My son Sam was an excellent high school debater. He took whatever issue and whatever side he was assigned and constructed the obvious arguments with clarity and persuasive force. He delivered them in a finely tuned vocabulary backed by verbal passion.
My daughter Mae was even better. She won the state championship as “Scary Girl” because she added to Sam’s abilities, which she admiringly copied, a steely glare of determination that could unnerve her peers.
The practice they got in these skills has proven invaluable in their later lives. They, and we, are indebted to the teacher who led the debate team, Joan Macri, because she loved to teach. (That’s how you honor a teacher.)
I went to some of their debate meets. I enjoyed watching my children perform, but I found the arguments on all sides unsatisfying. I didn’t get educated, because that was not the purpose. My children trained in the creation of an arbitrary argument, without any necessary conviction that it was right. Good training to be a courtroom lawyer, where the job is to take the side of whoever hires you, and use a command of language to construct the most one-sided case possible.
Great training to be a politician. Every idea that politicians come up with, every policy they advocate, is the greatest ever. Every suggestion of the other party would be a disaster. Until they change their minds, and then whatever they used to believe is now impossibly stupid and obviously dangerous. In sports, trash-talking is an art form, but even boxers are much less personally abusive of their opponents than American politicians. The worst aspects of high school debate characterize much of our national political discourse.
Our discussion of national health is just one flagrant example. You won’t get an education about the health and health care of America by listening to politicians in or outside of Washington, because both sides are more interested in scoring political points than in helping us understand a complex issue.
Conservatives at the Heritage Foundation came up with a detailed plan for transforming health insurance. The Republican Governor of Massachusetts, in cooperation with a Democratic legislature, managed to transform that plan into law in 2006. He insisted on a key element: that every person in Massachusetts must sign up for the insurance, in order to keep costs reasonable for everybody. There would be a tax penalty for those who refused.
But when those same principles were used by Democrats to create the Patient Protection and Affordable Care Act in 2010 at the federal level, that Governor, Mitt Romney, said it was all wrong. He won’t talk about why he made it his greatest achievement 6 years ago. High ranking Republicans have been unanimous that it is not merely bad policy, but unconstitutional and un-American. It must be repealed.
Democratic debaters about health care tirelessly extol Obamacare’s virtues, which are mostly theoretical, because most of the Act has not yet come into existence. They don’t talk about Massachusetts either. In Massachusetts in 2009, only 1% of taxpayers had not purchased affordable insurance and thus had to pay an income tax penalty of a few hundred dollars. Massachusetts has the highest proportion of the population with health insurance, 98% in 2010, compared to 83% nationwide. Years after it began, the most significant experiment with a state-run health insurance system in our history, in which everyone must be enrolled, is outside the party debates, and we are gasping for some real information about how it might work at the national level.
The speeches and the ads and the PACs that politicians create seek to win our votes, not to educate us. They want us to listen to them, but they won’t listen to us. Americans are right in the middle on health care: in the latest Pew Research Center poll in June, 43% approved of the Affordable Care Act, and 48% disapproved. Even the Supreme Court, mostly appointed by conservative Presidents, split down the middle in determining Obamacare constitutional.
Half of Americans are not wrong. It’s the politicians who refuse to treat us as participants in the national debate who are wrong.
The sorry state of political discourse may be why so many Americans don’t know even the basic facts about the candidates. In a Pew Center poll last month, barely half of registered voters knew which candidate is anti-abortion. One third did not know that Obama would raise taxes on the rich and that Romney opposes gay marriage. Less than half of Americans know that Obama is a Christian. The ignorance is greatest among younger voters and those who never went to college.
The one-sided debating points of Republicans and Democrats whip up emotions without increasing our knowledge. Each side seeks to mangle the other side’s message. In the middle sits the American voter, wishing for enlightenment.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 16, 2012
Thursday, August 16, 2012
Tuesday, August 14, 2012
Election Primer 2012: 3. The Politics of Marriage
Our extended family organized my niece’s wedding last month on a remote lake in northern Wisconsin. Nearly 200 people watched Helen and Carl exchange vows they had written in a clearing in the woods, miles from the nearest gas station, store, or motel. The guests ate homemade granola, muffins and jars of jam, and partied until the wee hours under a giant tent.
Helen and Carl were delighted to have exchanged rings with each other. They were ecstatic that so many of their friends and relatives had made the long journey to tiny Springbrook (pop. 570). Their obvious happiness made their statements that every loving, committed adult couple should enjoy the right to marry seem perfectly in place.
Helen and Carl were not giving campaign speeches. They were just expressing joy at the way marriage brings a couple, their families and friends together, celebrating the transformation of love into lifelong commitment. It’s not their fault that marriage is now so publically contentious that politicians try to win votes by explaining who should be able to get married and who shouldn’t.
