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Luigi Explains Capitalism For Da People!

Get ready, this is a really long one . . . I just finished A Capitalism for the People: Recapturing the Lost Genius of American Prosperity and it's one of my favorite books . . . not just because it's written by a guy named Luigi Zingales and I'm an Italian-American hailing from North Brunswick (home a da Carnivale Italiano! you gotta getta some zeppole) although Zingales' perspective, as an expatriate Italian, is essential to his critique of the current American Italian system-- he's like Tocqueville in that he can see things we take for granted . . . here are a dozen things I took away from his analysis and his solutions:

1) the thesis of the book is that the US free-market system has degenerated into crony capitalism, and Zingales uses Silvio Berlusconi as the paragon of this model; Berlusconi ran an insulated system of business and government corruption and comparisons between Berlusconi, who essentially ran Italy like his own private business, and Trump are inevitable and easy to make, so while the book was published pre-Trump, in 2012, Zingales does make the Berlusconi/Trump analogy in this episode of Conversations with Tyler . . .Trump succeeded in the real estate business, where it is more important to have strong relationships with government entities rather than creating something new in the market (and he's always relied on bankruptcy and the kindness of that system) and like Berlusconi, Trump has rewritten what is appropriate for a politician and member of the government;

2) Zingales starts with the proposition that fair markets are hard to manipulate and markets- while not perfect-- establish more efficient and accurate measure of value than say, an academic committee creating tenure requirements or statist regime doling out consumer products;

3) the problem is when large institutions, corporations, conglomerates and firms become "too big to fail" and both politicians and institutions recognize this because politicians, who aren't in office forever, would rather quell the chaos during their term-- avoid Armageddon, even if it's only a five percent chance of Armageddon-- with a bail-out, rather than be the person who lets the economy tank . . . but this doesn't allow the markets to do their job and accurately measure value;

4) he then explains how institutions that get "too big to fail" and understand this decimate the system-- he explains this with an analogy: if you play roulette yourself, you've got the same pay-out odds and vigorish whether you bet red/black or bet on a single number . . . for every hundred dollars you play, over time, you are likely to collect back $94.73-- the $5.27 is the amount the 0 and 00 extract . . . but if you pay an agent to play for you and promise him 20% of the winnings, but he doesn't have to pay anything if he loses, that agent is going to take risks and hope for a big payout . . . if he bets red with the $100 dollars, he only makes twenty bucks, but if he bets a single number, he stands to $700 . . . and if he loses, he loses nothing; so managers of funds take big risks, and the big investment banks encourage this because they know that either the lenders will lose out, as they are over-leveraged, or the taxpayers will bail the entire mess out;

5) lobbying is a monkey wrench in keeping markets fair and keeping large financial institutions and the government from becoming inexplicably intertwined-- and Zingales proposes something scary-- since the government controls trillions of dollars in subsidies and monies, the 3.5 billion spent by companies to lobby Congress and the 2.5 billion spent in political contributions may grow larger and larger, as business learns just how important it is to control the government . . . and this political climate of winner-take-all and fuck the other party isn't helping things;

6) with all this lobbying and bailing out and government/business intertwinement, we're not getting the beneficial long-term consequences of markets-- the accurate measurement of value and the benefits of competition . . . imagine that any time your kids are acting up and there's a conflict in the family, grandma and grandpa rescue the kids from any discipline . . . in the short term, these interventions lead to harmony and happiness, but in the long-term, you end up with spoiled kids and unhappy parents . . . Zingales uses another analogy to explain this analogy-- you gotta love all dese metaphors!-- he says that at the Grand Canyon, there is a sign warning people not to feed the wild animals, as if you do they lose their instincts and their ability to feed themselves . . . now the animals would love if people fed them but we need to "protect" them from the corruption of free food, for their own good . . . Zingales has seen this go down in Italy, and he sees America headed down the same road;

