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Category: Public Interest

Seniors Feeling Financial Crunch – Increased Bankruptcies and Pension Overpayment Collections

Image: debt.org

Researchers tracking the financial blight of seniors report that seniors over age 65 are 3 times more likely to file for bankruptcy. Seniors are caught by reduced pensions, co pays on their children’s student loans, spiraling medical costs and lost wealth from the Great Recession.

Sources: Consumer Bankruptcy Project, The New York Times – 8/3/18

The post – Baby Boomer generation is feeling squeezed too as their bankruptcy filings are up over 66 % for the 55 to 64 year old group. Many Baby Boomers just beginning their retirement or in the their last years of savings were hit hard by the Great Recession, wiping out 401k investments in stocks and losing home equity wealth too. In all households lost $14 trillion in wealth, most of the income and asset recovery of the past 10 years has gone to the top 10 % in income.

The Consumer Bankruptcy Project is an ongoing effort led by Professor Thorne, University of Idaho; Professor Lawless; Pamela Foohey, a law professor at Indiana University; and Katherine Porter, a law professor at the University of California, Irvine. Their universities fund the project as they review court documents and send out questionnaires to retirees.

Social Security has not been able to fill the gap.  Nor was Social Security designed to be the sole source of income for seniors – it was setup to supplement pensions and savings.  Over the past 30 years corporations have shifted from defined benefit (pension direct payment) plans to defined contribution plans like 401k where the worker makes the majority for the contributions and the employer is off the hook to make direct fixed payments. Yet, today for 33 % of retirees receiving Social Security it provides 90 % of their income.  Medicare and drug costs cut into their Social Security checks:

Sources: The Kaiser Family Foundation, The New York Times – 8/3/18

Health care spending for the average retiree is increasing every year beyond Social Security income and drugs become more expensive, some with standard prices of $70 per dose gauged up in price to $1700 per dose.

Adding insult to injury firms like  AT & T are contracting with collection agencies to claw back overpayments to pensioners.  The firms make up the calculation tables and send out the checks now they blame the pensioner, who has already spent the money.  It is important if the retiree receives a statement of planned disbursements to send back incorrect checks, however in most cases the checks were sent over some years until the error was found and the retiree had no idea that there was an overpayment.

Next Steps:

The perfect financial storm for retirees comes down to the basic fact that corporations shifted their responsibility for pensions onto workers helping the financial services industry sell more financial products to an naïve and financial challenged workers.  Professional financial managers were replaced by amateur workers doing their best to invest their 401k plans and save for the future.  For the bottom 80 % income the last 30 years their wages have been stagnant with increasing educational costs for their children and increasing medical costs for themselves. The federal government has been of little help, not indexing Social Security payments to the actual costs seniors incur for increasing medical and health services costs.

  1. Pension Claw backs – this makes no moral sense, many retirees have spent 20 or 30 years of their lives for the business, the business made the mistake they need to take care of it. In AT & T’s case they spend billions on stock buy backs to make their executives and shareholders rich, they could take a fraction those funds and take care of their seniors and fund their pension liabilities appropriately.
  2. Retirement Income – in previous posts we have recommended that instead of an incredible mess of 401k accounts, financial houses and amateur investment management by workers, a guaranteed retirement program be implemented starting at the time a person begins work and receives his Social Security card. Worker savings toward retirement would be transferred into this one account for a lifetime, with Social Security contributions by the federal government, and savings by the worker.  A portion would be guaranteed by the federal government and professionally managed as a defined benefit plan. Workers could opt for professional management of all their funds as well.
  3. Medical Costs – as we have recommended health insurance should be run by one entity the present Medicare operation for all Americans from the time of birth. Medicare already has a formulary for drugs, and should be authorized to negotiate drug costs for all patients. Standard compensation for procedures and quality of care implemented for Obamacare should be extended. Drug companies will no longer be able to buy back their stock, but instead will be required to spend those funds to bring drug costs down, or reduce costs in other ways.  Direct prescription drug advertising should be outlawed to save the over $1 billion spent a year in wasted advertising and spend the funds on price reductions.