Marriage inevitably involves government business. Tax rates, health care, inheritance, veterans’ benefits, Social Security survivor payments, and decisions about raising children all depend on the legal relationships of family members.
The Defense of Marriage Act of 1996 is currently the focus of political attention. It defines marriage as the legal union of one man and one woman, and gives the states the unusual right to ignore other states’ laws, if those states allow a gay couple to marry. President Obama's 2008 political platform endorsed its repeal, while Republicans defend it.
But there is more to the issue of marriage than whether gay Americans can marry. Americans have changed our minds about marriage. What was wrong to even consider, what was disgraceful to do, and who could be one’s partner are no longer certainties.
In postwar America, heterosexual marriage was regarded as the norm for everyone. Over 80% of adults 25 to 34 years old were married. Divorce was a sign of failure or moral inadequacy, especially for a woman. Cheating was a sure sign of a gross character flaw. Except that important men could have mistresses, which nearly everyone winked at, but kept quiet about. Polygamy was bad, but inter-racial marriage was also a dangerous social and legal offense that might be met with violence.
These ideas of proper marriage were founded on unquestioned inequalities, regarded as natural laws – men should rule over women, whites should rule over blacks, homosexuals were sick and dangerous. That cultural understanding of marriage has been buried under the onslaught of cultural change. Polygamy has gone from an underground religious phenomenon to a piece of popular culture portrayed in a Broadway musical comedy (Book of Mormon), a reality show (Sister Wives), and a cable drama (Big Love). The proportion of adults 25 - 34 who are married has dropped to under 50%. More Americans support gay marriage than oppose it.
Despite this considerable shift, the new still struggles against the old. While it has become easy to vocally defend the previously indefensible, it is still hard to personify it. Megan Rapinoe, age 27, who scored three goals on the US women’s soccer team’s way to a gold medal, only last month announced that she has been dating an Australian female soccer star for 3 years. Newt Gingrich can present himself as the political and moral leader of conservative Americans after his two divorces and public infidelities, but it is hard to imagine a woman with that history as a viable candidate for national office. At least Newt keeps tying the legal knot. What if a person were unmarried, but in a committed relationship and cohabiting, like over 7.5 million other American couples – could they run for office?
The real issues are not our laws, but our ideas. Traditional beliefs about marriage were not based mainly on law; our laws reflected our beliefs. For example, identifying and preventing husbands’ physical abuse of their wives appeared to be an unwarranted intervention of government into private life until the women’s liberation movement of the 1970s brought wife-battering into the public eye. After another decade, the Family Violence Prevention Services Act of 1984 first gave federal help to victims of domestic violence and their children.
Some Orthodox Jewish families celebrate the marriage of a child to a non-Jew by holding a funeral service to mourn their familial death. These Jews break no American law, and so are free to continue, modify or abandon this behavior. The rest of us are free to disdain it. But we will continue to legislate against certain forms of marriage, even if their proponents cite Scripture in their defense, such as Warren Jeffs, the former president of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, whose version of polygamy included arranging marriages for underage girls and forcing his father’s many widows to marry him.
Our marriage debates show that electoral politics is not the only politics, that it reflects the broader and deeper, and much more interesting, politics of the whole American people. Think about your marriage politics when you vote in November.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 14, 2012
Helen and Carl were delighted to have exchanged rings with each other. They were ecstatic that so many of their friends and relatives had made the long journey to tiny Springbrook (pop. 570). Their obvious happiness made their statements that every loving, committed adult couple should enjoy the right to marry seem perfectly in place.
Helen and Carl were not giving campaign speeches. They were just expressing joy at the way marriage brings a couple, their families and friends together, celebrating the transformation of love into lifelong commitment. It’s not their fault that marriage is now so publically contentious that politicians try to win votes by explaining who should be able to get married and who shouldn’t.
Marriage inevitably involves government business. Tax rates, health care, inheritance, veterans’ benefits, Social Security survivor payments, and decisions about raising children all depend on the legal relationships of family members.
The Defense of Marriage Act of 1996 is currently the focus of political attention. It defines marriage as the legal union of one man and one woman, and gives the states the unusual right to ignore other states’ laws, if those states allow a gay couple to marry. President Obama's 2008 political platform endorsed its repeal, while Republicans defend it.
But there is more to the issue of marriage than whether gay Americans can marry. Americans have changed our minds about marriage. What was wrong to even consider, what was disgraceful to do, and who could be one’s partner are no longer certainties.
In postwar America, heterosexual marriage was regarded as the norm for everyone. Over 80% of adults 25 to 34 years old were married. Divorce was a sign of failure or moral inadequacy, especially for a woman. Cheating was a sure sign of a gross character flaw. Except that important men could have mistresses, which nearly everyone winked at, but kept quiet about. Polygamy was bad, but inter-racial marriage was also a dangerous social and legal offense that might be met with violence.