7) cronyism and unfair markets lead to winner-take-all scenarios, instead of healthy diversity and competition, and this is especially prevalent in the race to get into college-- while the number of people attending colleges in the US has skyrocketed, the size and amount of colleges has not . . . so there's winner-take-all competition to get admitted to the best schools and parents are spending much more time and resources on their children in order to get them in . . . this hasn't happened in Canada, where the admissions process isn't as competitive; so a tiny head-start when you are young can be very very important and wealth ensures this; Zingales uses a sports analogy-- if you allow professional teams to spend as much as possible, the riches teams will amass the best players and defeat everyone handily, which is great for one team but not particularly fun as a spectator or participant, so a salary cap-- which sounds non-competitive-- actually preserves competition . . . this is true for education and for lobbying, if money can buy success, then lots of money will be spent to ensure success and rules and social norms must be enacted to prevent this and encourage competition;

8) Zingales is certainly more conservative than me, and he's in favor of school voucher systems-- which I am not, for various reasons-- but I understand the logic of why he is in favor of the system, he brings up Finland, which has a much more rigorous method of selecting teachers-- in essence,  they have to be smarter than American teachers-- and this means you're going to have to pay teachers more to attract smarter people; I do agree with him on this account-- if we could just get rid of the worst teachers, the bottom ten percent, that would help things enormously; I think it's hard to measure the difference between fairly good and good teachers, because it depends on the metric . . . some teachers are better at improving test scores, others at making kids passionate about a subject, others at letting kids learn on their own . . . but there's no question that some teachers are just terrible and probably get too much protection from the union, and it's also true that the best teachers tend to be in richer schools, so vouchers can change this balance and create a "salary cap" situation that makes things more fair and competitive for more students;

9) if you can wrap your request for subsidies and protection in a noble cause, you'll really screw up the market . . . Zingales uses student loans and Pell grants as an example-- government-backed subsidies that have helped make the price of college double, as there is more demand, space constraints at elite colleges and a high cost and difficulty in starting new institutions;

10) the SEC and other regulators have had trouble enforcing inside trading, and Zingales sees the onus of responsibility for stamping out this on business schools and alumni networks: they need to publicly shame and disavow people who participate in these practices, instead of only celebrating whoever makes the most money . . . it's tough because those are the people that donate;

11) Zingales is in favor of fewer regulations and simpler regulations-- but not the Trumpian dismantling of all regulations without a counter-balance; the way to offset the removal of regulations is with Pigouvian taxes . . . so instead of having insanely complex environmental codes, which leads to employment for lobbyists and lawyers, and costs the taxpayers money in the form of the government agency and all the market distortions caused by the big-business lobbying . . . instead, tax pollutants, tax the amount of harm a factory does, and you are much more likely to capture revenue (or curb pollution) so this is a compelling example of a conservative thinker proposing a "good" tax . . . as opposed to a bad subsidy; subsidizing ethanol enriches ethanol producers, but a tax on gas could curb driving, could lessen greenhouse gases, could capture revenue, and could incentivize the electric car industry . . . without redistributing wealth and enriching the ethanol producers for doing nothing more vital than having a noble idea . . . I'm sure no conservative thinker has made it this far in the post, but this is a really important concept which Trump and his lackeys seem to be totally ignorant;

12) while it is in a voter's best interest to remain uneducated in most political forums-- it's not worth the time and effort-- Zingales does illustrate how shame, muck-raking, and a little bit of knowledge can go a long way in affecting policy and political outcomes . . . and deep into the book, he acknowledges that some people have an interest in public affairs, or they wouldn't have read his book, which tackles a complex subject in a detailed manner . . . anyway, these ideas are really important to understand; we need to harness the power of markets in America, often by separating big business and government; as anyone involved in sports knows, making things fair and competitive means more than simply removing all the rules . . . it takes thought, creativity, flexibility, and rigor; Zingales makes a fantastic case for a market-based ethic and hopes that breaches of this, in the form of cronyism and incestuous relationships between business and the government, will someday be stigmatized the way smoking is today . . . I hope he's right.

Stop the Country, I Want To Get Off!

