Most Young Homeowners Have Rich Parents

Yet another big indication of America’s declining social mobility is the fact that most young people who are financially well-off are simply those already born into stable and prosperous circumstances. As The Atlantic points out, the majority of Millennials who enjoy the rare benefits of homeownership, higher education without crushing debt, or ample savings owe such prosperous standing to their parents and families.

To start with, most of those who continue their education after high school have families that are able to help financially. A recent report from the real-estate research company Zillow looked at Federal Reserve Board data on young adults aged 23-34 and found that of the 46 percent of Millennials who pursued post-secondary education (that’s everything from associates degrees to doctorates), about 61 percent received some financial help with their educational expenses from their parents.

And yet, even with this help, the average student with loans at a four-year college graduates with about $26,000 in student-loan debt. Millennials who are lucky enough to have some, or all, of a college tuition’s burden reduced by their parents have a leg up on peers who are saddled with student debt, and they’ll be able to more quickly move out on their own, and maybe even buy their own house.

To be sure, there is no shame in getting help from one’s family. But it is important to acknowledge one’s fortuitous circumstances, and the contributions of others — from loved ones to society as a whole — that helped make it happen.  Continue reading

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Entrepreneurs don’t have a special gene for risk—they come from families with money

Eupraxsophy:

In essence, only people with a lot of money can take the necessary risks required to start their own business. Sure, there are always exceptions, but for the majority of Americans, the entrepreneurial path just isn’t feasible.

Perhaps with more vocational schools, job training programs, and more generous and accessible loans, starting a business would not be so out of reach from most non-wealthy people.

Originally posted on Quartz:

We’re in an era of the cult of the entrepreneur. We analyze the Tory Burches and Evan Spiegels of the world looking for a magic formula or set of personality traits that lead to success. Entrepreneurship is on the rise, and more students coming out of business schools are choosing startup life over Wall Street.

But what often gets lost in these conversations is that the most common shared trait among entrepreneurs is access to financial capital—family money, an inheritance, or a pedigree and connections that allow for access to financial stability. While it seems that entrepreneurs tend to have an admirable penchant for risk, it’s usually that access to money which allows them to take risks.

And this is a key advantage: When basic needs are met, it’s easier to be creative; when you know you have a safety net, you are more willing to take…

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Income Inequality Around the World

Or to be more precise, among the 34 countries that make up the Organisation for Economic Co-operation and Development (OECD), a club of mostly industrialized nations (including many of the world’s largest and most developed economies). Its recent report on inequality shows growing and unprecedented disparity of income across the board, albeit at different rates and levels depending on the country.

Mexico, Chile, the United States, and Turkey fare the worst, while Denmark, the Czech Republic, Slovenia, and Finland perform the best. The chart below displays the results, courtesy of Business Insider

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Finland and the Netherlands Experiment With Basic Income

Finland became the first country in Europe to announce plans for the implementation of a basic income program, according to the Basic Income Earth Network (BIEN). (To recap: a basic income is a universal, unconditional form of payment to individuals that covers their living costs. It allow people to choose to work more flexible hours and devote more time to non-work related activities, from caregiving and volunteering, to studying and leisure.)

The commitment consists of one line: ‘Implement a Basic Income experiment’, in the ‘Health and Welfare’ section of the programme.

The main party of government, the Centre Party and the new Prime Minister Juha Sipilä, are known to be supportive of Basic Income, but his new government partners, the populist Finns Party and conservative NCP have not spoken publicly on the issue. The scant reference to Basic Income raises some doubts about the government’s commitment to the policy.

So while it is far from a done deal — especially as the government has yet to release any further details, including a timeframe — it is nonetheless a big step, as few other countries, even in socially progressive Europe, have ever made such a formal, nationwide commitment.

Meanwhile, the fourth largest city in the Netherlands, another country that has been mulling over a basic income, is set to implement a plan of its own. The intention is not only to determine if a basic income will help people in absolute terms, but to see how its efficiency compares to the status quo of welfare payments. From The Independent:

University College Utrecht has paired with the city to place people on welfare on a living income, to see if a system of welfare without requirements will be successful.

Alderman for Work and Income Victor Everhardt told DeStad Utrecht: “One group is will have compensation and consideration for an allowance, another group with a basic income without rules and of course a control group which adhere to the current rules.”

“Our data shows that less than 1.5 percent abuse the welfare, but, before we get into all kinds of principled debate about whether we should or should not enter, we need to first examine if basic income even really works.

“What happens if someone gets a monthly amount without rules and controls? Will someone sitting passively at home or do people develop themselves and provide a meaningful contribution to our society?”

