid to talk about race because I harbor animus toward people of color. I’m decidedly liberal in my politics and support civil rights. I’m an advocate for expanding opportunities for all.

However, I find I’m afraid to talk about race because I have only experienced the white side of this story. I’m afraid to talk about race because I’m afraid of sticking my foot in my mouth, hurting the cause, and being called a racist.

Yep, I’m afraid of being called a racist. As a white heterosexual male raised in a Christian faith, society has erected few barriers to my pursuit of happiness and prosperity. Whatever the “ism” in our society, my traits let me cut to the front of the line. I know not the yoke of oppression due simply to my race, sexual orientation, gender, or religious affiliation. I have benefited in ways both known and unknown to me because of all these things. When it comes to seeing harm, let’s just say that I’ve got a lot of blind spots.

I think it’s because of the unknown ways I’m privileged that I’ve been afraid to speak out. By never experiencing the sharp end of the stick, I feared, irrationally or not, that speaking from a point of privilege might serve to reaffirm racism rather than reject it. Having never experienced the sharp end of the stick, I can feel anger when epithets get thrown around, but never really feel their sting. One of the only words that can be thrown at me and truly sting, and I know the sting pales in comparison to every epithet, is racist.

But if I am to be a true ally in the pursuit of justice for all, I must do something more than wear the liberal campaign button. I must speak up. I must declare my desire to be a better advocate for justice. This is my start. If these traits let me get closer to power, then I need to use them to our mutual advantage.

I may end up writing something stupid, and if so, please know that my intention was not to offend. But if I do offend, I ask that you call it out to me so that I may learn. I promise to shut up and listen.

If you are a person of color, I’m here to tell you that your struggle is my struggle. I would like to learn from you the best ways you think I can help. Today it’s going to start with me challenging white folks. What I will say isn’t news to you, but if a white voice can reach deeper into a white audience, then I hope this helps.

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Author's Note: Just as I was finishing this diary on what I believed formed the legal rationale used to justify the NSA metadata collection program, The Guardian published a leaked 2007 DoJ memo advocating for the expansion of surveillance powers. I decided to publish anyway. My analysis largely conforms with that in the memo, so I hope it adds to your understanding of the memo and why this rationale, as it is applied to the NSA, is so dangerous.
The recent disclosure of NSA data mining programs collecting massive amounts of information on nearly all American citizens from the nation’s telephone and internet companies without a warrant shook many Americans’ conception of jurisprudence and our legal system. It exposed an immense gulf between what you and I consider private and what the courts and our government have determined is private.

Whenever this story fully plays itself out, what may be most surprising to the public isn’t the scale of the program itself, but rather that the warrantless collection of data for this program is considered legal in the first place. Members of Congress and the Administration repeatedly stress that these programs operate under court supervision. They claim the programs are legal because the collection of metadata does not require a warrant. Metadata, for the purposes of the Verizon court order, consists of call routing information like originating and terminating phone numbers, cell tour ID, calling card number, and duration of the call. Since they claim that the programs are not collecting the underlying content that creates the metadata (i.e. not recording the conversation), the government insists that a subpoena or FISA court order is sufficient.

This focus on business records by public officials suggests that the FBI and the NSA are relying upon a legal rationale known as the Third Party Records Doctrine to claim legitimacy for its mass collection of metadata without a warrant. The ABA Journal describes the doctrine thusly:

In essence, the doctrine holds that information lawfully held by many third parties is treated differently from information held by the suspect himself. It can be obtained by subpoenaing the third party, by securing the third party’s consent or by any other means of legal discovery; the suspect has no role in the matter, and no search warrant is required.
The basis for the Third Party Records Doctrine can best be understood by examining three Supreme Court cases – Katz, Miller, and Smith – that help shape the modern legal conception of privacy in the United States. Each case deals with expectations of privacy and whether a warrant or a subpoena is sufficient to collect evidence. I briefly explain these cases on the other side of the fold and lay out why, because of modern technology, this legal rationale needs a radical change.
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I've been thinking about two things in the aftermath of this election. The first is the utter incompetence displayed by Romney's campaign advisors. The second revolves around the question of Obama's mandate. Both involve a sense of what America looks like. I tackle the first item above the fold and the second below it.


Mitt Romney never saw it coming.