Weaving Together a New Social Fabric for the Common Good

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Image: meritsolutions.com.au

One of the major problems we face in our society is isolation quite often brought on by inequality and poverty.  It is hard to be ‘in the social mainstream’ when you are out of the economic mainstream.

As we have noted we need common experiences, social connections and collaboration toward shared goals to overcome isolation.  Often for a person not moving up the economic ladder there is a lack of feeling connected to the community or a network that can assist them during a rough patch in life.

Education is a key to moving up the economic ladder. For young students in poor neighborhoods, without school resources, overworked teachers and rundown school facilities getting a good education is especially challenging. An group that is meeting the challenge of isolation head on is Thread, a social fabric weaving organization in Baltimore.  Thread connects students with up to five volunteers who do things that a family member might do. The volunteers are coached by an experienced volunteer called the Head of the Family.  The Head of the Family is coached by a Grandparent, and Grandparents are supported by Community Managers.  Community Managers are paid Thread staffers. Offering complimentary help are Collaborators who provide special assistance when needed for example in: legal help, SAT tutoring, mental health counseling etc. Thread replicates the family connections and support networks, while providing key links to volunteers who can help with connections to colleges and universities or other resources.

Thread works with 415 high school students, more than 850 volunteers and over 300 collaborators.  The results are impressive:

  • 87 % of students who have been in the program for 6 years have graduated from high school
  • 84 % of students in the program for 5 years have been accepted to college
  • 83 % of student alumni have completed a 4 or 2 year college degree or certificate program

The Thread example is one for policy makers to review, and examine in detail for the elements of what makes a social fabric weaving organization work.

Education is the Fifth Estate, an essentially building block of our democracy providing opportunities for all to move up in life.  Programs like Thread, provide insight into how to create the underlying support village for those that are isolated or have limited family support to change their life and shift into a productive path leading toward self-respect and self-esteem.  Our society benefits from adding productive citizens to our economy, while building safer and more democratic communities.  Certainly, forming organizations to rebuild the lives or our isolated young people in both cities and rural areas is critical to strenthening the Common Good.

The Truth Will Set Us Free

 

Image: Your Little Planet

It seems this Administration has a problem with facts, and the truth.  Simply the truth is what will set us all free to become all we can become and continue building this country and world. Yet, as of June 1st the Washington Post has counted 3,251 misleading or false statements by our POTUS.  As the leader of the Executive branch he sets the lead for his staff, they feel comfortable making misleading statements and creating ‘alternate facts’.  There are not ‘alternate facts’ when it comes to what is actually happening in our government.

The news media is the Fourth Estate, with special protections inscribed in the First Amendment of the Constitution declaring ‘Congress…shall make no law abridging the freedom of speech or of the press’.  We need the press to monitor government officials and ensure they are doing what they say they are doing and telling us the truth.  Without knowing how our public officials are discharging their responsibilities to serve the public’s interests and build the common good we cannot make decisions on the correctness of their behavior or who to vote for or against.  Madison and Jefferson were distrustful of a powerful federal government that was not under constant surveillance by the press, to ensure a faction or tyrant could not confuse the public and run wild over the people with their power.

The most alarming aspect of this Administration is not that it lies about policy and actions, it is that it lies constantly and changes the focus to undermining the press to new levels of bullying, intimidation and threats.  This barrage of constantly calling the mainstream press ‘false news and enemies of the people’, is to delegitimize the press to give the Administration the policy room to do whatever it wants. A guest on the PBS News Hour this past week, Peter Wehner, senior fellow at the Ethics and Public Policy Center in Washington, succulently described this unprecedented dishonesty as ‘pathological lying’ – a disease. A disease that is eating away at the foundations of our democracy.