It is not surprising that the Dutch would lead the way in this experiment, given that they already have a well-established fondness for less traditional work environments — 46.1 percent of the labor force works part-time, the highest proportion in the European Union, and the nation is nonetheless broadly prosperous, with a high rate of life satisfaction. This is a country that already leads the way in work-life balance, so it would be interesting to see how this endeavor goes and whether it will catch on elsewhere in the country or beyond.

Finland and the Netherlands are the first developed nations to experiment with a guaranteed basic income since the 1970s, when Canada conducted a pilot project dubbed “Mincome” in a small town, with great results. Other experiments have been performed more recently in India, Namibia and Brazil, each one of them reporting measurable, positive outcomes in everything from poverty reduction to healthcare and general wellness.

As BIEN notes, there is an increasing interest in Basic Income worldwide, as well there should be: from mounting inequality to a dearth of well-paying and sustainable jobs, there are plenty of good reasons to consider at least trying out this streamlined and promising approach to alleviating poverty and improving quality of life.

What If Students Stopped Paying Back Their Loans?

That is the provocative question posed by Vice to Professor Andrew Ross, who teaches Social and Cultural Analysis at New York University. As one of the founders of debt resistance groups like Occupy Student Debt and Strike Debt; a member of the Debt Collective; an advocate for the rights of debtors; and an author of Creditocracy and the Case for Debt Refusalhe is clearly something of an expert on the subject. His answer?

A strike of any kind is a tactic. It’s not a solution. It’s a tactic towards a goal, and the goal here ultimately is for the US to join the long list of industrialized countries around the world that make it their business to offer a free public higher education system. None of these other countries are as affluent as the US; there’s no question that this country could afford to do so. In fact, we produced an estimate not that long ago about how cheap it would be for the federal government to cover tuition at all two and four-year colleges. There are several estimates in circulation, and a few years ago that kind of proposal was dismissed out of hand. But now we’re beginning to see it pop up on Capitol Hill in various forms. It’s a proposal that’s part of Bernie Sanders’ campaign for president. It’s a proposal that pushed President Obama in the direction of making community colleges free, at least for two years. It’s becoming a little more respectable to talk about [solutions for student debt], on Capitol Hill and in the public sphere in general. None of that would have happened without a student debt resistance.

Read the rest of this illuminating interview here. Given the mounting economic and social consequences of this issue, one can expect the public debate about student debt and the cost of higher education to only intensify.

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Noam Chomsky: The Death of the American University

Eupraxsophy:

“The university imposes costs on students and on faculty who are not only untenured but are maintained on a path that guarantees that they will have no security. All of this is perfectly natural within corporate business models. It’s harmful to education, but education is not their goal.”

Originally posted on Vox Populi:

On hiring faculty off the tenure track

That’s part of the business model. It’s the same as hiring temps in industry or what they call “associates” at Walmart, employees that aren’t owed benefits. It’s a part of a corporate business model designed to reduce labor costs and to increase labor servility. When universities become corporatized, as has been happening quite systematically over the last generation as part of the general neoliberal assault on the population, their business model means that what matters is the bottom line.

The effective owners are the trustees (or the legislature, in the case of state universities), and they want to keep costs down and make sure that labor is docile and obedient. The way to do that is, essentially, temps. Just as the hiring of temps has gone way up in the neoliberal period, you’re getting the same phenomenon in the universities.

The idea is…

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U.S. Hospitals Charge Patients Three Times Market Rate

Reports of widespread exploitation and inefficiency in the U.S. healthcare system is hardly shocking anymore, not that it is any less disquieting. From accessibility and cost-effectiveness, to health outcomes like life expectancy and maternal health, the U.S. consistently performs mediocre at best in various metric of performance.

Some months back, I shared an article from Slate that pinned much of this problem on greedy hospitals. A recent study reported in The Atlantic only further bolsters this grim assessment:

North Okaloosa [in Florida], along with New Jersey’s Carepoint Health-Bayonne Hospital, tops the list of the U.S. hospitals with the highest markups for their services, according to a new study in Health Affairs. The study found that, on average, the 50 hospitals with the highest markups charged people 10 times more than what it cost them to provide the treatments in 2012.

On average, all U.S. hospitals charged patients (or their insurers) 3.4 times what the federal government thinks these procedures cost. “In other words, when the hospital incurs $100 of Medicare-allowable costs, the hospital charges $340″, explain the authors, Ge Bai of Washington and Lee University and Gerard F. Anderson of the Johns Hopkins Bloomberg School of Public Health. The ratio of hospital charges to costs has only increased over time: In 1984, it was just 1.35, but by 2011, it was 3.3.