In more news that sounds fake but isn't, Betsy DeVos-- the billionaire freelance Christian educational reformer who Trump has chosen for Secretary of Education-- has revealed that she would like to "help advance God's Kingdom" in the pedagogical realm . . . she's not content just donating money to Christian schools, instead she wants to "be in that Shephelah, and to confront the culture," which basically means she wants to fight the good fight against the Philistines-- of which I am one-- and she acknowledges that "the church-- which ought to be in our view more central to the life of the community-- has been displaced by the public school as the center for activity, the center for what goes on in the community" but she hopes with charter schools and tax credits and vouchers that the church can get more and more central and involved in the education of the youth . . . and I know she's not speaking to me, or my area of the country-- but still . . . HOLY SHIT . . . this is a wonderful, wild, weird admission of actual political/religious purpose-- in a way it's lovely because it's so clear and so crazy, an incredibly brazen violation of the separation of church and state, the admission of a deep-held desire for the government to fund religious affiliation-- Christian religious affiliation-- and a bizarre plan to unravel the most accessible democratic institution in American life-- the public school-- which is now a place where parents of any class, status, religion, and/or belief can have an immediate effect . . . a place where local people can run for school board or serve on the PTA or volunteer or coach or simply attend functions and have influence-- and so I love to see her ardent longing laid bare, her yen to turn this special place into a segregated religious institution . . . to place the secular setting where arts and music and sports and various clubs of all stripes and denominations happen under a religious purview, and more importantly, to taint the place where our critical thinking is taught with the tincture of Christian ideology-- hello Creationism!-- and I just love that she says it out loud, for everyone to hear . . . it's a great reminder of how ideologically different people are in this great country of ours; for a loosely connected reason why this is a weird and wild turn of events, listen to Sam Harris talk to Shady Hamid about his new book: Islamic Exceptionalism . . . Hamid explains that one of the major differences between the Islamic nations that often export terror and Western nations that do not, is that Islam is completely intertwined with politics, and there is no separation of church and state, nor is there even the idea that it's possible to separate religion and politics in places like Iran and Saudi Arabia . . . but there's no way that the Senate in the United States of America will approve her, right?

Trump Sez the Chinese Curse is a Hoax

The Chinese Curse is devastatingly simple: may you live in interesting times, and-- unless the Chinese Curse is a Chinese Hoax-- there is no question that we have entered The American Era of the Chinese Curse . . . and I've exhausted myself thinking about the implications of this, and I've been trying to process and digest everything I've seen, read, heard, and thought before I posted on the election, but now that I've heard Trump's pick for Secretary of Education, Betsy DeVos, things have hit close enough to home and I need to vent about it all . . . and so here are some of my thoughts:

1) Betsy DeVos is a union-busting proponent of charter schools and vouchers, and she'd like nothing better than to privatize the most venerable community democratic institution in America, the public school . . . this causes me a great deal of anxiety, both for my job and the future of funding for the public school my children attend . . . and DeVos has ties to Amway . . . yuck;

2) I live in a wonderful liberal enclave where the kids walk to school, play in the streets (and occasionally get hit by cars) and enjoy a fairly safe, often wonderful, multi-cultural, friendly community . . . in my town, the vote tally was 3900 for Clinton and 1100 for Trump, and most of the Trump support seems to have come from the Orthodox Jewish population, who held a Trump rally at a synagogue, and who were probably voting for Trump for the reasons outlined in number one-- they pay Highland Park taxes, but they send their kids to private schools, and Trump would be their best bet on saving some money in this regard;

3) I was excited by Trump's infrastructure promises because I thought I might get air-conditioning in my classroom, but since Trump's infrastructure plan is to incentivize private companies to do infrastructure work and he'd like to appoint someone who wants to dismantle the public education system, I'm not going to hold my breath;

