By Israel Shamir
Who said the filthy rich are good for nothing? Their antics are very entertaining! The Nouveau Riche have always been notorious headline-providers, and the newest crop of Russian oligarchs make the robber barons of previous generations look timid and colorless. As money ages, it becomes anaemic; divided and subdivided by careful lawyers into a maze of corporate entities. New money is still good fun; they pull their stunts right in public, and they don’t pull their punches. These hometown heroes fill the vacuum left by the maharajas and sheiks in a way that our drab bureaucrats never could; they parade their Humvee Jeeps through the Moscow crouds, as sure and proud as the Indian kings who once rode their battle elephants in the jungle.
They are more powerful and less restrained in their choice of action than ever were Scorsese’s Mafia dons. Brutal, unscrupulous, overriding, often overreaching, these are characters made for a Shakespearean drama. They are lawless; they freely trample upon other people until somebody finally tramples upon them. They are full-bloodied villains or generous benefactors, or both. Their habit of using London as their litigation headquarters has given their other habits an international audience.
Recently two mighty tycoons, Berezovsky and Abramovich, jousted in a London court for the prize of billions — and incidentally disclosed how they stripped the Russian public of its most valuable assets during Yeltsin’s privatization regime. These courtroom warriors do not flinch at revealing their base crimes to achieve victory; in this case another Neoliberal myth has been destroyed, and another dark chapter in Russian history has been illuminated.
The looting of a country is heavy fare; the public hungered for some light farce. The Polonsky vs. Lebedev case came to the fore, publicized internationally via the London court system. This is the hilarious story of a media mogul and a real estate baron who go full smackdown on live TV. Only the mighty pen of Nikolai Gogol, the mid-19th century Russian author of The Squabble (You can read the plot here) could have done it justice; he might have called it Why Alexander Lebedevich Punched Sergei Polonovich, but you’ll have to bear with my humble efforts.
BelleNews gives us a blow by blow description of the live smackdown action:
- In front of an astonished studio audience, Alexander Lebedev (the Russian mogul) rains a series of blows onto the head of Sergei Polonsky (the real-estate baron), knocking him off his chair. This is during a TV debate on the global economic crisis.
- Images of the dramatic scene, which have been posted on YouTube, show Lebedev losing control and standing over Polonsky in a threatening manner.
- Polonsky appears to attempt to calm him down and Lebedev takes his seat once more.
- After few seconds, without warning, as Polonsky gently pats him on the arm, Lebedev again decides it’s time to let his fists do the talking.
- Lebedev suddenly hits Polonsky several times on the side of the head, sending him sprawling to the floor.
- Polonsky stands back up, seemingly unharmed, and the two men stare hard at each other as studio flunkies defuse the situation.
Note: Alexander Lebedev is one of the richest men in the world, with a fortune that’s estimated to be in the region of $3.1 billion.
In fact, Polonsky and Lebedev are two mid-sized Russian tycoons; neither of them could buy Minnesota cash on the nail. They could have become great pals, toasting each other’s successes in turn; for both are given to real estate development, both love swimming, both wear casual more often than formal, both are rather vain, and both are facing a sharp decline in their fortunes. But instead they have come to blows, for they are doomed to be opposing characters. Which is the protagonist and which the antagonist? None.
Sergei Polonsky is forty, a young man as tycoons go, the first post-Soviet generation of Russian businessmen. He is still big and broad like the Blue Beret commando he once was, but years of soft living have robbed him of his waist; now he looks more like a jolly, well-fed dolphin. His lady friend is a prominent businesswoman by her own right, and a swimming champion.
Alexander Lebedev is 12 years older; his was the generation that privatised the USSR. He is a shape-shifter; he has modernized his appearance over the years from a hard-muscled, disciplined, business-suit-wearing ex-KGB-man into a metrosexual guitar player with an alluring haircut, light shirts and blue jeans. He traded in his old Soviet-era wife for a newer, more camera-friendly model.
Lebedev lives in downtown Moscow, in a former Scout Youth Club built in glorious Stalinesque imperial style with columns and portico, and transformed – after its privatisation – into a minor manor, with an Olympic-size swimming pool where he spends much of his time. He escapes the Moscow autumnal gloom at his Cote d’Azure villa and in his London mansion.
Polonsky lives in a futuristic penthouse, perched like a ship’s bridge atop a skyscraper with a 360° view, high above Moscow. He designed and built the skyscraper and his own apartment himself, being an architect by education and profession. He spends his weekends floating in a converted barge, moored just beyond the city limits, in the company of a tame racoon, doing chi kung – Chinese meditation practice – and voraciously reading arbitrarily-chosen books. In winter he drives a slim, high-tech sled pulled by snow-white blue-eyed huskies; in summer he glides through the deeps on a sea-bob, or hang-glides over blissful hills.
Lebedev built a resort in Crimea; he lavished his generosity on the city, restoring the historic Chekhov theatre, but he prefers to spend his time in London, hobnobbing with Harry Potter’s creator, Ms Rowling, Sir Elton John and other worthies. He plays guitar, and supports DDT, a Russian rock group. He also owns a quality British newspaper, The Independent, as well as a tabloid, the Evening Standard, and the Russian Novaya Gazeta.
Polonsky, in contrast, has built himself a fortress of solitude, a stone and glass castle rising from the waves of a lonely island off the shores of Sihanoukville, not far from Alain Delon’s home in remote Cambodia. He meets with Sufi teachers, receives instructions from Zen monks and chi gung adepts. He is into esoteric knowledge and mystic experiences.