These ideas of proper marriage were founded on unquestioned inequalities, regarded as natural laws – men should rule over women, whites should rule over blacks, homosexuals were sick and dangerous. That cultural understanding of marriage has been buried under the onslaught of cultural change. Polygamy has gone from an underground religious phenomenon to a piece of popular culture portrayed in a Broadway musical comedy (Book of Mormon), a reality show (Sister Wives), and a cable drama (Big Love). The proportion of adults 25 - 34 who are married has dropped to under 50%. More Americans support gay marriage than oppose it.
Despite this considerable shift, the new still struggles against the old. While it has become easy to vocally defend the previously indefensible, it is still hard to personify it. Megan Rapinoe, age 27, who scored three goals on the US women’s soccer team’s way to a gold medal, only last month announced that she has been dating an Australian female soccer star for 3 years. Newt Gingrich can present himself as the political and moral leader of conservative Americans after his two divorces and public infidelities, but it is hard to imagine a woman with that history as a viable candidate for national office. At least Newt keeps tying the legal knot. What if a person were unmarried, but in a committed relationship and cohabiting, like over 7.5 million other American couples – could they run for office?
The real issues are not our laws, but our ideas. Traditional beliefs about marriage were not based mainly on law; our laws reflected our beliefs. For example, identifying and preventing husbands’ physical abuse of their wives appeared to be an unwarranted intervention of government into private life until the women’s liberation movement of the 1970s brought wife-battering into the public eye. After another decade, the Family Violence Prevention Services Act of 1984 first gave federal help to victims of domestic violence and their children.
Some Orthodox Jewish families celebrate the marriage of a child to a non-Jew by holding a funeral service to mourn their familial death. These Jews break no American law, and so are free to continue, modify or abandon this behavior. The rest of us are free to disdain it. But we will continue to legislate against certain forms of marriage, even if their proponents cite Scripture in their defense, such as Warren Jeffs, the former president of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, whose version of polygamy included arranging marriages for underage girls and forcing his father’s many widows to marry him.
Our marriage debates show that electoral politics is not the only politics, that it reflects the broader and deeper, and much more interesting, politics of the whole American people. Think about your marriage politics when you vote in November.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 14, 2012
Thursday, August 9, 2012
Election Primer 2012: 2. Basic Facts about Taxes
Taxes are perhaps the most significant issue in this campaign. Politicians have talked non-stop about taxes for years. Much of the voting public is so riled up about taxes that they can’t see straight.
Taxes are too big an issue to deal with in one short essay. Here I want to begin a discussion of taxes in the US by laying out a few facts, some of which appear to be ignored in our public discussions. Before we can evaluate what each party says about taxes and the tax policies they favor, we need to know some basics.
Basic fact number one is that federal taxes have been falling for decades. From the end of World War II until 1964, the top tax rate was more than 80%; from 1950 through 1963, it was 91% - 92%, on all income over $400,000. This top rate was lowered to 77% in 1964, then again to 70% from 1971 to 1981, but was applied to all income over $200,000. A striking change was made in the 1980s, first lowering the top rate to 50% in 1982, then to 28% in 1988.
The top rate was raised again in 1991 to 31%, then in 1993 to 39.6%. In 2003, that rate was again lowered to 35% on income above $300,000 to $400,000, depending on the year.
Rates for the lowest tax bracket have followed a somewhat different path: around 20% until 1964, then 14% until 1982, then 11% until 1988. At that point, as the top tax rate was lowered to 28%, the lowest bracket’s rate was raised to 15%, where it stayed until 2002, when it dropped again to 10%.
What do all these fluctuations mean? One obvious conclusion is that high, even very high tax rates on the wealthiest taxpayers do not impede economic growth. The US economy, measured by the Gross Domestic Product, grew faster from 1950 to 1970, when the top tax rate was 77% or higher, than since 1970, when it fell to half that level.
A second conclusion is that lowering tax rates for high earners does not bring a stronger economy. In international comparison, Americans are not over-taxed. Economies which are doing as well or better than ours, like Germany, have higher tax rates: all incomes over $150,000 (married couples) are taxed at 42% or more. Tax rates are just one of many forces affecting the health of the national economy.
Another basic fact is that 46% of American households paid no federal taxes in 2011. Fact spinners often misstate this by saying that 46% paid no taxes at all, which is untrue. About half of those 46% paid Social Security and Medicare taxes on their income. Many also paid state taxes on income which was not federally taxed. On federal tax returns this year, I and all other married couples could deduct $19,000 from our income without paying any tax. In Illinois, this deduction is only $4000. A full-time worker making the federal minimum wage would pay no federal taxes, but would be taxed on most of their income in Illinois. Of course, everyone pays sales tax. So virtually all Americans are paying taxes.
