Those of us who live near the top of the income pyramid are doing very nicely, thank you. Yet our government keeps showering us with Christmas presents. Meanwhile, economic life is pretty miserable for those near the bottom and is getting worse for those in the middle. Does this strike you as fair?

The main story line of the U.S. economy over the last third of a century evokes Charles Dickens’s classic “A Christmas Carol.” Starting in the late 1970s, the labor market turned ferociously against those with less education and in favor of those with more. This was not Ronald Reagan’s fault, nor George Bush’s (either one), nor Mitch McConnell’s. It just happened. And except for a brief shining moment during the Clinton boom, the Great Disequalization has continued unabated to this day…

Wages. When it comes to wages, the basic story of recent decades is redolent of Scrooge. Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels. Yes, that’s right, no real increase in over 35 years. That is an astounding, dismaying and profoundly ahistorical development. The American story for two centuries was one of real wages advancing more or less in line with productivity. But not lately. Since 1978, productivity in the nonfarm business sector is up 86%, but real compensation per hour (which includes fringe benefits) is up just 37%. Does that seem fair?

Taxes. We often hear that the top 1% of income-tax payers pay about 40% of all the income taxes. Sounds like Robin Hood is on the job. But that’s just income taxes. Did you know that the payroll tax (the people’s tax) now brings in about 96% as much revenue as the personal income tax (the rich man’s tax)? As recently as 2000, it brought in just 65% as much. Yes, taxpaying has been radically democratized. Yet the drumbeat from the right continues: We must remove the oppressive yoke of taxation from the backs of the haves, and put it on the backs of the . . . Well, they usually don’t finish the sentence. But someone must pay the bills.

The federal budget deficit. American budget history from the end of World War II until the Reagan presidency was simple: The federal government ran modest deficits in a growing economy, and the debt-to-GDP ratio fell and fell. President Reagan’s huge income tax cuts, which were heavily skewed toward the rich, changed all that. And it took 15 years—and politically courageous actions by Presidents Bush 41 and Clinton—to set things right.

But the nation took leave of its fiscal senses, and simply stopped paying for anything, during President Bush 43’s eight years. Not for huge tax cuts—once again skewed toward the rich. Not for the Medicare drug benefit—which, in fairness, is skewed toward the poor. Not for two wars. That spree was followed by the financial crisis, the Great Recession, and the policy responses thereto—all of which blew up the deficit massively under President Obama.

Forty years of de-regulation, tax cutting, off-shoring and the general erosion of social cohesion has set the stage for the big one. The question is when will it hit?

First up, this public school is brought to you by… NYT

Facing another potential round of huge budget cuts, the Los Angeles school board unanimously approved a plan on Tuesday night to allow the district to seek corporate sponsorships as a way to get money to the schools.

Contrary to what you might have heard on talk radio, the financial crisis of 2007-2009 was brought to you by the private sector… The Big Picture

- More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
- Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
- Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

Why Bill Gates is the Devil: Reason #2068 – Billy Boy is funding yet another faux media outlet to pollute public discourse and debate over education policy… Schools Matter

The Center for Education Reform is seeking a top-notch Managing Editor as it prepares for the launch of The Media Bullpen, a groundbreaking journalistic media/policy platform dedicated to dedicated to: a) correcting the record on K-12 education issues and; b) improving the media/public understanding of topics in K-12 education and education reform.

China is the new Japan… The Krug-man

These days, China seems to play the same role in much of our discourse that Japan did two decades ago. We look at our own follies — which are immense — and then look at the Chinese, and ascribe to them all the virtues of foresight and determination we lack.

But just like the Japanese, the Chinese are human, and their policy makers are subject to the same kinds of confusion and inability to make hard choices that are part of the human condition. And Chinese macroeconomic policy is in the process of becoming a cautionary tale.

Looking for a reason why we’ve [re]entered an era of bubbles and crashes…? How about extreme inequality? Naked Capitalism

First, the rich spend a smaller proportion of their wealth than the less-affluent, and so when more and more wealth becomes concentrated in the hands of the wealth, there is less overall spending and less overall manufacturing to meet consumer needs.

Second, in both the Roaring 20s and 2000-2007 period, the middle class incurred a lot of debt to pay for the things they wanted, as their real wages were stagnating and they were getting a smaller and smaller piece of the pie. In other words, they had less and less wealth, and so they borrowed more and more to make up the difference.

Reuters makes up its own case for structural unemployment without bothering with that whole evidence thing… Beat the Press

Reuters decided to abandon evidence-based reporting in a news story that told readers that the United States is suffering from “structural” unemployment. The use of the term “structural” is important because it implies that the main reason that people are unemployed is that there is a mismatch between skills and the available jobs. The alternative explanation, is that we just need more demand in the economy to drastically increase employment levels.