The two men are from very different cities and backgrounds. Lebedev grew up a child of privilege; his father was a professor of the prestigious Foreign Service School. As a young man he joined the KGB and the Communist Party. He graduated from his father’s school, proceeded into the KGB college, and then entered the diplomatic service. He was stationed at the Soviet Embassy in Kensington, London; his assignment: stop the money fleeing Russia. In eight years he learned the ropes, and with the fall of the USSR the gamekeeper turned poacher.
Lt.-Col. (KGB) Lebedev left the service in 1992 and used his professional insider knowledge of Soviet debts to make a fortune and direct fleeing money to safe havens. Not many Russians knew the banking system like he did. There was a lot of money that could be made by a person with the right connections: he bought cut-rate loans cheap and cashed them in at full value with a friendly Treasury official. He made a deal with Gazprom that made the Russian state two hundred millions poorer and himself and his collaborators that much richer. He befriended Victor Chernomyrdin, then Prime Minister, and Chernomyrdin channelled state funds into Lebedev’s recently-opened bank. Lebedev used his connections to capture positions in state-sponsored companies like Ilyushin and Aeroflot: the profits went to Lebedev, while the expenses went to the state.
Polonsky hailed from St Petersburg, of humble origin. He grew up as the USSR collapsed around him; he studied architecture, went into construction and building, hired Ukrainian builders while they were still inexpensive, and built himself into a real estate developer. He is proud of being a self-made man; he obtained nothing from the state, and never sought anything, he says. He did not privatise government factories, but instead established good connections with City Hall and catered to newly-prosperous Muscovites. He looks honest enough to buy a used car from, though such trustworthy guys do not become billionaires. People in the know say that he had to cut backroom deals with Mme Baturina, wife of the Moscow Mayor and one of the richest women in the world: no building was erected in Moscow without a nod from her.
Polonsky has tried to avoid politics; he professes a lack of knowledge and interest in things political. He is a builder, he says, no more. He puts his soul into huge projects spreading from Moscow to Switzerland and from London to Croatia. He is democratic in the Russian style: he mixes easily with all kinds of ordinary folks, but they’d better follow his orders or else. He is a petty tyrant, his (dismissed) employees say: he forbids texting during board meetings! Violators have their precious iPhones smashed against the wall (a feat I myself have only dreamed of). His ambitions lie in the spiritual sphere, and business often takes a back seat to his search for God.
Lebedev has a penchant for politics. He has tried on for size several political factions, varying from the ultra-nationalist Rodina (“Motherland”) to the socialist SR and to the ruling ER, being torn between political ambitions and the desire to make a fast buck. Sometimes the two go together.
In 1996, in the run-up to the fateful elections, Lebedev supported Boris Yeltsin, the then-president of Russia, a dissipated alcoholic who embezzled Russian national wealth and enriched the oligarchs. Lebedev’s bank was used by Yeltsin’s Treasury in order to channel state funds into piles of greenbacks all wrapped up for bribes. It was some of Lebedev’s cash that was seized by security in the infamous Case of the Xerox Paper Box, when an activist tried to carry out millions of dollars for Yeltsin’s bribe fund in a cardboard box. Lebedev did not shy away from this deed; he was rather proud of it, and even paid the dirt-digging magazine Kompromat (“Compromising Matters”) to produce a special issue containing a sanitised version of this, and other exploits.
Lebedev’s daring misdeeds inevitably attracted the attention of law enforcement, and a case against him was eventually drawn up by the State Attorney General. Lebedev, by his own boast, set the Attorney General up with two easy-going girls in a sauna, and filmed the frolics. The film has been broadcasted on a fellow oligarch’s private NTV channel and the Attorney General abruptly resigned.
Some people say that Lebedev was not responsible for the setup. If true, this speaks volumes. Might Mr. Lebedev think that bad publicity is much better than no publicity at all? The facts support the theory. Lebedev produced a book ominously entitled 666 or The Beast Is Born, full of prosaic smackdowns targeting nearly every public personality in Russia. He humbly refers to himself as the “ideal capitalist” and claims credit for these and other dashing criminal exploits.
Lebedev is always quick with an explanation as to why each crime was a good deed: it was either to save Russia from the clutches of the commies (he conveniently misplaces his own Party credentials), or to save the world from the KGB (again he is silent about his own history in the very same service). He openly despises Putin’s working class roots and rise to power. It galls him that they once had the same rank in the KGB. But the real reason behind Lebedev’s opposition is that Putin fearlessly prosecutes the oligarchs. Or is it “persecutes”?
Oligarchs have a persecution complex: any and all interference is unjust. They think of themselves as omnipotent, though they are only powerful, and they bristle against even the most minor efforts to curtail their power. Their money buys them power over life and death, but this power saps their mental health. They start to believe the hype offered by sycophants. They begin to reject trusted advisors. They end up alone and unhinged, pursued by the law. Too much power corrupts, and the Russian oligarchs have more power than any of Stalin’s satraps ever had.
Mr Putin does not approve of oligarchs meddling in politics. He does not punish them arbitrarily, nor does he rewrite the laws to target them. Putin’s Russia allows these tycoons to get away with many things, but it does draw the line at crime – sometimes. This is Putin’s great sacrilege; he holds the oligarchs accountable to the letter of the law. This level of independence comes as a great shock to them. They are getting whiplash trying to readjust after the total freedom of lapdog Yeltsin’s day. The oligarchs wistfully recall the days when they employed their powers over life and death with impunity, like viceroys of India in Clive’s time.
Alas, Mr Lebedev’s political ambitions have remained unfulfilled. He reduced his lofty goals to something more achievable, and decided to become the Mayor of Moscow. He failed. Worried now, he set his sights upon becoming the Mayor of Sochi (the Miami of Russia). Again, he failed. The sharks, sensing blood, began to circle. His dashing exploits belatedly began to attract the attention of the law, especially his alleged appropriation of $300 million in state bailout funds meant to shore up his bank. He accepted the money, but it soon became apparent that his bank’s coffers were empty, or rather stuffed with fictitious promissory notes. His dealings in the aircraft industry also have come under scrutiny and it appears that the state, the main shareholder, might have been swindled in a major way.