An epic, colossal failure of simple math led his advisors to model 2012 as a 2004 redux.

When the Romney campaign talked about 2004-type turnout, they were talking about the white vote as a share of the total vote. In 2004, exit polling indicated the white share of the total vote was 77%. This compares to 74% in the 2008. The Romney campaign believed that minority turnout in 2012 would be lower than in 2008 due to a lack of enthusiasm. They figured they could move the share of the white vote from 74% back up to 77%.

But this assumption showed a complete lack of understanding of The Math. A cursory glance at Census data regarding voting and registration should have pointed them to a 2012 electorate that was 72%, white - just as the exit polls showed.

The above chart shows Census data for the racial composition of voters. You can plainly see the white share of voters declining over time. Exit polling data shows a similar share of the vote over time. And its trend is clearly declining, too.

I create two variables to help predict the white share of voters in 2012. The first is the rate at which the white share of all voters decays. I calculated the annualized decay rate over periods of 16, 12, 8, and 4 years. The second variable is an adjustment factor between the Census data and exit polling data.

From these data points, I constructed a matrix showing a range of decay rates and adjustment factors. These numbers point to white voters comprising 72% of the 2012 electorate.

What this meant was the Romney campaign had a much steeper hill to climb to push the white share of the vote to 77%. Their starting point wasn’t 74% from 2008; it was 72%. To get a sense of the Sisyphean task at hand, just take a look at the net new registered voters between 2004 and 2008. That's a 7.3 million registered voter gap.

Here is a chart of voter participation rates based on Census data for white voters, black voters, and Hispanic voters. I've included an estimation of voter participation rates the Romney campaign needed to hit their 77% target.

Based on national polling data from the week prior to the election, this miscalculation meant Romney’s campaign overestimated their total vote by 4 points. Instead of 47.8%, Romney’s team believed him to be at nearly 52%.

As you case see, Romney needed ahistorical levels of white enthusiasm and minority pessimism to meet his turnout targets. I’m no quant jock, but it was plainly clear to me that we’d never see a 2004-type electorate again. Romney’s pollster ought to be sued for malpractice.

(If you've made it this far, thank you. My take on the mandate, below the fold, is much shorter.)

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Republicans taught me a lot during this election season. I’ve learned that my race should dictate my action. I’ve learned that the legitimacy of action can alter hormonal balances in mystical ways. And I’ve learned that no matter how horrible something is, I can thank God for it.

In fact, race, legitimacy, hormones, and God are so determinative of my action, you could say I have no choice.

As a pro-choice Democrat, this is a difficult concept to swallow.

So, after careful reflection on these Republican teachings, it looks like I'm compelled to vote for Mitt Romney.

Let’s look at how it all stacks up.

John Sununu taught me that race matters. He taught me that race shapes compels one's actions. Why else would an upstanding military man like Colin Powell endorse President Obama? Damn it Piers, you've got to stand with a candidate for President who is your "own race."

When I read about Sununu’s statement, the 2008 Obama voter in me cringed. While Mitt and I may share a shade of complexion on the color wheel (except when appearing on Univision), we don't really have any political values in common. If race is my electoral destiny, then it stands to reason I’ve got to vote for Mitt.

However, I'm not sure I can control my gag reflex and pull the lever for Romney. But Republicans teachings have an answer for this, too.

This is where legitimacy and hormones come into play. Todd Akin taught us that the perceived legitimacy of rape can trigger a woman’s body to shut down a pregnancy from happening. If legitimacy is strong enough to stop a pregnancy, then it’s got to be strong enough to stop a vote for Obama, right?

Although I'm intellectually inclined to vote for Obama, the fact is I’m white - legitimately so.

(At least I think it's legitimate. My parents were married when I was born - just not so much married when I was conceived. But, hey, legitimacy starts at the wedding reception, not conception, right?)

And not only am I legitimately white, but as the Sports Illustrated Swimsuit Edition affirms on an annual basis, I have raging hormones.

So it must stand to reason that, by virtue of my legitimate whiteness, my body will shut down that whole voting-for-Obama-thing from happening. My whiteness will overcome all thought and reason and cause me to fight through the tears and vote for Romney.

As you can imagine, the mere thought of voting for Romney rocks my world. I’m left wondering, ‘How can such a horrible thing happen to me? Why, Lord, why is this happening?’