Yesterday, I posted on the story that the Republican commissioners on the Financial Crisis Inquiry Commission bailed early to release a maddeningly stupid ‘report’ of their own that reiterated all of the non-sense bouncing around talk radio and Fox News, because I felt that it offers us a clear picture of how political power is constructed in early 21st America and how that construct intersects with concrete realities only in an accidental and ad hoc manner. Today, Barry Ritholtz demonstrates why this is important and offers ten questions for any thinking individual to consider in assessing the validity of the claims being made by these public intellectuals. I realize that it is easy to dismiss the whole affair as ‘more of the same’, but I would caution you against such a dismissive conclusion.

Across the political spectrum, the means of constructing an effective political bloc capable of achieving power is through the manipulation of language. Repeat the Big Lies enough and those lies develop what you could call ‘truth effects’ as in they create their own reality in which certain outcomes becomes pre-ordained. Whether its a ‘Fair Tax’ that would push the nation’s tax burden down the income ladder or labelling the few remaining institutions mandated with the task of protecting workers and senior citizens from wage slavery as being Ponzi schemes, it is through the manipulation of language and popular discourse that the Masters of the Universe wield their evil magic.

What sparked this particular rant…? The new Big Lie being propagated in the noise machine that public employees [aided by their evil unions] are better paid than their private sector counterparts is leaking into more mainstream outlets despite being almost total fantasy…

Using the latest federal data, Keefe said the average total compensation for workers in the private sector with bachelor’s degrees is $89,041 compared with $56,641 for public workers.

For workers with professional degrees — lawyers, say, or doctors — the gap is more dramatic: $175,141 in the private sector, $79,330 in the public.

Where public outdoes private is among workers without much education. The average compensation for a public worker without a high school diploma is $41,000, compared with $27,719. With diplomas, employees in both sectors make $44,000.

Public workers are more educated than private — 57 percent have college degrees and higher, compared with 44 percent. Because workers in all sectors are paid according to education and skill levels, lumping them all together — the least skilled with the most — is misleading.

While the middle and working classes continue their descent toward peonage, the nation’s wealth is becoming increasingly concentrated among the noble few, and any resistance to this dynamic is quickly labelled ‘class warfare‘ by the powers that be.

Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.

In the four decades that the Census Bureau has been tracking household income, there has never before been a full decade in which median income failed to rise. (The previous record was seven years, ending in 1985.) Other Census data suggest that it also never happened between the late 1940s and the late 1960s. So it doesn’t seem to have happened since at least the 1930s.

The key here is to remember that this long slide toward a Banana Republic is not something that is being done to us [the body politic] by evil Republicans or Democrats but is something that we are doing to ourselves. We internalize discourses that do not only bear little resemblance to reality but also undermine our own self-interests as citizens of the republic, and this is where education enters the picture. The reason the Masters of the Universe use the Big Lie and marketing techniques to achieve political ends is that it works. Only a well-educated populace capable of critical thinking and rational inquiry can immunize the republic from this growing kleptocracy, and it only takes a quick glance at education statistics to understand that we’re in deep trouble.

Let’s look at a few inconvenient facts. We had housing bubbles in the UK, Australia, Ireland, Spain, Iceland, Latvia, Canada, and a lot of Eastern Europe. Can we blame the CRA and Fannie and Freddie for that? How about the M&A boom, which resulted in a ton of leveraged loans being issued at super low spreads? If the Fed and other central banks had not driven rates to the floor, we’d see a good bit more distress and dislocation in this sector of the market. Oh, and how about the fact that banks in Continental Europe, which had no housing bubble in their home markets, and no evil Fannie or Freddie analogues, also nearly keeled over in the crisis?

This whole line of thinking is garbage, the financial policy equivalent of arguing that the sun revolves around the earth. Yes, the US and other countries provide overly generous subsidies to housing, and curtailing them over time would not be a bad idea. But that’s been our policy for decades. Calling that a major, let alone primary, cause of the crisis, is simply a highly coded “blame the poor” strategy, In reality, both the runup to the crisis and its aftermath were one of the greatest wealth transfers from the citizenry at large to a comparatively small group of rentiers in the history of man.

However, lest you think that these public intellectuals actually believe this garbage, it is important to note that not only have these commissioners been MIA during committee sessions since August but they are quickly scrubbing their bios to eliminate any mention of their previous advocacy of de-regulation.

It appears that the web editors at the AEI have been busy.

Peter Wallison, currently a member of the Financial Crisis Inquiry Commission,
was also the co-director of AEI’s Financial Deregulation Project, along with his co-director, Columbia professor Charles Calomoris.