In response, the canny Mr Lebedev activated his long term insurance policy. If he were a Russian Jew, he would have claimed he was being attacked by authoritarian Russian anti-Semites; but Mr Lebedev is not a Russian Jew. Instead, Mr Lebedev claims he is being attacked by authoritarian KGB thugs like Mr Putin. This insurance was effective but expensive: for many years he had been forced to heavily subsidise the anti-Putin newspaper Novaya Gazeta, widely read in the central borough of Moscow and unheard of elsewhere. To influence the international set, he purchased two British newspapers and strenuously promoted his new image as a sort of Khodorkovsky: just another wealthy man victimized by Putin’s KGB thugs. He claimed that he was poisoned like Litvinenko, but he miraculously survived. The British were only too happy to cooperate with Lebedev’s propaganda campaigns; the establishment was (and is) willing to support any and all anti-Putin elements, including the Chechen separatists.
It was during his campaign for Moscow Mayor, that Mr Lebedev became aware of Mr Polonsky, who happened to be on good terms with the incumbent Mayor. At that time, Polonsky was busy erecting the tallest twin skyscrapers in Europe, the Federation Towers – the gem of Moscow City. Polonsky immediately became the next target for Lebedev’s hate: another low-caste self-made man, definitely not a pukka sahib. It was also an opportune moment for a quick and easy kill, because Polonsky’s star was falling fast.
Polonsky had gotten himself into trouble, as do all the oligarchs at one point or another. He was not thorough and he was not prudent. He rejected his trusted advisors and surrounded himself with yes-men. He believed his hunch instead of counting odds. He jumped into multimillion deals with a bow and a handshake, and his partners walked away with chunks of his empire. His dreams of samurai honour were shattered by modern Russian business pragmatism.
He relied upon his assistants, and they robbed him blind. The more he empowered them, the faster they would vamoose with his money. His vast capital (assessed at over three billion dollars at the peak) began to shrink precipitously; cash flow became a problem for him, he was over-extended and had difficulty completing his most ambitious projects. Ordinary people who invested in his projects had become justifiably angry.
It was at this moment that the cunning Lebedev unveiled his ingenuous device to break Polonsky. The media mogul spread a malicious (and apparently false) rumour that the foundations of Federation Towers had cracked. Polonsky was already on the defensive, now his back was against the wall. He invited Moscow journalists to come and look for themselves: they were allowed to roam freely some forty yards below the surface, trying to locate the crack, refusing to admit its absence. He offered a million roubles to anyone who could find it. Nobody found anything, but the rumour persisted, supported by Mr Lebedev and his newspapers.
Alone and unhinged, Polonsky began to claim that he himself invented the crack story in order to promote public awareness of the project. There were no buyers for this weird story. His projects continued to suffer setbacks, raiders continued to seize his developments, his companions continued to rob him blind. The crack story cracked his empire.
This is the backstory to the Oligarch Smackdown on live TV. It was ostensibly going to be about global economics. They had exchanged only a few words when Mr Polonsky brought up the painful subject of the crack. The whole world awaited Lebedev’s reply. He looked into the eyes of his victim. What did Mr Lebedev feel at that moment? Pride? Hatred? In any case, alone and unhinged, he rose and landed a few well-aimed jabs upon Polonsky’s jaw. The sitting ex-commando was knocked down, decisively proving the superiority of KGB training over that of Airborne Troopers. The programme was a global success; after delighting the viewers, who had been prepared for a dry recitation of global doom, it went on to become an all-time favourite on YouTube.
But the story did not end there. In face of millions who had watched the assault live, Lebedev denied he hit Polonsky. Standing just outside of the studio, Lebedev insisted stubbornly to the journalists: “I did not touch him; Polonsky assaulted me, because I am in opposition to Putin.” Yes, Lebedev is amazing: he is one man who is prepared to deny anything. Years ago, he had fought to ban gambling in St Petersburg, an ostensibly noble purpose. When it came out that his bank had heavily invested in the lotteries (the main competitor to gaming machines), Lebedev denied all motives of self-interest. Even after his own bank manager proved beyond the shadow of a doubt that the strategy was Lebedev’s own idea, he continued to deny all knowledge with a straight face. I wonder if even James Bond could equal this feat.
During the race for the Moscow City Hall, Lebedev bought a newspaper (the Moscow Correspondent) and turned it into a fighting machine. They soon printed a scurrilous rumour that Mr Putin was involved in an extra-marital affair. Lebedev could not imagine that Putin would react as he did. Usually quite complacent to rumours, accusations and attacks, the President became furious. Fearing Putin’s fury, Lebedev immediately shut down the newspaper, fired the editor and said on air that the baseless article was created by the current Mayor of Moscow and inserted by the editor in return for a bribe. This brazen lie cost the editor his career; Lebedev never recanted.
Since his televised assault, Lebedev has been asked many times why he did it. Some of his explanations are so off the wall that one has difficulty believing he actually offered them as true statements. The palm probably should go to “I thought that I would become a popular hero because I struck out against that hateful oligarch”. This is rich coming from him. Polonsky seems genuinely at a loss to explain Lebedev’s behaviour. Not only has Lebedev refused to apologise, he is continuing to deny he even did it. Is he claiming the insanity defence? More likely he is claiming his rights of oligarchic power: the impunity defence.