And then a funny thing happened. The Lord spoke to me.

Well, not directly to me. He spoke to Richard Mourdock first. Richard then spoke to an audience watching the Indiana US Senate debate while cameras were rolling.
And from those cameras, Mourdock's words were beamed to all corners of the nation to news outlets which rebroadcast what Mourdock said. And those words were recorded by my TiVo, allowing me to learn my next Republican teaching after getting home from work, eating dinner, and putting the kids to bed.

Although the Lord, it seems, moves in technologically mysterious ways, I heard him loud and clear.

What Mourdock taught me was that even when a "horrible situation" occurs, "that's something God intended to happen."

There it is. My race tells me I should vote for Romney. My legitimate whiteness triggers hormonal surges that stop me from voting for Obama. And God is evidently showing me that a Romney vote is what He wants.

My vote for Romney is inevitable.

But, I can't help but feel a little perplexed. After all, none of this stopped me from voting for Obama in 2008.  John McCain is white like me, and I didn't vote for him. How can I reconcile this with my Republican teachings? How did I resist both the divine and the biological reasons to vote for McCain? And does this mean there’s a way that I don’t have to vote for Romney this year?

In times like these, maybe turning to a half-term ex-Governor can reveal the truth.
And then it hits me. Refudiate!

Just as she asked Obama to embrace being "half-white" and "refudiate" the NAACP, I could embrace Obama's half-whiteness and vote for him instead of Romney. But how?

If race is supposed to dictate my vote, to indicate what is right, then how do I handle voting for a candidate who is half-black and half-white? How can I determine exactly how to vote? His whiteness should draw me in, but wouldn’t his blackness simultaneously push me away?

Maybe God is sending me a sign of his intention, in the form of a half-term Governor talking about a half-white President. Maybe the answer is... half.

And then the answer strikes me with the full force of one of the Fundamental Theorems of Kindergarten: Two wrongs don’t make a right.

Two wrongs don't make a right can be restated this in mathematical terms.

2 x Wrong <> Right

To isolate what is wrong, we divide both sides by 2 and get:

Wrong <> 1/2 Right

And the truth is revealed. If you are half-right, you can't be wrong!

Aha! I have threaded the needle. By voting for a half-white candidate, a fully legitimate white person like myself can be half-right (in convoluted Republican terms), and, therefore not be wrong!

God’s intention is fully revealed. After rigorously applying these Republican teaching, my lack of choice is clear.

GOBAMA 2012!

On a serious note, the GOP war on women is real. Their statements are no laughing matter. Please consider donating time or money to:
The Rape, Abuse, and Incest National Network
Planned Parenthood

Wed Oct 24, 2012 at 03:59 AM PDT

Gallup and the Making of an Outlier

by D Wreck

Much discussion has been made regarding Gallup's daily tracking poll and the large lead it projects for Mitt Romney. More and more polling data comes in daily from other organizations that suggests Gallup is an outlier. A deeper review of Gallup's likely voter data and Census voter participation data suggests a flaw in Gallup's likely voter model that specifically underestimates the Hispanic vote (and generally underestimates the non-white vote). With President Obama at +63 with non-white voters, you start to get a sense of how big the error might be.

(continue reading below the fold)

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Arthur Laffer's piece in The Wall Street Journal is titled The Real 'Stimulus' Record. A closer reading of Laffer's data will convince you that he should have air quoted 'Real' instead of 'Stimulus'.

PhotobucketNow, when Arthur Laffer, The Wall Street Journal, and economic data converge during an election season, the perfect storm of bullshit is about to rain down. It epitomizes Mark Twain's three categories of lies - lies, damn lies, and statistics.

Laffer generated this table and declared, "Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus."

Not knowing exactly how Laffer defined either data point, I pulled data from the International Monetary Fund to see if I could figure out his math. I wanted to confirm or refute the correlation he so boldly found.

After analyzing the data, I found there are a number of misleading things in both this op-ed article and the data presented in his table. Laffer cherry picks time references, produces data to fit his agenda instead of using data to draw a conclusion, misleads in his description of the data, and generally fails to meet academic standards concomitant with a PhD in economics.