If one is committed to lowering our federal tax burden, one obvious place to look is the defense budget. That label is actually a misnomer, since the Defense Department has waged offensive war in Iraq and Afghanistan for a decade. In any case, military appropriations (2012 budget: $683 billion) take about 20% of the total federal budget, about 9 times the budget appropriation for education, 13 times that of housing and urban development, 16 times that of energy, 25 times that for agriculture or transportation. Another useful comparison is that our military spending is greater than the combined defense budgets of the next 17 largest spenders.
The deficit projected for the 2012 federal budget is about $1 trillion. Eliminating all federal agencies and cabinet departments, except Defense, would not even come close to eliminating that deficit. Eliminating Medicare and Medicaid completely would come close to balancing the budget.
Those are not serious ideas. But some people have suggested getting rid of individual cabinet departments, such as the Dept. of Energy. Proposals like that may sound good to some voters, but they mean little. All of our nuclear weapons and the nuclear reactors which power our Navy are controlled by the DOE. As in this case, every agency and department carries out indispensable functions. Eliminating a department might just mean putting its sub-agencies into other departments, with little savings.
Lowering taxes means reducing spending. Many states, such as Illinois, have even more significant deficit problems than the federal government. If federal spending is reduced, state budgets might go even further into the red.
Here is the most basic fact about taxes: at this moment, our tax system is not supporting our spending, at the state or federal level. Whatever proposals politicians make about taxes should be clear and detailed about how they will relate to spending. That’s probably too much to hope for.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 9, 2012
Taxes are too big an issue to deal with in one short essay. Here I want to begin a discussion of taxes in the US by laying out a few facts, some of which appear to be ignored in our public discussions. Before we can evaluate what each party says about taxes and the tax policies they favor, we need to know some basics.
Basic fact number one is that federal taxes have been falling for decades. From the end of World War II until 1964, the top tax rate was more than 80%; from 1950 through 1963, it was 91% - 92%, on all income over $400,000. This top rate was lowered to 77% in 1964, then again to 70% from 1971 to 1981, but was applied to all income over $200,000. A striking change was made in the 1980s, first lowering the top rate to 50% in 1982, then to 28% in 1988.
The top rate was raised again in 1991 to 31%, then in 1993 to 39.6%. In 2003, that rate was again lowered to 35% on income above $300,000 to $400,000, depending on the year.
Rates for the lowest tax bracket have followed a somewhat different path: around 20% until 1964, then 14% until 1982, then 11% until 1988. At that point, as the top tax rate was lowered to 28%, the lowest bracket’s rate was raised to 15%, where it stayed until 2002, when it dropped again to 10%.
What do all these fluctuations mean? One obvious conclusion is that high, even very high tax rates on the wealthiest taxpayers do not impede economic growth. The US economy, measured by the Gross Domestic Product, grew faster from 1950 to 1970, when the top tax rate was 77% or higher, than since 1970, when it fell to half that level.
A second conclusion is that lowering tax rates for high earners does not bring a stronger economy. In international comparison, Americans are not over-taxed. Economies which are doing as well or better than ours, like Germany, have higher tax rates: all incomes over $150,000 (married couples) are taxed at 42% or more. Tax rates are just one of many forces affecting the health of the national economy.
Another basic fact is that 46% of American households paid no federal taxes in 2011. Fact spinners often misstate this by saying that 46% paid no taxes at all, which is untrue. About half of those 46% paid Social Security and Medicare taxes on their income. Many also paid state taxes on income which was not federally taxed. On federal tax returns this year, I and all other married couples could deduct $19,000 from our income without paying any tax. In Illinois, this deduction is only $4000. A full-time worker making the federal minimum wage would pay no federal taxes, but would be taxed on most of their income in Illinois. Of course, everyone pays sales tax. So virtually all Americans are paying taxes.
If one is committed to lowering our federal tax burden, one obvious place to look is the defense budget. That label is actually a misnomer, since the Defense Department has waged offensive war in Iraq and Afghanistan for a decade. In any case, military appropriations (2012 budget: $683 billion) take about 20% of the total federal budget, about 9 times the budget appropriation for education, 13 times that of housing and urban development, 16 times that of energy, 25 times that for agriculture or transportation. Another useful comparison is that our military spending is greater than the combined defense budgets of the next 17 largest spenders.
The deficit projected for the 2012 federal budget is about $1 trillion. Eliminating all federal agencies and cabinet departments, except Defense, would not even come close to eliminating that deficit. Eliminating Medicare and Medicaid completely would come close to balancing the budget.
Those are not serious ideas. But some people have suggested getting rid of individual cabinet departments, such as the Dept. of Energy. Proposals like that may sound good to some voters, but they mean little. All of our nuclear weapons and the nuclear reactors which power our Navy are controlled by the DOE. As in this case, every agency and department carries out indispensable functions. Eliminating a department might just mean putting its sub-agencies into other departments, with little savings.