Polonsky has not benefited from his public humiliation; in fact, the story only further injured his already suffering business reputation, and a project he had planned to do in London collapsed soon afterwards. It was for this reason that he brought civil charges against Lebedev in a London court, and retired to his Cambodian island, posting his daily catch of barracudas on the Facebook.
Almost a year had passed before the exceedingly slow-grinding mills of Russian criminal justice charged Mr Lebedev, but eventually the media baron was charged with “hooliganism” and “assault”. His lawyers claim that Lebedev had felt threatened and was forced to defend himself; Lebedev (with a straight face) claims that he is being persecuted by the bloody Putin regime for his “love of freedom”. A bald-faced liar is always more entertaining than a talented ingénue, so we will not be too surprised if Mr Lebedev walks away with a slap on the wrist. Anyway, the bloody Putin regime is soft on the oligarchs. However, this Oligarch Smackdown is far from over. We await Mr Lebedev’s elevation to the voice of Russia’s conscience by his own British hacks!
Language edited by Paul Bennett
Israel Shamir reports from Moscow, and can be reached at email@example.com
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A pair of interesting articles on MarketWatch highlights the plight of those graduating from college deep in debt and little prospects of landing a good job in their field.
First consider Why go to college if I can’t get a job? by John Pelletier.
A recent Economic Policy Institute study reports that the unemployment rate is 9.4% for college grads ages 21 to 24 (not currently seeking a post graduate degree), and the underemployment rate for this group is 19.1% (this includes part-time workers who want full-time jobs). In 2011, those grads lucky enough to have a full-time job earned an average of $35,000 a year, a 5.4% inflation adjusted decrease from 2000 average income. Finally, it is estimated that nearly 4 of 10 grads are working in fields that don’t require a college degree (the college-grad barista syndrome).
Why you must get that degree
Despite all this gloomy data, getting a bachelor’s degree is still worth the cost and effort. Why? For one simple reason — the alternative of not having a college degree is so much worse:
Recent high school grads’ unemployment rates are frightening. The Economic Policy Institute study shows that the recent unemployment rate for high school graduates between age 17 and 20 who aren’t enrolled in additional schooling is 31.1%. And their underemployment rate is 50.4%.
Some People Do Not Belong in College
Pelletier perpetuates the myth everyone belongs in college. Many don’t. Arguably at least half don’t. In Portland Oregon, ACT scores show less than half of test-takers are ready for college math
ACT scores from the class of 2012 show about 58 percent of Portland Public Schools students who took the ACT college entrance exam aren’t prepared to pass college-level algebra courses.
You really want to send those kids to college? To get a degree in what?
Pray tell what good is a degree in English, history, PE, or political science other than teaching English, history, PE, or political science? And how many of those teaching jobs are even available?
Yet colleges churn out thousands of graduates, year after year, with perfectly useless degrees.
Is a College Degree Required? Why?
Consider things from the perspective of the employer. With so many college graduates available, why not make a college degree a requirement for a job?
Many companies do just that (or at least prefer those with degrees). Are the results satisfactory?
I was discussing the futility of this situation with a friend, Claude, yesterday evening. Claude tells me of an entry-level position she knows of that requires a degree in chemistry. The main function of the job is to clean test-tubes for the primary researchers.
Cleaning test-tubes does not require a degree in chemistry. Indeed, the position does not seem to require any degree at all. Supposedly, there is room for advancement down the road, but it never happens. People with chemistry degrees get fed up cleaning test-tubes and quit. They cannot keep the position filled.
Notice the waste. A disabled person, perhaps even a severely disabled person may be able to do the job very well, be very happy to have the job, and be very dedicated in performing what others would consider menial duties.
Other companies will not hire those who are over-qualified, and this leads to a setup where PhDs dumb down their resumes in hopes of landing a job.
Trading Caps and Gowns for Mops
Next consider Trading Caps and Gowns for Mops by Quentin Fottrell.
After commencement, a growing number young people say they have no choice but to take low-skilled jobs, according to a survey released this week. And while 63% of “Generation Y” workers — those age 18 to 29 — have a bachelor’s degree, the majority of the jobs taken by graduates don’t require one, according to an online survey of 500,000 young workers carried out between July 2011 and July 2012 by PayScale.com, a company that collects data on salaries.
Another survey by Rutgers University came to the same conclusion: Half of graduates in the past five years say their jobs didn’t require a four-year degree and only 20% said their first job was on their career path. “Our society’s most talented people are unable to find a job that gives them a decent income,” says Cliff Zukin, a professor of political science and public policy at Rutgers.
The jobs that once went to recent college graduates are now more often going to older Americans. Over the past year, workers over 55 accounted for 58% of employment growth, says Dean Baker, a co-director of the Center for Economic and Policy Research, a nonprofit think tank in Washington, D.C. Why? Employers think older workers are a safer bet and more likely to stay, he says. Unemployment hovered at 6.2% in July for workers over 55, according to the Labor Department, but was more than double that rate — 12.7% — for those ages 18 to 29.
As a result, college graduates are finding themselves locked into lower-paid jobs. “The shaky economy has forced many of them into a world of underemployment,” says Katie Bardaro, lead economist for PayScale. The starting salary for a graduate is $27,000, 10% less than five years ago, the Rutgers’ study found. “Unlike those who graduated five years ago,” Zukin says, “the long-term expectations of this generation are not being met.”
Older Workers Safer
Some may be surprised to learn that those over 55 have an easier time finding a job. I am not. It makes perfect sense for businesses to hire people with no dependents and even more so those on Medicare so they do not have to pick up health insurance costs.
Please consider Demographics of Jobless Claims written May 1, 2008.