Over at Calomoris’s bio, his status as co-director of AEI’s Financial Deregulation Project is the first sentence;

Not so on for his co-director Wallison. Indeed, any reference to his participation on the Financial Deregulation Project is gone from Wallison’s AEI bio.  Instead, the language has been replaced with the more benign “codirector of AEI’s program on financial policy studies.”

Why the change? After all, it is the AEI’s position that deregulation was not a cause of the crisis.

The language change is a poor attempt to hide Wallison’s role in the radial deregulation of derivatives, banking, leverage and sub-prime mortgages from casual inspection.

This Intellectual dishonesty is telling, but unnecessary. Many people from across the political spectrum agree with the AEI that the bank bailouts were wrong, that corporate giveaways are inappropriate, and that the government created Moral Hazard.

However, some of those people consider data, facts, details, as part of their analysis.

Barry Ritholtz appears to be more forgiving than I as he points toward cognitive dissonance as the driver of this scrub-job. From where I’m sitting, this looks like pure cynical politics. These guys saw the writing on the wall in August and bailed to protect their careers in the right-wing noise machine. They know damn well that this is a bunch of non-sense, and that is why they are scrubbing their bios. But who cares? If they tow the party line like good little boys then they can look forward to well paying jobs and enjoying a prominent position in popular discourse. It’s best for everyone involved if they simply cut Trotsky their long embrace of de-regulation out of the picture.

Larry Cuban, a professor emeritus of education at Stanford University, says some of the public’s negative views come from frequent criticism from policymakers and in news reports.

“It’s become a throwaway line: ‘Oh, sure U.S. schools are lousy,’” said Cuban. “I think we have schizophrenia in the U.S. that we believe all U.S. schools are lousy except the schools we send our kids to.”

Thirty years of intensive marketing bank-rolled by the richest families in America has paid off in a general sense. Much like the denizens of the Scooter Store Revolution collecting government assistance while demonstrating against government assistance for an amorphous group of ‘others’ sucking on the entitlement tit, Americans are all for punishing lazy teachers working in predominantly urban areas far from their comfortable suburban oases but seem quite satisfied with their teachers and schools.

Second, while I can’t speak for big urban districts like Chicago and NYC, the whole issue is a bunch of horse manure. You show me a lazy, good-for-nothing teacher [and they're out there... I've worked with them] working in a school and I’ll show you an administrator who is failing to do his/her job. For the majority of school districts, there are procedures in place for getting rid of dead weight. What unions offer teachers is the right to due process and that is it. Living in the South I’ve witnessed many occasions in which due process saved teachers [usually biology teachers] from the pre-Enlightenment influence of local churches intent on ensuring children do not learn the basic knowledge informing many of the medical procedures keeping church elders alive to do God’s work.

Perhaps the most important take away from all of this is that the long term strategy of the elite in creating politicized think tanks, policy centers, and foundations to ’shape’ the body politic to their benefit are now reaping the rewards of their investments. The commonsensical ‘center’ of American politics has now shifted so far to the right that the public commons is now being offered up to the highest bidder in the name of liberty and equality.

If you want to understand where public education reform is heading, look south and east to Florida, where the governor-elect, Rick Scott, is talking about a new funding student formula that is more likely to destroy the public school system than accomplish anything else.

Scott wants to expand a voucher program that allows low-income and disabled students to use public money to go to private schools to ALL students…

Once upon a time in America, it may have sounded preposterous not only in concept but in chances of implementation.

But the Republicans in Florida, who just tightened their control in the state capital in the last election, are making in clear that they are determined to push for such a system in the state legislature next year.

There are legal, constitutional and other hurdles, but in today’s political and education atmosphere, no bad idea is impossible to implement.

That Rick Scott is a veteran of the largest Medicare fraud scheme in US history speaks volumes as to how dysfunctional our political system has become, but that he is now poised to set up yet another form of public looting in a legalized form should give everyone pause before blindly accepting the entreaties of public education reformers like Scott’s new useful tool Michelle Rhee.

Ultimately, the rot at the core of our political structure will break the American system that emerged from the upheavals of early 20th century, and this kleptocratic ’success’ is made possible by the common sense understandings that have been under construction for the past 3 decades. From Rush Limbaugh to the Op-Ed page of the Washington Post, the individuals who make up the American body politic have been conditioned to see themselves as atomistic entities who will achieve ‘liberty’ only through the rejection of social action and community.