Lowering taxes means reducing spending. Many states, such as Illinois, have even more significant deficit problems than the federal government. If federal spending is reduced, state budgets might go even further into the red.
Here is the most basic fact about taxes: at this moment, our tax system is not supporting our spending, at the state or federal level. Whatever proposals politicians make about taxes should be clear and detailed about how they will relate to spending. That’s probably too much to hope for.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 9, 2012
Tuesday, August 7, 2012
Election Primer 2012: 1. Federal Regulation of Banks
There are 13 weeks until Election Day. Many people say this is one of the most important elections in recent history. The talking heads on television focus on the horse race between the candidates, and tell us little about what they would do if elected. Campaign ads are nasty and misleading. Because voters need clear and objective information to make good decisions, the Journal-Courier has agreed to publish “Election Primer 2012", twice weekly factual articles, in which I lay out some of the issues at stake in these elections.
1. Federal Regulation of Banks
I got an official notice from my bank the other day, concerning government regulation of banks, a major issue in the November elections. “Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.”
“Personal information” includes my Social Security number and credit history, information about my account balances, about payments I make, even about my income. Big US banks can find out what and where we buy, how much we spend every month and how we pay our balances.
Farmers State Bank and Trust, my local bank with local owners for 100 years, chooses not to share any of this financial information with anyone, except where it is necessary to do my business and serve my banking needs. What I do with my bank stays with my bank.
CitiBank, the giant bank which handles my credit card and millions of others, sent me the same notice, but with a different message. CitiBank spreads my personal information all around. They use it to market their own products to me. They also give it out to other financial companies and to their “affiliates”. I can’t stop CitiBank from doing that; it is their legal right by law.
CitiBank also discloses my transactions and account information and credit scores to all kinds of other companies, affiliates and non-affiliates. By law I could limit that sharing, but I have to make a special request.
As the statement from Farmers Bank says, all of those provisions about my financial privacy come from federal laws about banks, a political issue that clearly divides the two parties.
When I visited my bank this week, I noticed a sign about another major element of federal regulation of banks: the Federal Deposit Insurance Corporation guarantees my deposits up to $100,000. In the midst of the last great depression, Congress passed and Franklin Roosevelt signed the Glass-Steagall Act of 1933, the first major federal regulation of banks. That law created the FDIC so that customers at banks which went bankrupt would not lose their savings. Millions of Americans have been rescued from financial disaster by the FDIC.
Glass-Steagall also prohibited commercial banks from simultaneously being investment banks or insurance companies. The Republican Congress in 1999 passed the Gramm–Leach–Bliley Act, which repealed that wall of separation. Most Democrats voted for it, some opposed it, and President Clinton signed it. A special provision that Democrats insisted upon was the basis for the notifications these banks sent me, and thus for my ability to opt out of some sharing, but not all.
Republicans and Democrats are now arguing about more recent federal legislation, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank provided the first federal regulation of hedge funds, limits risky investments by banks, and requires public corporations to allow shareholders to vote on executive compensation every 3 years, among many other complex provisions.
Dodd-Frank also created the Consumer Financial Protection Bureau. Since Republicans took over the House later in 2010, they have tried to prevent the CFPB from coming into existence. The NY Times wrote, “In May 2011, 44 Republican senators signed a letter saying they would refuse to vote on any nominee to lead the bureau. They argued that the agency had too much power.”
During a Congressional recess, President Obama used his executive authority to appoint Richard Cordray as director, so the CFPB could begin work.
Last month the young agency demonstrated what these federal regulations mean for consumers and voters. In the first enforcement action by the CFPB, Capital One Bank, which has clever commercials (“What’s in your wallet?”), but misleading marketing, will have to refund $210 million to its credit-card holders, because it tricked them into buying costly add-on services. According to USA Today, “The bank’s phone-sales operators told customers that services like payment protection and credit monitoring were free or mandatory or offered more benefits than they did.”
At the same time, the CFPB began to investigate the home mortgage process, hoping to make it easier for borrowers to understand the kind of loan they are getting and its cost.
Dodd-Frank was passed by Democrats when they controlled Congress. Nearly every Democrat voted for Dodd-Frank, and nearly every Republican voted against it. In August 2011, Mitt Romney said, “I’d like to repeal Dodd Frank.” In January, he said, “Now, the banks aren’t bad people, they’re just overwhelmed right now.” He called the CFPB the “most powerful and unaccountable bureaucracy in the history of our nation”. While he was in London last week, Romney continued his attack on Dodd-Frank, calling it “unnecessary” and “overly burdensome”.
President Obama and the Democrats defend these laws, and want the CFPB to continue its work.
Every banking transaction you perform is regulated by federal laws. Democrats and Republicans strongly disagree about how much regulation should restrict banks’ behavior.
How do you want your personal information treated by banks who participate in your daily lives? How actively should the government investigate banks who cheat their customers? Your vote matters.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 7, 2012
1. Federal Regulation of Banks
I got an official notice from my bank the other day, concerning government regulation of banks, a major issue in the November elections. “Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information.”