Structural Demographics Poor
Structural demographic effects imply that prospects in the full-time labor market will be poor for those over age 50-55 and workers under age 30. Teen and college-age employment could suffer a great deal from (1) a dramatic slowdown in discretionary spending and (2) part-time Boomer reentrants into the low-paying service sector; workers who will be competing with younger workers.
Ironically, older part-time workers remaining in or reentering the labor force will be cheaper to hire in many cases than younger workers. The reason is Boomers 65 and older will be covered by Medicare (as long as it lasts) and will not require as many benefits as will younger workers, especially those with families. In effect, Boomers will be competing with their children and grandchildren for jobs that in many cases do not pay living wages.
Chasing the American Dream
I commend Quentin Fottrell (or the editor) for putting in that link to the Rutgers’ study. Far too often, writers cite studies or the work of others without putting in links. In this case, the Rutgers’ study, Chasing the American Dream: Recent College Graduates and the Great Recession is well worth a closer look.
click on any chart that follows for a sharper image
The report describes the findings of a nationally representative sample of 444 recent college graduates from the class of 2006 through 2011. The authors claim the survey has a sampling error of +/- 5 percentage points.
FIGURE 2. RELATIONSHIP OF DEGREE TO FIRST JOB
Mish Comments: Note that 35% of graduates land in a job that is not related at all or not closely related to what they studied. However, even if they did land a job in their field, did their job require a degree? The question is an important one. Someone studying to be a chef and landing a job at Wendy’s flipping burgers is in a related job.
FIGURE 5. DID THIS JOB REQUIRE A FOUR-YEAR COLLEGE DEGREE?
FIGURE 7. WHAT DO YOU THINK OF YOUR CURRENT JOB AS:
Mish Comments: Only 30% think they are in a career. Of those who think they are in a “stepping stone”, I have to ask, how realistic is that view?
Progress in Paying off Debt
The article notes … One to five years since graduation, most of the students in our survey have made very little progress in paying down their debt. Only 13% have paid off all of their debts for their college education; one in four has not paid off any of it, thus far. Four in ten who graduated in 2009, 2010, and 2011 reported that they had yet to pay off any of their debt. Compounding their financial challenges is the fact that nearly half (46%) reported that they also have other financial debts, such as credit cards.
FIGURE 11. THE EFFECT OF COLLEGE DEBT ON BEHAVIOR (OF THOSE WHO HAVE COLLEGE DEBT)
Mish comments: Note that 40% delayed buying a house or making other major purchases. 27% moved back home. If you are looking for a reason for a weak housing market there you have it. Graduates deep in debt with a job not in their field, or no job at all are unlikely to be buying houses and cars. Boomers facing retirement want to downsize, but there are few capable buyers able to make purchases. Housing is going to be structurally weak for years to come as a result of student debt and demographics.
President Obama promotes education as the answer to the unemployment problem. Other presidents have done the same thing. However, throwing money at the problem has done nothing but raise the cost of education for everyone, leaving many graduates debt-slaves for life, with totally useless degrees.
Here are some charts and comments from my post What Role Does Government Play in Price Inflation?
Inflation Comparison – Select Components Since 1978
Inflation Comparison – Current CPI Components Since 2000
The above charts are from Doug Short at Advisor Perspectives. Doug creates excellent charts every month on various CPI components. Rather than reinvent the wheel, I asked Doug for a set of custom charts.
Specifically, I had asked Doug to go back to 1971 for both charts.
Unfortunately, data for components in the first chart only goes back to 1978, and in the second chart not even that far.
The reason I asked for a starting year of 1971 is that’s when I started college.
Tuition at the University of Illinois in Fall of 1971 was $250 a semester for engineers (My degree is in civil engineering). Current University of Illinois Tuition is $8,278 per semester for Illinois residents, $15,349 for non-residents.
Note that tuition difference: $250 in 1971 vs. $8,278 today.
Note Areas of Highest and Lowest Price Inflation
The least government interference is in apparel and recreation. The most government interference in the free market is education and health care.
Education is rife with “no child left behind” madness, free tuition for veterans, and for-profit school scams that flourish only because student loans cannot be discharged in bankruptcy. The student loan and Pell Grant programs should be abolished.
Mike “Mish” Shedlock
Read more at http://globaleconomicanalysis.blogspot.ca/2012/08/trading-caps-and-gowns-for-mops-why-go.html#A7mec4Ig4eYSKoA7.99
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There’s a long list of scenarios that could sour the mood at the 2012 Republican National Convention in Tampa, Florida. “Newt University” could go off the rails. “Violent anarchists” may make an appearance. Fifteen thousand protesters and Occupiers could gum up the GOP’s works. The ban on puppetry might sadden Republican children.
And then there’s the potential hurricane that could be barreling out west toward Tampa, just in time to spoil Mitt Romney’s big kickoff party.
Here’s what you need to know about Tropical Storm Isaac, Mother Nature’s latest display of flagrant liberal bias.
What is Isaac?
It’s a tropical storm that could hit Tampa on Monday, the first day of the GOP nominating convention. Here’s an image from the National Hurricane Center’s Wednesday night forecast showing the fast-moving storm’s probable path (colloquially referred to as the “cone of doom” in Florida):
National Hurricane Center
Where did the name “Isaac” come from?
Isaac has been used for four distinct tropical cyclones in the Atlantic (tropical storms in 1988 and 2012, and hurricanes in 2000 and 2006). Names for hurricanes and storms are generally retired in the event of direct fatalities or extensive damage.
What are the chances the storm touches down in Tampa?
A direct hit by Isaac would be the first one Tampa has experienced in nine decades. Even including the worst-case scenario—torrential downpours, sizable storm surges, and full-scale hurricane-force winds—forecasters are right now putting the odds of evacuation at around 3 percent. (However, some analysts are giving Isaac a 50 percent chance of harming American oil and gas production in the Gulf of Mexico.)