In the study, the facilities that marked up their prices the most were more likely to be for-profit (as opposed to not-for-profit), urban hospitals that are affiliated with a larger health system. Community Health Systems operates half of the 50 hospitals with the highest markups. The U.S. Justice Department has investigated the Franklin, Tennessee-based hospital chain for the way it bills Medicare and Medicaid. In February, the company and three New Mexico Hospitals agreed to pay $75 million to settle a case in which Community Health Systems was accused of making illegal donations to county governments, which were then used to obtain matching Medicaid payments.

Overall, three-quarters of the hospitals on the highest-markup list are in the South, and 40 percent of them are in Florida.

Only Maryland and West Virginia restrict how much hospitals can charge. The Affordable Care Act makes not-for-profit hospitals offer discounts to uninsured people, but it doesn’t set limitations on bills sent to patients treated at out-of-network or for-profit hospitals.

Unsurprisingly, the researchers found that the system is especially predatory towards those that are either most vulnerable in terms of their healthcare needs (such as having chronic or potentially fatal ailments) and those with “the least market power” (e.g. the poor, who also tend be medically vulnerable). Equally unsurprising is how these overcharges are found to contribute to “exceptionally high medical bills, which often leads to personal bankruptcy or the avoidance of needed medical services” — little wonder why the U.S. fares poorly in health outcomes.

As expected, the solutions to such an entrenched and widespread problem will not be easy or politically tenable (at least not yet).

In an statement, Jarrod Bernstein, spokesman for Carepoint Health-Bayonne Hospital, said, “These charge prices affect less than 7 percent of our overall encounters system-wide, and without it, or adequate contract reimbursements, our safety net hospitals that serve the most vulnerable among us risk closure. That is why we are calling for a new healthcare reimbursement system that offers equivalent rates for all patient encounters regardless of where they live that will make these charges irrelevant”.

The study authors say one way to fix this might be to require hospitals to post their markups online so patients can price-compare before they go. But that wouldn’t work for emergencies, for people who live far from all but one hospital, or for the many people for whom hospital charging codes are, very understandably, inscrutable.

Alternatively, legislators could say that hospitals can only charge people a certain amount more than what they would charge Medicare, which usually negotiates some of the lowest rates. Or, more states could do what Maryland, Germany, and Switzerland all do and aggressively limit how much all hospitals can charge, period.

But as the authors note, that last solution would be “subject to considerable political challenges”, which is perhaps a polite way of saying, “will make the Obamacare battle of 2010 seem like a casual game of bridge among friends”.

Maybe it won’t be so politically challenging to change the system once push comes to shove. How much longer will people put up with being preyed upon in their most vulnerable circumstances? Profiting off of sickness and vulnerability — whether as an insurer or hospital — is as morally repugnant as it gets. How could this be tolerable? What does it say about our culture?

The Lasting Damage of High Inequality

In my previous post, I shared the grim results of a recent OECD study that found a consistent rise in wealth and income inequality across much of the developed world, with the U.S. taking the lead among the richest countries (though comparatively less wealthy countries Chile, Mexico, and Turkey were ahead).

Reporting on the same survey, the New York Times delved further and explored the impact that this worsening inequality is already having on societies: Continue reading

Income Inequality Growing Across The World

The Organization for Economic Cooperation and Development (OECD), a group of 34 mostly wealthy countries, has published the results of a study finding that income inequality is “at its highest since records began”, with the with the United States ranking among the highest on the spectrum.

More from Al Jazeera:

The United States was near the high end of the inequality spectrum, followed by Israel, the United Kingdom and Greece. Only Turkey, Mexico and Chile were found to have higher levels of income inequality than the U.S.

Denmark was the least unequal country according to the report, as measured using the Gini index, a common measure of income distribution. Slovenia, the Slovak Republic and Norway also ranked near the low end of the spectrum.

Overall wealth is even more unevenly distributed than income, according to the report. Across all 34 countries studied, the bottom 40 percent of households were found to possess 3 percent of all wealth. In contrast, the top 10 percent laid claim to half of all wealth, and the top one percent held almost 20 percent of all wealth.

Gurría said the report’s findings demonstrate that inequality slows down economic growth. He urged OECD member countries to adopt more redistributive policies, saying that redirecting wealth flows would benefit not just low-income households but the economy as a whole.

“Well-designed, prudent redistribution does not harm growth”, he said. “In fact, it goes hand-in-hand with growth”.

In addition to tax transfers, the OECD report recommends more investment in education, policies that promote remunerative employment, and measures that “remove barriers to female employment and career progression”. Bringing more women into the workforce and narrowing the pay gap was found to have a mitigating effect on income inequality.

In recent years, global elites have become increasingly concerned about income inequality. Last November, the World Economic Forum, which hosts the annual gathering of political and economic leaders in Davos, Switzerland, put out a report identifying income inequality as the number one trend to watch in 2015.