“Personal information” includes my Social Security number and credit history, information about my account balances, about payments I make, even about my income. Big US banks can find out what and where we buy, how much we spend every month and how we pay our balances.
Farmers State Bank and Trust, my local bank with local owners for 100 years, chooses not to share any of this financial information with anyone, except where it is necessary to do my business and serve my banking needs. What I do with my bank stays with my bank.
CitiBank, the giant bank which handles my credit card and millions of others, sent me the same notice, but with a different message. CitiBank spreads my personal information all around. They use it to market their own products to me. They also give it out to other financial companies and to their “affiliates”. I can’t stop CitiBank from doing that; it is their legal right by law.
CitiBank also discloses my transactions and account information and credit scores to all kinds of other companies, affiliates and non-affiliates. By law I could limit that sharing, but I have to make a special request.
As the statement from Farmers Bank says, all of those provisions about my financial privacy come from federal laws about banks, a political issue that clearly divides the two parties.
When I visited my bank this week, I noticed a sign about another major element of federal regulation of banks: the Federal Deposit Insurance Corporation guarantees my deposits up to $100,000. In the midst of the last great depression, Congress passed and Franklin Roosevelt signed the Glass-Steagall Act of 1933, the first major federal regulation of banks. That law created the FDIC so that customers at banks which went bankrupt would not lose their savings. Millions of Americans have been rescued from financial disaster by the FDIC.
Glass-Steagall also prohibited commercial banks from simultaneously being investment banks or insurance companies. The Republican Congress in 1999 passed the Gramm–Leach–Bliley Act, which repealed that wall of separation. Most Democrats voted for it, some opposed it, and President Clinton signed it. A special provision that Democrats insisted upon was the basis for the notifications these banks sent me, and thus for my ability to opt out of some sharing, but not all.
Republicans and Democrats are now arguing about more recent federal legislation, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank provided the first federal regulation of hedge funds, limits risky investments by banks, and requires public corporations to allow shareholders to vote on executive compensation every 3 years, among many other complex provisions.
Dodd-Frank also created the Consumer Financial Protection Bureau. Since Republicans took over the House later in 2010, they have tried to prevent the CFPB from coming into existence. The NY Times wrote, “In May 2011, 44 Republican senators signed a letter saying they would refuse to vote on any nominee to lead the bureau. They argued that the agency had too much power.”
During a Congressional recess, President Obama used his executive authority to appoint Richard Cordray as director, so the CFPB could begin work.
Last month the young agency demonstrated what these federal regulations mean for consumers and voters. In the first enforcement action by the CFPB, Capital One Bank, which has clever commercials (“What’s in your wallet?”), but misleading marketing, will have to refund $210 million to its credit-card holders, because it tricked them into buying costly add-on services. According to USA Today, “The bank’s phone-sales operators told customers that services like payment protection and credit monitoring were free or mandatory or offered more benefits than they did.”
At the same time, the CFPB began to investigate the home mortgage process, hoping to make it easier for borrowers to understand the kind of loan they are getting and its cost.
Dodd-Frank was passed by Democrats when they controlled Congress. Nearly every Democrat voted for Dodd-Frank, and nearly every Republican voted against it. In August 2011, Mitt Romney said, “I’d like to repeal Dodd Frank.” In January, he said, “Now, the banks aren’t bad people, they’re just overwhelmed right now.” He called the CFPB the “most powerful and unaccountable bureaucracy in the history of our nation”. While he was in London last week, Romney continued his attack on Dodd-Frank, calling it “unnecessary” and “overly burdensome”.
President Obama and the Democrats defend these laws, and want the CFPB to continue its work.
Every banking transaction you perform is regulated by federal laws. Democrats and Republicans strongly disagree about how much regulation should restrict banks’ behavior.
How do you want your personal information treated by banks who participate in your daily lives? How actively should the government investigate banks who cheat their customers? Your vote matters.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, August 7, 2012
Tuesday, July 24, 2012
The Free Market in China
I must say at the beginning that I am not an expert on China. I have just observed Chinese people for three weeks, and I have made short visits to China before.
The question “how free?” is very important to me and to many people. In many countries, such as Syria and Egypt, citizens dissatisfied with their level of freedom have come into the streets and risked their lives to demand more. Our own politics revolves around questions of how free the market should be. So how free is the market in China?
For many people in the US, the fact that China is ruled by the Communist Party provides a ready-made answer – communism is the opposite of freedom. Like most simple responses to complex questions, that answer is of little use. Freedom is not yes or no, black or white, but a broad spectrum of rights and limitations. Communism, like democracy, comes in many forms. I offer these observations about market freedoms in China.