What has this thing meant for the GOP convention thus far?
Organizers are closely watching developing news of the tropical storm, but have not yet announced plans to cancel, postpone, or move events. The Romney campaign is considering moving Ann Romney’s speech from Monday night to another evening, but that’s reportedly due to lack of TV coverage (major networks will air summer reruns during certain prime-time convention hours), not fear of a major hurricane.
Are people besides convention-goers being affected by this storm?
Yes, very much so, and given the widespread danger Isaac poses in the Caribbean, it seems sort of myopic to focus on the RNC: Puerto Rico has opened 428 shelters, and 50 people have hunkered down so far, according to Gov. Luis Fortuno. (Roughly 4,000 people are already without power, and more than 3,000 don’t have access to clean water.) The Virgin Islands are battening down the hatches as well and were hit with 40-mile-an-hour winds and a 10-foot surge of waves on Thursday.
Haiti, which is still recovering from the devastating 2010 earthquake, could very well be in the path of the storm. Here’s a video report:
What role does Walmart play in Florida’s disaster response plan?
Potentially a big one. The state’s director of emergency management, Bryan Koon, is a business school grad whose last job was running disaster response for Walmart and Sam’s Club. His “extensive private-sector experience” must have made him attractive to Republican Gov. Rick Scott, a privatization proponent whose personal portfolio has included Walmart stock and who has extolled the corporate chain’s values on multiple occasions. (Walmart also contributed to Scott’s inaugural fund, and gave $15,000 to the Republican Party of Florida.)
While working at Walmart, Koon gave the Federal Emergency Management Agency an interview (its since been wiped from the government agency’s site) that offers some insight into his (and the corporation’s) disaster preparedness philosophy:
We have an extensive database that helps us keep track of what the most popular items are after each type of disaster, which enables us to get the right merchandise to an area more quickly in preparation for or in response to an emergency…
Our ideal situation is one in which private sector, non-governmental organizations and local, state and federal government emergency management organizations…develop inter-operable plans that maximize those strengths and minimizes gaps in coverage…We feel that we are on the right road to get to this eventuality, but it will still be a long trip. It started with Hurricane Katrina, where the folly of planning in a vacuum and hoping for the best was exposed and the benefits of involving the private sector were clearly illustrated.
Koon’s faith in Walmart’s ability to figure out a hurricane isn’t a total aberration; in 2008, multiple media outlets trumpeted “Wal-Mart to the Rescue,” an economist’s study (PDF) that concluded the big-box store performed impeccably in the post-Katrina recovery, thanks to “superior organizational routines that emerge through private ownership and competitive markets.” Few of these media reports pointed out that the author, Stephen Horwitz, is a politically conservative libertarian whose CV includes numerous articles for The Journal of Ayn Rand Studies.
What have leaders in Florida been saying recently?
“Public safety—that’s going to be the No. 1 priority. We can have the convention again,” Lt. Gov. Jennifer Carroll said on Wednesday.
“We’d be dealing a lot with storm surge issues down there,” Koon told reporters. “We’re also working on a high number of potential evacuations.”
Here’s footage of a press conference Scott held on Thursday morning:
If this becomes a hurricane, where do folks find shelters?
The Hillsborough County government has a list [PDF] of public hurricane shelters for both low and high intensity storms (all the listed locations are at local public schools).
Is Tropical Storm Isaac a liberal conspiracy?
Um, no, but we’ll keep you posted if new information comes through suggesting otherwise. In the meantime, here’s Rush Limbaugh (a man famous for branding The Dark Knight Rises an anti-Romney conspiracy) talking about how President Obama is orchestrating the storm-related panic in order to throw the Republican convention into Day After Tomorrow-type chaos:
I can see Obama sending FEMA in in advance of the hurricane hitting Tampa so that the Republican convention is nothing but a bunch of tents in Tampa, a bunch of RVs and stuff. Make it look like a disaster area before the hurricane even hits there.
Is there something about GOP conventions that attract hurricanes?
Not quite, but this isn’t the first time something like this has happened, either. For instance, just back in 2008, Hurricane Gustav hit Louisiana while Republicans were beginning their national convention in St. Paul, Minnesota. Even though the hurricane ended up missing St. Paul by hundreds of miles, weather concerns caused organizers to cancel or roll back several opening-day events.
And, of course, there are still the ghosts of Hurricane Katrina.
So, is climate change making this worse?
Well, it can’t be helping. Earlier this summer, MoJo‘s Julia Whitty wrote about the reasons (“hotspots” in sea surface temperatures) that 2012 might be a bigger hurricane year for the East Coast.
UPDATE 1 (Friday, August 24, 11:50 a.m. PDT): At maximum sustained winds at 60 mph (the threshold for turning into a hurricane is 74), Tropical Storm Isaac has gained strength, but does not seem to be showing signs of rapid intensification. The Washington Post reports:
Much of southern Florida could receive 6-9” in the next few days, with locally higher amounts. Areas in Haiti and Dominican Republic could see 10-20” of rain, with 6-12” in Jamaica and eastern Cuba. Besides flooding, additional threats include coastal storm surge, tornadoes, and of course, winds from the storm itself.
The storm does appear to be veering West, away from the site of the Republican convention in Tampa. However, National Hurricane Center spokesman Dennis Feltgen said Friday that “[n]ot by any stretch of the imagination [is Tampa] out of the woods with this thing.”