I deconstruct the numbers below the fold... (don't be afraid, it's just math, I promise it will be OK)

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Earlier today, Mitt Romney suggested cultural superiority plays a hand in the disparity in GDP per capita between Israel and the Palestinian territories.

"As you come here and you see the GDP per capita, for instance, in Israel which is about $21,000 dollars, and compare that with the GDP per capita just across the areas managed by the Palestinian Authority, which is more like $10,000 per capita, you notice such a dramatically stark difference in economic vitality," the Republican presidential candidate told about 40 wealthy donors who ate breakfast at the luxurious King David Hotel.

Romney said some economic histories have theorized that "culture makes all the difference."

"And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things," Romney said, citing an innovative business climate, the Jewish history of thriving in difficult circumstances and the "hand of providence."

While the divide between Palestinians and Israelis in broad terms of national wealth is rooted in a number of political and historical forces, and warped by the unrest in the area, I was curious to see if international rankings of GDP per capita might shine a light on cultural forces at play in the rest of the world.

My conclusion? GDP per capita is a poor indicator of cultural superiority. It is, however, a great indicator of tax havens and oil reserves.

What a shock, Mitt has a cultural bias for hiding money and avoiding taxes.

A rundown of GDP per capita numbers below the fold...

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The Newark Star-Ledger reports that New Jersey Governor Chris Christie is "leaning against accepting federal funds to expand Medicaid in New Jersey."

You're against accepting federal funds to expand Medicaid, Governor? What about that little waiver you filed with the Department of Health and Human Services and subsequently approved (PDF) by DHHS April 14, 2011?

The Associated Press reported at the time that your 2012 budget relied on $88 million in savings from these Federal Medicaid matching funds.

U.S. Rep. Frank Pallone Jr. (D., N.J.)... was celebrating the news. "This is one more benefit related to the Affordable Care Act that helps people with medical care and helps states with financial resources to meet those needs."
I'd applaud you for wanting to expand insurance coverage, but then you had to cover your bases with the Tea Party fan club.
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Tue May 22, 2012 at 04:52 PM PDT

If Mitt Were Your Neighbor...

by D Wreck

The professional political media have expressed considerable consternation about "Obama's Attack On Bain... And The Capitalist Way of Life!" Is it fair to examine a candidate's business experience, especially when said candidate touts his business acumen as bona fides for running the country? Really? This is debatable?

I'd like to suggest a thought experiment. Mitt Romney wants to bring his business sense to running our country. His business ways are a way of American life. So let's see how a private equity scenario might play out in my neighborhood...


I’ve always like my neighbor’s house. I asked some banker friends if they knew anything about the house or the family that owned it. And, as luck would have it, my banker friends did know about the house and the family. They told me that the house was worth $250,000, but the neighbor only owed $25,000 on it. They also informed me that the family had a bank account with $210,000 set aside for their children’s college education.

I told my banker friends that I wanted to buy that house. I asked them if I could use my neighbor’s house and bank accounts as collateral for the loan to buy the house. They said, "Sure!"

So I bought my neighbor’s house using my neighbor’s income and assets as collateral for the loan.

Once I took possession of the home, I named myself the new head of my neighbor’s family. Since I bought the house from the family, and I was now the head-of-the-family, I paid myself the money my neighbors would have received when I bought the house from them.

I was so proud of myself that I dipped into my neighbor’s college fund and paid myself a $55,000 management fee for being so brilliant. Oh, yeah, and for my new responsibilities as head-of-the-family. Almost forgot about that. So I took another $15,000 out of that college fund, just to be safe.

The family was really nervous about all these changes. Who could blame them? But as the new head-of-the-family, it was my responsibility to take care of them. After I asked the parents to vacate the master bedroom – I was the head-of-the-family after all – I told them that I’d build them a nice bedroom suite in the basement. "It’d be great," I told them, "just you wait and see."

I looked around the house and saw a few other changes that I wanted to make, so I went back to my banker friends and asked for another loan against the house to spruce up the place. Another $225,000 should do the trick.

I called up plumbers, electricians, roofers, framers, landscapers, drywallers, designers, architects and got them working on sprucing up the place.

Managing all of that construction chaos was a lot of work. I needed another management fee. Another $50,000 did the trick.

And then I had a very serious conversation with my neighbors. I explained that I’m doing a lot for them, but it takes money to do this. I told them that they needed to increase their income by 25% in order to cover the monthly payments on those loans I took out.