4) Clinton didn't get people out to vote the way Obama did-- perhaps because she was an establishment candidate in an anti-establishment campaign, and the Ohio and Pennsylvania counties that flipped are the ones plagued by heroin and opioid epidemics, so while I thought America was Pretty Great and Addressing Some Issues So It Might Get Greater, the people in these towns really think America Sucks-- they are uneducated, jobless, angry, and addicted to drugs or surrounded by people addicted to drugs, or working a crappy job, or working a decent job but surrounded by people working crappy jobs and addicted to drugs and watching their town go to shit-- and so while I liked some of the policy tweaks Clinton was proposing . . . maybe they would make college cheaper, or provide more pre-K and childcare, or help working mothers, maybe she would strengthen Dodd-Frank, etcetera-- and while she wasn't overtly proposing things I really care about-- she wasn't promoting unionization and radical environmental protection and carbon taxation, at least she wasn't completely opposed to them . . . but my life is generally great, and so while I fear massive change from the status quo, a bunch of people that I don't know or live near were really angry and wanted any kind of change, especially one that would make things worse for immigrants and minorities and terrorists and women, because if you can't find a way to improve your life, the best way to feel better about yourself, is to make someone else's life worse;

5) the best best case scenario of Trump's term (which will probably be eight years, unless he does something really really egregious, because he'll be able to create some short-term-- but very costly-- windfalls in the economy in order to get elected again) is that he fosters some diplomatic ties with Russia, remains a bit isolationist and doesn't get involved in some awful militaristic adventure, doesn't go too nuts with the wall and immigrant thing, and doesn't dismantle too much of the Clean Air and Water Act and other environmental regulations, figures out a way to revise Obamacare without making 22 million people lose healthcare, and basically doesn't get much done . . . but the more typical scenario is that moderate Republicans like John McCain reign him in a bit and we just have a typically terrible Republican term . . . so you can expect tax cuts that will drive up the national deficit, cuts in government programs, a stupid purposeless expensive adventure in the Middle East, a weakening of organized labor, a super-conservative Supreme Court, the return of torture, environmental deregulation and devastation, but a bit of a windfall from tearing all the coal from the mountains and fracking all the gas out of the earth and drilling for oil everywhere, financial deregulation followed by a financial bubble followed by a recession . . . for more on this, just read about the eight years under George W. Bush . . . yuck;

6) Myron Ebell, the climate change contrarian leading Trump's EPA transition team, is a scary motherfucker . . . while the education stuff hits close to home, nothing scares me more about Trump than his belief in conspiracy and hokum, and his lack of understanding of the scientific method . . . he's an anti-vaxxer, for Christ's sake;

7) if you're a guy like me, and just can't understand why anyone would vote for Trump, and would consider him a populist here, then you need to read this great post my friend John sent me . . . it's written by a guy who grew up in a white Jesus-fearing red community, and he says stop trying to understand the rural Christian voters because they don't understand themselves-- they are angry and brand loyal and would never let any "facts" or "critical thinking" or argument or logic sway them otherwise . . . Clinton is a socialist crooked politician and God is a white guy with a  beard who controls the weather and the best news source is the post that makes you happiest on Facebook-- whether it's fake or alt-right propaganda  and white people are superior and no elitist coastal bastard is going to tell you otherwise . . . and these people have been voting against their best interests for quite a while, Thomas Frank fully explains it in his masterpiece What's the Matter with Kansas: How Conservatives Won the Heart of America . . . it's a moral choice that's about brand loyalty, not critical thinking or policy, and if you're brand occasionally talks about grabbing women by the pussy, well, you can put up with that;

8) even if Trump said the things he said purely in order to win the election, the hate and vitriol he spewed against women, Mexicans, immigrants, and Hillary Clinton should never be forgotten and the pussy grabbing remark should be mentioned at every press conference . . . despite blind conservative brand loyalty, I'm surprised that any father with a daughter or any woman at all voted for this crass idiot, and I am ashamed for them . . . and I know that these people who voted for Trump hate me because I pity them for their ignorance and provincialism, it's an ugly dynamic;

9) worst case Trump scenarios are really scary: he's capable of bullying, intimidating, and coercing the press; he might really screw up banking regulations and trade deals; he might hurt the U.S. diplomatically for many years to come; he might start a nuclear war; he might intern all Muslims; the First and Second Amendment will be under attack; he might spend tons and tons of money building a wall; he's angry, petty, and he's been the butt of the joke for decades and now, in the ugliest and weirdest "underdog" victory ever, the butt of the joke-- the Ugliest American-- has become the most powerful man in the free world . . . it's best not to think about these situations and just concentrate on the stuff he will definitely fuck up, and scrutinize him constantly;