Here’s the National Hurricane Center’s updated wind speed probability for the storm, for 8:00 a.m. EDT on Friday:
Asawin Suebsaeng is an interactive fellow at the Washington, DC, bureau of Mother Jones. For more of his stories, click here. You can also follow him on Twitter. Email tips, insights, and anger to asuebsaeng [at] motherjones [dot] com. RSS | Twitter
Source Article: http://www.motherjones.com
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(Graphite pencil, crayon and collage on paper)
Pretty bad. Here is a sample of factlets from surveys and studies conducted in the past twenty years. Seventy percent of Americans believe in the existence of angels. Fifty percent believe that the earth has been visited by UFOs; in another poll, 70 percent believed that the U.S. government is covering up the presence of space aliens on earth. Forty percent did not know whom the U.S. fought in World War II. Forty percent could not locate Japan on a world map. Fifteen percent could not locate the United States on a world map. Sixty percent of Americans have not read a book since leaving school. Only 6 percent now read even one book a year. According to a very familiar statistic that nonetheless cannot be repeated too often, the average American’s day includes six minutes playing sports, five minutes reading books, one minute making music, 30 seconds attending a play or concert, 25 seconds making or viewing art, and four hours watching television.
Among high-school seniors surveyed in the late 1990s, 50 percent had not heard of the Cold War. Sixty percent could not say how the United States came into existence. Fifty percent did not know in which century the Civil War occurred. Sixty percent could name each of the Three Stooges but not the three branches of the U.S. government. Sixty percent could not comprehend an editorial in a national or local newspaper.
Intellectual distinction isn’t everything, it’s true. But things are amiss in other areas as well: sociability and trust, for example. “During the last third of the twentieth century,” according to Robert Putnam in Bowling Alone, “all forms of social capital fell off precipitously.” Tens of thousands of community groups – church social and charitable groups, union halls, civic clubs, bridge clubs, and yes, bowling leagues — disappeared; by Putnam’s estimate, one-third of our social infrastructure vanished in these years. Frequency of having friends to dinner dropped by 45 percent; card parties declined 50 percent; Americans’ declared readiness to make new friends declined by 30 percent. Belief that most other people could be trusted dropped from 77 percent to 37 percent. Over a five-year period in the 1990s, reported incidents of aggressive driving rose by 50 percent — admittedly an odd, but probably not an insignificant, indicator of declining social capital.
Still, even if American education is spotty and the social fabric is fraying, the fact that the U.S. is the world’s richest nation must surely make a great difference to our quality of life? Alas, no. As every literate person knows, economic inequality in the United States is off the charts – at third-world levels. The results were recently summarized by James Speth in Orion magazine. Of the 20 advanced democracies in the Organization for Economic Cooperation and Development (OECD), the U.S. has the highest poverty rate, for both adults and children; the lowest rate of social mobility; the lowest score on UN indexes of child welfare and gender inequality; the highest ratio of health care expenditure to GDP, combined with the lowest life expectancy and the highest rates of infant mortality, mental illness, obesity, inability to afford health care, and personal bankruptcy resulting from medical expenses; the highest homicide rate; and the highest incarceration rate. Nor are the baneful effects of America’s social and economic order confined within our borders; among OECD nations the U.S. also has the highest carbon dioxide emissions, the highest per capita water consumption, the next-to-largest ecological footprint, the next-to-lowest score on the Yale Environmental Performance Index, the highest (by a colossal margin) per capita rate of military spending and arms sales, and the next-to-lowest rate of per capita spending on international development and humanitarian assistance.
Contemplating these dreary statistics, one might well conclude that the United States is — to a distressing extent — a nation of violent, intolerant, ignorant, superstitious, passive, shallow, boorish, selfish, unhealthy, unhappy people, addicted to flickering screens, incurious about other societies and cultures, unwilling or unable to assert or even comprehend their nominal political sovereignty. Or, more simply, that America is a failure.
That is indeed what Morris Berman concludes in his three-volume survey of America’s decline: The Twilight of American Culture (2000), Dark Ages America (2006), and Why America Failed (2011), from which much of the preceding information is taken. Berman is a cultural and intellectual historian, not a social scientist, so his portrait of American civilization, or barbarism, is anecdotal and atmospheric as well as statistical. He is eloquent about harder-to-quantify trends: the transformation of higher (even primary/secondary) education into marketing arenas for predatory corporations; the new form of educational merchandising known as “distance learning”; the colonization of civic and cultural spaces by corporate logos; the centrality of malls and shopping to our social life; the “systematic suppression of silence” and the fact that “there is barely an empty space in our culture not already carrying commercial messages.” Idiot deans, rancid rappers, endlessly chattering sports commentators, an avalanche of half-inch-deep self-help manuals; a plague of gadgets, a deluge of stimuli, an epidemic of rudeness, a desert of mutual indifference: the upshot is our daily immersion in a suffocating stream of kitsch, blather, stress, and sentimental banality. Berman colorfully and convincingly renders the relentless coarsening and dumbing down of everyday life in late (dare we hope?) American capitalism.
In Spenglerian fashion, Berman seeks the source of our civilization’s decline in its innermost principle, its animating Geist. What he finds at the bottom of our culture’s soul is … hustling; or, to use its respectable academic sobriquet, possessive individualism. Expansion, accumulation, economic growth: this is the ground bass of American history, like the hum of a dynamo in the basement beneath the polite twitterings on the upper stories about “liberty” and “a light unto the nations.” Berman scarcely mentions Marx or historical materialism; instead he offers a nonspecialist and accessible but deeply informed and amply documented review of American history, period by period, war by war, arguing persuasively that whatever the ideological superstructure, the driving energy behind policy and popular aspiration has been a ceaseless, soulless acquisitiveness.