I also asked them to cut out any money they were spending on groceries. I said, “Think of how much space is wasted storing food, not to mention all the space taken up by the appliances used to cook the stuff. We can make more efficient use of the space without all that kitchen-y stuff taking up square footage. It’ll make a lot more sense for you to eat all your meals at restaurants – leave food storage and prep to the professionals.”

I wanted to redecorate, as well. So I sold all the household furnishings on Craigslist – that old stuff had to go! I pocketed about $12,000 by selling those furnishings.

But now I had an empty house I needed to fill with new stuff. So back to the bankers I went, and I got another line of credit against the house for $75,000 to pay for the new furnishings. But, again, this was a lot of work. So I dipped into the college fund one more time for $20,000 in management fees.

Have you ever tried living in a house while you’re renovating it? It is impossible. So, being the responsible head-of-the-family, I moved myself and my neighbor’s family to a really nice hotel that I own. For six months! I think they’ve seen the error of their ways with the whole “cooking” thing. Six months of restaurant dining was the best!

When the construction on the house was finally done and all the new furnishings were in place, we were ready to move back in. But we had a little problem. Remember how I asked my neighbors to make 25% more money to take care of these loan payments. They got a 2% raise at the beginning of the year, but that was it. And the hotel and restaurant bills were pretty high, so I had to use a lot of the money we borrowed for construction and redecorating to pay the hotel and restaurant. That alone came to $185,000. So, we were coming up short and couldn’t pay the plumbers, electricians, framers, landscapers, drywallers, designers, architects, or decorators… or the bank.

So I had to make a very big head-of-the-family decision. And big decisions are really hard to make. So, for all my troubles, I needed one last management fee from the college fund – the last $70,000. And then I made the big decision.

I decided to hand the bank the keys to house, let them take possession of it, and name them the new head-of-the-family. I thought maybe the bank could sell it and make back some of its money. Who knew the $250,000 house I bought, then poured another $300,000 into, would only be worth $295,000 when all was said and done?

When all was said and done, I walked away with $657,000 ($250,000 for buying the house, $210,000 in management fees, $12,000 for the old furnishings, and $185,000 for my hotel and restaurant.). Since the bank's loans were secured, they got first shot at being made whole. The bank had loans of $550,000 against the house, but could only sell it for $295,000, leaving them in the hole for $255,000. But only $435,000 of the $550,000 in loan proceeds were used, so the bank recouped $115,000. That left them short only $140,000. What about the plumbers, electricians, framers, landscapers, drywallers, designers, architects, and decorators? Their claims against the family were "unsecured," so they would have to split whatever assets were left. After the bank got its share, there were no assets left. So, that meant there wasn’t any money left to pay the plumbers, electricians, framers, landscapers, drywallers, designers, architects, or decorators. They lost $300,000.

And what about my neighbors? Well, they aren’t neighbors anymore. They had to leave the house when the bank foreclosed on it. The kids won’t be able to go to college, because their college funds are gone. My neighbors believe so much in the value of a college education that they would’ve borrowed money for their kids’ tuition. But, their credit is shot because of the foreclosure. And the bankruptcy. Oh yeah, they had to declare bankruptcy, too, because they couldn’t pay the plumbers, electricians, framers, landscapers, drywallers, designers, architects, or decorators. I heard some of the plumbers, electricians, framers, landscapers, drywallers, designers, architects, and decorators had to declare bankruptcy, too, since they didn’t get paid.

But, as Mitt says, "That’s the way America works." Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain. The $900,000 they lost someone else gained.


Of course no one would stand for this if one's life could be taken over in such a manner. But replace the house with a company, the college fund with a pension fund and you're not very far off mark in describing how private equity can disrupt the lives of so many for the benefit of so few.

So is this a "fair" line of attack? Is it fair to consider the adverse reactions to a particular action? Why don't you ask all those pregnant women who used Thalidomide to treat morning sickness? Thalidomide was an effective treatment for morning sickness, so why even worry about the extremely high rate of birth defects attributed to the drug?

Being a good steward to our country means taking as many of the costs and benefits into account as possible. Mitt Romney's business experience is fair game. And it does not speak well of his ability to govern for the benefit of us all.

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