Every major religion on this planet places a high value on honesty, truthfulness and integrity.  The truth is not a new concept – except for this Administration. Madison had great faith that when a well-educated and informed public made decisions they would be able to make the right decisions in the interest of the common good. Let’s rededicate ourselves in all our interactions with each other, our families and in our democratic institutions to be honest, truthful and transparent.  Only with consensus around the facts can we move together and solve the problems ahead for our children and future generations.

Scientists Discover Plants Can Reduce Ocean Acidity

Image: see.systemsbiology.net

Global ocean acidity has increased by 30 % over the past 200 years and is expected to increase by 150 % by 2099 to the highest level in over 20 million years.  About 25 % of the carbon dioxide in the air is absorbed into the ocean.  For carbon organisms like algae they will grow increasingly prevalent yet for calcifying organisms like oysters, lobsters, clams, sea urchins, corals and others they will lose the ability to grow and reproduce.

Source: WXshift

Three and one half billion people rely on the ocean for food. It is of huge consequence to have the oceans of the world become so acidic that the sea cannot sustain ocean life nourishing billions of people.

So, what is being done to reduce ocean acidification?  Certainly, efforts at reducing global warming are having an impact in the ocean specifically. There are some intelligent solutions being developed that would immediately improve shell organism survival.  The Pacific Northwest has a $200 million shellfish industry for export and shipping to West Coast cities.  Baywater Shellfish, west of Seattle, is having trouble growing geoducks, oysters and clams for market due to increased acidification of the water causing the shellfish to lose nutrients they need to grow and survive.  However, Oregon State University researchers working on an solution have discovered that eelgrass growing near the shell fish farms can lower the acidity in the water through photosynthesis absorbing the carbon, and pulling it from the water. This process allows vital nutrients to become available to the shellfish.  Eelgrasses can be planted in oyster farms or near shellfish hatcheries to provide the necessary lower acidity levels to nourish the shellfish.

The ocean covers 70% of our planet and provides food for 3.5 billion people making it crucial to human existence.  We have a stewardship responsibility to reverse the damage we are causing by human activity to preserve the oceans for future generations.  Cleanup of the ocean is a top priority for all of us and businesses too, as business success in the future assumes access to safe, clean, reliable water supplies and ocean environment.

GOP Administration Panders to Infant Formula Companies

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Photo: elle

Last May, the U.S. attended a multi-lateral World Health Assembly meeting held in Ecuador to finalize the language for promotion of breast feeding to developing countries with poor regions.  The policy recommended mothers breast feed their babies to promote better health than using possibly contaminated water with dry formula.  The risks of mixing infant formula with polluted water outweighed the possibly less breast milk that some mothers give their infants.

Source: Down to Earth – 3/22/18

About 11 % of the world’s population and 19 % of people in India alone do not have access to clean water.  For developing nations developing sources of clean water is crucial for their long term economic, and societal development. People drinking contaminated water suffer from multiple GI diseases, growth deformities and death.

U.S. representatives dropped long time support of over 40 years of research and other investigations in poor regions of the world noting the good health practice of breast feeding. Instead, the administration wanted all language recommending breast milk over infant formula deleted, including language focused on monitoring infant formula companies overly promoting their formula products.

Taking the corporate side is not new. In 1981, during the Reagan Administration  U.S. representatives at a WHO conference took the only position out of 118 countries against promoting the use of the breast milk over infant formula.

Breast milk provides anti-bodies, nutrients and other substances not available in infant formulas which are synthesized.  Obviously, when breast milk is not available infant formula maybe a good substitute temporarily when using clean water.

Next Steps:

The infant formula market is estimated to be $26 billion in 2017 growing to $66 billion by 2027. The industry is adding GMOs to its formula, offering organic versions and other approaches focused particularly on emerging countries where birth rates are much higher offering greater sales opportunities than in developed countries.  It is clear the infant formula industry has successfully lobbied the GOP Administration when it shifts policy that has been settled for decades promoting breast milk is best for babies to promote good health and longevity. Plus, other studies show the nurturing relationship of the mother with her baby during breast feeding is beneficial  to the social, and psychological health of the child.