Social Darwinism and the “life is like the jungle” attitude that are so pervasive in our society have a single purpose: to convince you that you are an antelope. The only thing you can do is run away. You’ll be OK so long as there are other people around who are even more vulnerable. You could try to stop them, but why? Every time they eat the poor, the geezers, and the kids who are defenseless, you live another day. Don’t try holding your ground against the big, strong predator. Don’t stick together or they’ll eat all of you.

Just imagine how much different our politics and society would be if we were less eager to say “As long as they’re eating someone else, I don’t care” and more apt to get in a big group and ask the lion if it feels lucky.

Scorers often emerge from training more confused than when they started. Usually, within a day or two, when the scores we are giving are inevitably too low (as we attempt to follow the standards laid out in training), we are told to start giving higher scores, or, in the enigmatic language of scoring directors, to “learn to see more papers as a 4.” For some mysterious reason, unbeknownst to test scorers, the scores we are giving are supposed to closely match those given in previous years. So if 40 percent of papers received 3s the previous year (on a scale of 1 to 6), then a similar percentage should receive 3s this year. Lest you think this is an isolated experience, Farley cites similar stories from his fourteen-year test-scoring career in his book, reporting instances where project managers announced that scoring would have to be changed because “our numbers don’t match up with what the psychometricians [the stats people] predicted.” Farley reports the disbelief of one employee that the stats people “know what the scores will be without reading the essays.”

My observation from hiring both Chinese and Western graduates is that with Chinese graduates, you get a much better guarantee of someone who will actually work hard at their task for 8 hours a day, but, you will need to supervise them and give them a great deal of guidance. With Western graduates, about 75 percent of them are completely useless because they are so undisciplined and lacking in basic knowledge. The remaining 25 percent, however, and pure gold. They attack problems creatively, are eager to show you their best and rapidly take to new tasks and challenges.

For instance, systems that were poor-to-fair tended to rely on incentive funding for teachers and schools for meeting high performance targets. Those systems in the midlevel ranges had teacher salaries at a level comparable to gross domestic product per capita, while those in the great-to-excellent range tended to have salaries that far outpaced GDP per capita.

Similarly, lower-performing countries tended to use many more interventions based in accountability, like standardized student assessments, but systems in the good-to-great performance category and beyond, even those that had previously had formal accountability systems, reduced their frequency. And teacher evaluations gradually became less standardized as the teaching force got better and as teachers held one another accountable, through collaboration and demonstrations, for helping students to learn.

Fair enough… That said, since the US ranks as an average nation in terms of educational achievement, this study would appear to be telling us that our relentless march toward increased standardization and accountability built on a clearly behaviorist model is wrong-headed. In fact, the study seems to be in line with much of what sociologists and political economists have been trying to tell us for quite some time.

Click here to view the embedded video.

In reality, you should prepare yourself for heavy doses of the new status quo masquerading as a challenge to the entrenched interests of the… wait for it… status quo.

Moon-Pies and RC’s for all, Clive! We’ve done lost our minds!

There’s a frustrating paradox in Chinese education. On the one hand, millions of college graduates cannot find a job — at least a desirable job that pays substantially more than what a migrant worker makes. On the other hand, businesses that want to pay a lot more can’t seem to find qualified employees.

Multinational companies in China are having a difficult time finding qualified candidates for their positions. According to a recent survey of U.S.-owned enterprises conducted by the American Chamber of Commerce in Shanghai, 37 percent of the companies that responded said that finding talent was their biggest operational problem. A separate study by McKinsey Quarterly found that 44 percent of the executives in Chinese companies reported that insufficient talent was the biggest barrier to their global ambitions.

The explanation: a test-oriented educational environment…

[The Confucian civil service exam] Keju is dead now but its spirit is very alive in China today, in the form of gaokao, or the College Entrance Exam. It’s the only exam that matters since it determines whether students can attend college and what kind of colleges they can attend. Because of its life-determining nature, gaokao has become the “baton” that conducts the whole education orchestra. Students, parents, teachers, school leaders and even local government officials all work together to get good scores. From a very young age, children are relieved of any other burden or deprived of opportunity to do anything else so they can focus on getting good scores.

The result is that Chinese college graduates often have high scores but low ability. Those who are good at taking tests go to college, which also emphasizes book knowledge. But when they graduate, they find out that employers actually want much more than test scores…

Chinese educators are well aware of the problems with the gaokao system and have been trying to move away from the excessive focus on testing…

I had an interesting conversation with a Chinese education scholar on a long airport shuttle ride this past October, and he shared with me an observation that I found to be [let us say] enlightening. I asked him about recent efforts in China to move away from a test-based education system in light of our hell-bent determination to create our own on this side of the Pacific. His response was: “China is becoming the US, and the US is becoming China.” That just about sums it up…