Chinese are free to buy the same variety of goods and services that we are. I saw all the familiar global brands here: KFC, Rolex, Levis and Toyota. There appear to be few rules about selling. People sell from stores, from carts on bicycles, from blankets on sidewalks. As I walked around Beijing looking un-Chinese, many men tried to sell me rides in pedicabs or tours of the Great Wall. I don’t think it was a sign of my attractiveness that young women tried to sell me their company, following me until I had said “no” a dozen times.
State-supported capitalism is everywhere. On the long train ride from Beijing to Kaifeng, uniformed railroad employees insistently hawked various products to a captive audience, including a “traditional Chinese medicine”, a crude vacuum device to put on the skin to “cure various diseases”.
Making and spending money may be freer in China than in the US. We have a much more highly developed set of legal regulations about how products must be manufactured and sold, especially where consumer safety is concerned. A persistent problem in China is adulteration of food products. Recent scandals about unhealthy ingredients in powdered milk have caused better-off people to order foreign baby formula over the internet.
Manufacturers and consumers are also more free to pollute than in the US. Factories pour poisons into rivers, and cars spew so much particulate matter into the air that Chinese cities are blanketed in a permanent haze.
The greatest freedom appears to be enjoyed by drivers, unhindered by stoplights, pedestrians, or what we would consider common courtesy. While most drivers of cars usually obeyed internationally accepted rules of the road, apparently anything goes for motorcycles and scooters. For my own safety, I quickly learned always to give way, wherever I was, whoever had the green.
Information is not as free. In my hotel rooms, I could only get Chinese TV channels, all controlled by the government, although CNN was broadcast on big screens in one hotel restaurant.
Politics is less free. All political decisions are tightly controlled by the Communist Party. Protesting political authority is not impossible, as many news reports have demonstrated, but it takes courage and might be dangerous.
In the center of Beijing, police are everywhere, especially around Tiananmen Square, site of the largest modern mass protests in China in 1989, which were repressed with violence. More generally, this is a highly policed society, with uniformed men, parking attendants, and others whose jobs I could only guess at on every street. These people provide security, for the citizen against crime and for the government against opposition. They can be both comforting and threatening.
A free market and free politics don’t necessarily go together. Freer political systems, where citizens can exercise some control over the economy, usually lead to restrictions on the market in the public interest. Complete freedom of big business, whether owned privately, as in the US, or controlled by the government, as in China, means less freedom for average citizens to enjoy safe working conditions, a clean environment, and healthy products. The free economic market in China is exciting, as is their traffic, but I’ll take our regulated system any time.
Steve Hochstadt
Springbrook, WI
published in the Jacksonville Journal-Courier, July 24, 2012
The question “how free?” is very important to me and to many people. In many countries, such as Syria and Egypt, citizens dissatisfied with their level of freedom have come into the streets and risked their lives to demand more. Our own politics revolves around questions of how free the market should be. So how free is the market in China?
For many people in the US, the fact that China is ruled by the Communist Party provides a ready-made answer – communism is the opposite of freedom. Like most simple responses to complex questions, that answer is of little use. Freedom is not yes or no, black or white, but a broad spectrum of rights and limitations. Communism, like democracy, comes in many forms. I offer these observations about market freedoms in China.
Chinese are free to buy the same variety of goods and services that we are. I saw all the familiar global brands here: KFC, Rolex, Levis and Toyota. There appear to be few rules about selling. People sell from stores, from carts on bicycles, from blankets on sidewalks. As I walked around Beijing looking un-Chinese, many men tried to sell me rides in pedicabs or tours of the Great Wall. I don’t think it was a sign of my attractiveness that young women tried to sell me their company, following me until I had said “no” a dozen times.
State-supported capitalism is everywhere. On the long train ride from Beijing to Kaifeng, uniformed railroad employees insistently hawked various products to a captive audience, including a “traditional Chinese medicine”, a crude vacuum device to put on the skin to “cure various diseases”.
Making and spending money may be freer in China than in the US. We have a much more highly developed set of legal regulations about how products must be manufactured and sold, especially where consumer safety is concerned. A persistent problem in China is adulteration of food products. Recent scandals about unhealthy ingredients in powdered milk have caused better-off people to order foreign baby formula over the internet.
Manufacturers and consumers are also more free to pollute than in the US. Factories pour poisons into rivers, and cars spew so much particulate matter into the air that Chinese cities are blanketed in a permanent haze.
The greatest freedom appears to be enjoyed by drivers, unhindered by stoplights, pedestrians, or what we would consider common courtesy. While most drivers of cars usually obeyed internationally accepted rules of the road, apparently anything goes for motorcycles and scooters. For my own safety, I quickly learned always to give way, wherever I was, whoever had the green.
Information is not as free. In my hotel rooms, I could only get Chinese TV channels, all controlled by the government, although CNN was broadcast on big screens in one hotel restaurant.