The infant formula industry ought to understand their products depend on access to clean water to be effective as a compliment to breast feeding. The industry should shift  its resources from blind product promotion and lobbying efforts and instead help to increase access to clean water worldwide.  The infant formula industry needs to recognize their responsibility to support the common good promoting clean water and good health overall.

AT & T Wins Time-Warner – Americans Lose Free Press

 

Photo: Free Press

A federal court judge approved the $85 billion bid by AT &T of Time – Warner, creating a huge vertically integrated media giant.  The judge found no need for the kind of conditions placed on the Comcast acquisition of NBC Universal in 2011, or ensuring a free press.  Though both cases are quite similar in that AT & T and Comcast are both major media companies acquiring content providers and news organizations (NBC, and CNN).  In approving the Comcast – NBC bid, the judge laid out detailed conditions to protect consumers, requiring adherence to net neutrality for Internet supported content providers and assistance for low income users. Since the Comcast – NBC merger Comcast has violated several provisions of the agreement as outlined by former FCC commissioner Mignon Clyburn and Senator Richard Blumenthal including: not adhering to network neutrality in providing channels to consumers, slow implementation of low income Internet assistance programs, not providing smaller cable channels with fair rates to access regional sports networks and discriminated against Bloomberg Television (a competitor of CNBC).   Clyburn and Blumenthal in their op-ed piece pose three key questions to be answered in every major merger (our answer):

  1. How will consumers be affected? Negatively by lack of competition
  2. What will this do to competition in the industry? Reduce competition significantly
  3. What will it mean for small businesses? Small businesses will be squeezed out of the market

For some reason, the court in the AT & T – Time Warner case did not seem interested in answering these questions related to safeguarding consumers, businesses or freedom of the press. Federal regulators found in the Comcast – NBC bid the need for 150 conditions to be placed on the merged corporate organization.

Today, the court saw a need for no conditions?  Why? When we have a deregulation federal government policy wave rolling across the country today it is even more imperative that conditions be in place if these giant mergers are to be approved.

Next steps:

Our position is the merger juggernaut needs to be stopped now, and this merger not approved – later we will have to break it up anyway.  Mergers contribute to lack of jobs as well which hurt wage gains by workers.  Media concentration limits access to information and choices for media coverage. In 1983, 90 % of media, entertainment and distribution markets were controlled by 50 companies, today, there are 6 major players:

By approving the AT &T – Time-Warmer deal the court is giving a green light to deals now under review like the Disney bid (Comcast biding too) for 21st Century media which would create yet another huge conglomerate strangling competition and reducing the number of news sources. Other major Internet players are waiting in the wings like Apple, Google, Amazon and Facebook who are flush with cash and looking to control both the Internet, broadcast and film content and distribution.

We have said that deals like this need to be reviewed in supporting the common good ensured by freedom of the press.  This AT &T deal should not be approved on media concentration and press limitation grounds.  Jefferson and Madison observed correctly that a democracy can not long survive without a well-informed citizenry making decisions based on multiple points of view. Major corporations win in deals like the AT &T – Time Warner merger, the American citizen loses.

Our Founding Leaders Believed Public Education Builds the Common Good

Image: Your Little Planet

Public education’s rightful role is as the Fifth Estate next to the Fourth Estate, the Press, as pillars of our government.  The judiciary, legislative and executive being the other three Estates. Thomas Jefferson and James Madison in their writings on education knew it was crucial for the success of the country that all citizens (then it was white males) be well educated to use their knowledge to check the power of tyrants.