10) the press really dropped the ball-- they were vetting Clinton as if she won, and not doing story after story about Trump's crazy conspiracy theories, his lack of core principles, his corrupt business practices, his lack of tax information, his insane business conflicts, and the very real possibility that he might end up running an autocratic kleptocracy . . . he won't be doing political favors for people, he'll be directly enriching himself with his policy moves . . . this one is too depressing to continue;

11) I was trying to explain to my wife why we still have the electoral college, and I was really having trouble-- I know the Founding Fathers wanted to give rural states enough power to have some say and they wanted to promote a more stable two-party system, and the electoral votes make this possible, but it's gotten to the point where there are two Americas . . . and there are a lot more of us progressive city folk, who would like parks and good schools and clean air and water and green energy and multicultural tolerance and more Northern European style policy such as single payer healthcare and better family leave and help with college education and a progressive Supreme Court, and then there are these smaller states that are holding us hostage, and I'm not sure what they want-- and I don't think they know what they want either-- and I don't want to be stereotypical, so I'll refrain from speculating, but if there are any red state Trump supporters who read this blog (not a shot in hell) then please explain in the comments what policy you expected from Trump . . . anyway, we're getting to the point where we should be two separate economic entities, which would be nice, because the blue states are far less reliant on the federal government, and would do much better without the baggage of the red states-- who are incredibly thankless for the money we send to subsidize them;

12) some folks voted for Trump because he'd be tough on terrorism and ISIS, but I can't understand why people in rural America-- the least likely place for a terrorist attack-- are far more fearful of Muslims than the folks on the coasts, and some people voted for Trump because they see him as a bastion of law and order, a voice of reasonable justice wearing "the mantle of anger" amidst the gun violence, flood of immigrants, city riots and kowtowing to minority groups like Black Lives Matter . . . and while I don't agree with any of this, and think these people received their information from fake news on Facebook, at least it's a reason;

13) I'm not saying Trump is like Hitler . . .  that would be hyperbolic, plus Hitler was organized, a compelling speaker, and Hitler actually had a plan of action-- joke stolen from David Cross-- but Hitler promised jobs, Hitler promised revenge for the deals that Germany had made with the world (The Treaty of Versailles) and Hitler was an intimidating bully who hated immigrants and promised to make Germany great again . . . those are just some interesting parallels, but I'm not comparing the two leaders because I don't want to get put on leave, like this teacher;

14) and so that's what it's come down to . . . the majority of the country, myself, included, can't believe what has happened, and many of us would have no problem leaving the red states to fend for themselves-- I would gladly vote to secede from the crap that's going to happen in the next 4-8 years . . . the red states can pollute themselves to hell, cut all the government services, privatize everything, dismantle the schools, ban gay marriage, make kids study Creationism, do lots of heroin, carry semi-automatic weapons everywhere, refuse to vaccinate, insult women and the disabled, deport immigrants, build walls and do whatever insane shit they want to do, with a spray-tanned game-show host as their beloved daddy-leader . . . just don't touch my America, because my America is Pretty Great . . . it could use improvements, but it's certainly never been better than this . . . so all I can hope for is that the political forces in my town and state can keep the political forces of Donald Trump and his ilk at bay, and maybe that's why we have the electoral college and why we are a loose federation of states . . . and readers who voted for Trump, perhaps you could explain yourselves in the comments, because you folks are an angry apocalyptic cipher to me . . . I still haven't gotten to have an actual conversation with a real Trump supporter, which makes me pretty sheltered-- I guess I live behind my own wall of elitist coastal intellectualism, which I've erected out of brain cells and books, but maybe someday soon some folks from Trump's America will make their way over my wall and explain things to me.

Charter Schools and Vouchers: The Math Doesn't Add Up

Once again, I have written an argument against charter schools and vouchers, but this might appeal to more conservative minds, as it deals with the financial consequences of Governor Christie's legislation; please read it, get involved, sign the petition, write letters to the newspaper and your political representatives, and I promise to return to my usual stupidity.
A New Sentence Every Day, Hand Crafted from the Finest Corinthian Leather.