The colonial period, the seedbed of American democracy, certainly featured a good deal of God-talk and virtue-talk, but Mammon more than held its own. Berman sides emphatically with Louis Hartz, who famously argued in The Liberal Tradition in America that American society was essentially Lockean from the beginning: individualistic, ambitious, protocapitalist, with a weak and subordinate communitarian ethic. He finds plenty of support elsewhere as well; for example in Perry Miller, the foremost historian of Puritanism, according to whom the American mind has always “positively lusted for the chance to yield itself to the gratification of technology.” Even Tocqueville, who made many similar observations, “could not comprehend,” wrote Miller, “the passion with which [early Americans] flung themselves into the technological torrent, how they … cried to each other as they went headlong down the chute that here was their destiny, here was the tide that would sweep them toward the unending vistas of prosperity.” Even Emerson and Whitman went through a phase of infatuation with industrial progress, though Hawthorne and Thoreau apparently always looked on the juggernaut with clearer (or more jaundiced) eyes.
Berman also sides, for the most part, with Charles Beard, who drew attention to the economic conflicts underlying the American Revolution and the Civil War. Beard may have undervalued the genuine intellectual ferment that accompanied the Revolution, but he was not wrong in perceiving the motivating force of the pervasive commercial ethic of the age. Joyce Appleby, another eminent historian, poses this question to those who idealize America’s founding: “If the Revolution was fought in a frenzy over corruption, out of fear of tyranny, and with hopes for redemption through civic virtue, where and when are scholars to find the sources for the aggressive individualism, the optimistic materialism, and the pragmatic interest-group politics that became so salient so early in the life of the nation?”
By the mid-nineteenth century, the predominance of commercial interests in American politics was unmistakable. Berman’s lengthy discussion of the Civil War as the pivot of American history takes for granted the inadequacy of triumphalist views of the Civil War. It was not a “battle cry of freedom.” Slavery was central, but for economic rather than moral reasons. The North represented economic modernity and the ethos of material progress; the economy and ethos of the South, based on slavery, was premodern and static. The West — and with it the shape of America’s economic future — was up for grabs, and the North grabbed it away from an equally determined South. Except for the abolitionists, no whites, North or South, gave a damn about blacks. How the West (like the North and South before it) was grabbed, in an orgy of greed, violence, and deceit against the original inhabitants, is a familiar story.
Even more than in Beard, Berman finds his inspiration in William Appleman Williams. When McKinley’s secretary of state John Hay advocated “an open door through which America’s preponderant economic strength would enter and dominate all underdeveloped areas of the world” and his successor William Jennings Bryan (the celebrated populist and anti-imperialist!) told a gathering of businessmen in 1915 that “my Department is your department; the ambassadors, the ministers, the consuls are all yours; it is their business to look after your interests and to guard your rights,” they were enunciating the soul of American foreign policy, as was the much-lauded Wise Man George Kennan when he wrote in a post-World War II State Department policy planning document: “We have about 50 percent of the world’s wealth, but only 6.3 percent of its population … In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity … To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives … We should cease to talk about vague and … unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.”
As a former medievalist, Berman finds contemporary parallels to the fall of Rome compelling. By the end of the empire, he points out, economic inequality was drastic and increasing, the legitimacy and efficacy of the state was waning, popular culture was debased, civic virtue among elites was practically nonexistent, and imperial military commitments were hopelessly unsustainable. As these volumes abundantly illustrate, this is 21st century America in a nutshell. The capstone of Berman’s demonstration is a sequence of three long, brilliant chapters in Dark Ages America on the Cold War, the Pax Americana, CIA and military interventions in the Third World, and in particular U.S. policy in the Middle East, where racism and rapacity have combined to produce a stunning debacle. Our hysterical national response to 9/11 — our inability even to make an effort to comprehend the long-festering consequences of our imperial predations — portended, as clearly as anything could, the demise of American global supremacy.
What will become of us? After Rome’s fall, wolves wandered through the cities and Europe largely went to sleep for six centuries. That will not happen again; too many transitions — demographic, ecological, technological, cybernetic — have intervened. The planet’s metabolism has altered. The new Dark Ages will be socially, politically, and spiritually dark, but the economic Moloch — mass production and consumption, destructive growth, instrumental rationality — will not disappear. Few Americans want it to. We are hollow, Berman concludes. It is a devastatingly plausible conclusion.
An interval — long or short, only the gods can say — of oligarchic, intensely surveilled, bread-and-circuses authoritarianism, Blade Runner- or Fahrenheit 451-style, seems the most likely outlook for the 21st and 22nd centuries. Still, if most humans are shallow and conformist, some are not. There is reason to hope that the ever fragile but somehow perennial traditions and virtues of solidarity, curiosity, self-reliance, courtesy, voluntary simplicity, and an instinct for beauty will survive, even if underground for long periods. And cultural rebirths do occur, or at any rate have occurred.
Berman offers little comfort, but he does note a possible role for those who perceive the inevitability of our civilization’s decline. He calls it the “monastic option.” Our eclipse may, after all, not be permanent; and meanwhile individuals and small groups may preserve the best of our culture by living against the grain, within the interstices, by “creating ‘zones of intelligence’ in a private, local way, and then deliberately keeping them out of the public eye.” Even if one’s ideals ultimately perish, this may be the best way to live while they are dying.
There is something immensely refreshing, even cathartic, about Berman’s refusal to hold out any hope of avoiding our civilization’s demise. And our reaction goes some way toward proving his point: We are so sick of hucksters, of authors trying — like everyone else on all sides at all times in this pervasively hustling culture — to sell us something, that it is a relief to encounter someone who isn’t, who has no designs on our money or votes or hopes, who simply has looked into the depths, into our catastrophic future, and is compelled to describe it, as Cassandra was. No doubt his efforts will meet with equal success.
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