James Madison had tremendous vision, and steadfast hope that knowledge would triumph over ignorance when he said in a letter to W. T. Barry about a bill for Kentucky public education in 1822, “Knowledge will forever govern ignorance”.  Today, we are finding out if his vision can be held up as true or will demagogues and tyranny rule the day through ignorance.  Madison focused on the means of acquiring knowledge as proving the power to overcome tyranny. “A popular Government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy; or, perhaps both.  He saw that the people must be armed with knowledge to have leverage over their rulers. “And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives.” Education provides the way for the intellectual development of all people to discern the truth from untruth, coming from any individual or the press. They gain the ability to lead themselves and to discern policies and leaders that are basing their ideas and plans on truth rather than fiction.

Thomas Jefferson sponsored a bill for public education in the Virginia legislature when he was Governor and wrote the following preamble to the law:

“Whereas it appeareth that however certain forms of government are better calculated than others to protect individuals in the free exercise of their natural rights, and are at the same time themselves better guarded against degeneracy, yet experience hath shewn, that even under the best forms, those entrusted with power have, in time, and by slow operations, perverted it into tyranny; and it is believed that the most effectual means of preventing this would be, to illuminate, as far as practicable, the minds of the people at large, and more especially to give them knowledge of those facts, which history exhibiteth, that, possessed thereby of the experience of other ages and countries, they may be enabled to know ambition under all its shapes, and prompt to exert their natural powers to defeat its purposes.” (Underlining is ours).

 The law, The Act to Establish Public Schools, was presented to the House of Delegates in 1778 and 1780 but was not passed until 1796, when Jefferson was serving as US ambassador to France, with continuous lobbying by his friend James Madison.

Jefferson was adamant that education was the antidote to tyranny when he wrote George Wythe on August 13, 1786 (the bill still had not passed, and would not for 10 more years), “I think by far the most important bill in our whole code is that for the diffusion of knowledge among the people. no other sure foundation can be devised for the preservation of freedom, and happiness.”

The relationship of freedom and learning was a closely held view by Madison as well when in 1822 in his letter to W.T. Barry he said, “What spectacle can be more edifying or more seasonable, than that of Liberty & Learning, each leaning on the other for their mutual & surest support?”

Madison continued in his letter to Barry that the poor should be in public school as well paid by the rich, “Whilst those who are without property, or with but little, must be peculiarly interested in a System which unites with the more Learned Institutions, a provision for diffusing through the entire Society the education needed for the common purposes of life…that it is better for the poorer classes to have the aid of the richer by a general tax on property, than that every parent should provide at his own expense for the education of his children, it is certain that every Class is interested in establishments which give to the human mind its highest improvements.”  He advocates that the property of the rich be taxed to support public education for all. Yet, in Europe education today is primarily funded by national governments. It is likely that Madison after experiencing the tyranny of the King of England did not want the national government as the source of funding for educating people on how to discern the truth from untruth expressed by national leaders.

To create a sense of the common good is to understand the views of immigrants he astutely observes, “An acquaintance with foreign Countries in this mode (learning institutions), has a kindred effect with that of seeing them as travellers, which never fails, in uncorrupted minds, to weaken local prejudices, and enlarge the sphere of benevolent feelings.”

Two hundred and twenty years ago since passing the Virginia public education act our country has changed the focus to educating, women, minority groups, and all members of society to be better informed, discern the truth and select democratic leaders.

Yet, how well has public education performed in its role to create the common good?  Next week, we will look at measuring public education achievements and failures in building a more democratic society.

Maybe We Do Make Choices for the Common Good – More Than We Think

 

Image: Your Little Planet

James Madison was concerned that the basic character of man was self-interest and he would not act if in a power position for the common good.  While, this self-interest aspect of people is turbo charged in capitalist nations, it may not be the choice many of us make when we see the light of the common good and make choices that benefit all of us. Certainly, Madison put great faith in a diverse, well informed citizenry making good choices for their representatives who would act with ‘enlightened interest in the public good’.  Our government of checks and balances provides a way for the this enlightened good idea to be discovered from free speech and forcing self-interested people to recognize they had gone too far and needed to see the needs of all the people.

Our media has taken the negative perspective (it sells advertising and gains attention) that there is a tragedy of the commons, which Prof Garrett Hardin popularized in 1968, that people have a tendency to always go for the self–interest choice, i.e. overgrazing a plot of land to make more money from the ever increasing number of livestock that a herder wants to graze causing overgrazing and killing the life support ability of the land.  There are countless examples of over farming from large regions like the Midwest in the 1930s causing huge dust storms and forcing migration of farmers to California and the West.  Today, we see self-interest to the max in stock buy backs where corporations purchase their own stock to reduce the number of shares and drive the price up, so executives and shareholders would make more money – at the expense of employees not receiving raises, investments in research to increase productivity and reduce product prices or increasing investments in employee training and development.

Yet, maybe we do make the choice for the common good when offered.  Lecturer, Dylan Selterman, at the University of Maryland, asked his students an extra credit question if they would like to have 2 or 6 extra credit points to your final grade, but if 10 % of the students asked for 6 extra points none would receive them.  Class after class would go over the 10 % limit, until he provided a third choice – altruistic – you can select zero points.  After offering the third choice enough selected the zero point or two-point option so that would be under the 10 percent limit. The classes learned if they were not too greedy with their extra credit point choice they all could win.

So, how does choice and information play a role in developing and implementing common good policy?  A 2008 classic study by consumer researchers found that if hotel guests were provided a message that said ‘the majority of guest reuse their towels’ then towel recycling would increase dramatically. While, today we are used to recycling towels there were two elements:  one – providing information that towel recycling would reduce water usage and two – you have a choice to reuse or not reuse your towel.

Source: Journal of Consumer Research – 2008

The common good dilemma in regulating industry is more challenging because of the profit motive and personal benefit in making more money by increasing profits and reducing costs.  For chemical factories, installing scrubbers and extra equipment to return cleaner air to the sky is a cost, while just using the air for their factory and workers is free. Yet, all people beyond the factory are hurt from air pollution.  Generally, penalties for violating air pollution standards, or court cases have been the only way to stop polluting behavior.  But is there another way; getting an industry sector to work together, see that in their own interests if they all reduce air pollution they will benefit because they all breathe cleaner air – and they all have the similar costs if they all install equipment or even share technology and air pollution equipment in a group purchase.  Maybe when everyone is taking action, it is seen as the right choice and reduce costs for all with the benefit that everyone will enjoy clean air. Plus, if everyone is making the same investment, the costs will be similar across the industry and no single company is hurt financially or by Wall Street analysts.

Blackrock CEO To Corporations: Focus on Social Responsibility Too, Are They Listening?

Image: ipleaders.in

Laurence Fink, CEO of Blackrock with $6.3 trillion of assets under management sent a letter to one thousand CEOs outlining that in the future they will be evaluating companies on their societal impact not just profits.  Blackrock manages major index funds which require that they invest in firms included in the index even when they don’t like the direction management is taking the company or take actions that are detrimental to their employees or community.  Fink tells executives that a new age has arrived where shareholders and company management need to be more actively engaged. Plus, companies need to take the long term view related to rising automation,  slow wage growth and climate change and explain their plans to shareholders.

Next Steps: 

We applaud Fink’s focus on social responsibility by corporations.  As he notes governments maybe way behind in the seeing the needs of society and solving those problems.  Corporations can even add value, as Deloitte observes in five ways: creating new market opportunities, taking regulatory relationships from reactive to proactive, retaining top talent, enhancing brand value,  and building sustainable supply chains. Now, let’s make this a priority on Wall Street.  Fink in an interview on NPR’s Marketplace today, clarifying that Blackrock was not Wall Street.  We have a ways to go with Wall Street expectations for quarterly results – we can hope that Wall Street was listening to a major investor like Blackrock.

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