Politics is less free. All political decisions are tightly controlled by the Communist Party. Protesting political authority is not impossible, as many news reports have demonstrated, but it takes courage and might be dangerous.
In the center of Beijing, police are everywhere, especially around Tiananmen Square, site of the largest modern mass protests in China in 1989, which were repressed with violence. More generally, this is a highly policed society, with uniformed men, parking attendants, and others whose jobs I could only guess at on every street. These people provide security, for the citizen against crime and for the government against opposition. They can be both comforting and threatening.
A free market and free politics don’t necessarily go together. Freer political systems, where citizens can exercise some control over the economy, usually lead to restrictions on the market in the public interest. Complete freedom of big business, whether owned privately, as in the US, or controlled by the government, as in China, means less freedom for average citizens to enjoy safe working conditions, a clean environment, and healthy products. The free economic market in China is exciting, as is their traffic, but I’ll take our regulated system any time.
Steve Hochstadt
Springbrook, WI
published in the Jacksonville Journal-Courier, July 24, 2012
Tuesday, July 17, 2012
Open Versus Closed Education
When I visited the campus of Henan University in Kaifeng, China, it was final exam time. As I walked toward the library, I could see many students studying on the steps. But when I got closer, I could hear the increasing buzz of many voices. On the sidewalks, in the hallways, and even on the athletic fields, hundreds of Chinese students were talking to themselves. I had to ask what was going on.
They were preparing for their exams by reciting lessons from the books they were holding. Chinese education has traditionally emphasized memorization. Students listen to lectures and read texts in order to absorb information, which will be repeated at exam time. European universities have also relied primarily on lecturing and listening.
At small colleges across the US, like Illinois College, a different type of learning happens. From their first day on campus, students are encouraged to think for themselves, to ask questions, to wonder why. The ideal educational setting is not the lecture hall, but the seminar room, where students must take responsibility for their own education. The readings they have done and the lectures they have heard represent only the first step.
While knowing some facts is necessary in every field, learning how to evaluate evidence, solve new problems, and ask original questions are the crucial skills we try to impart. The goal of a liberal arts education is not mainly the accumulation of knowledge, but an understanding of how knowledge is created and the ability to create new knowledge by oneself. It emphasizes problem-solving over repetition of information. Only if students learn how to think will they be prepared to succeed in a world where knowledge is changing every day.
Different educational philosophies have different political implications. Professors lecturing to hundreds of students dutifully and quietly taking notes reinforce a hierarchical system of authority and obedience, where the right people have the right answers. Lively discussion around a seminar table encourages equality and the value of individual opinions. This form of pedagogy is messy and can seem less efficient than memorizing the right answers. The lack of one right answer to every question can be confusing to those who seek simplicity in a complex world.
The liberal arts pedagogical tradition developed alongside American democracy, and contributes to its continuing strength. It is now being copied in many European countries as a reaction against hierarchical educational systems, in which the professor is a mini-monarch in an authoritarian classroom.
The liberal arts emphasis on skills does not go unchallenged in its American home. There are also people in the US who believe that education is about memorizing facts. Some people accept science only if it affirms answers they already know, and censor history if it does not tell the stories they favor. The conservative critique of American higher education is actually a complaint about the openness of the liberal arts tradition.
Others emphasize facts because they insist on short-answer testing as the only way to maintain high standards in public schools. President Bush’s No Child Left Behind was based on continual testing and tended to transform curricula into teaching for particular tests. President Obama’s Race to the Top also relies heavily on tests to rate school systems. Because testing skills is much more difficult than testing knowledge, the more public schools are rated by tests, the more that teaching will focus on facts.
Surrounding Henan University is a high fence with a few gates guarded by uniformed security personnel. You need an ID card just to enter the library. The university is a closed world, protected from wider society.
The American liberal arts college is open. There are no fences to keep the public out. There are no obstacles to challenging professorial authority. There are no questions which may not be asked.
Steve Hochstadt
Springbrook, WI
published in the Jacksonville Journal-Courier, July 17, 2012
They were preparing for their exams by reciting lessons from the books they were holding. Chinese education has traditionally emphasized memorization. Students listen to lectures and read texts in order to absorb information, which will be repeated at exam time. European universities have also relied primarily on lecturing and listening.
At small colleges across the US, like Illinois College, a different type of learning happens. From their first day on campus, students are encouraged to think for themselves, to ask questions, to wonder why. The ideal educational setting is not the lecture hall, but the seminar room, where students must take responsibility for their own education. The readings they have done and the lectures they have heard represent only the first step.
While knowing some facts is necessary in every field, learning how to evaluate evidence, solve new problems, and ask original questions are the crucial skills we try to impart. The goal of a liberal arts education is not mainly the accumulation of knowledge, but an understanding of how knowledge is created and the ability to create new knowledge by oneself. It emphasizes problem-solving over repetition of information. Only if students learn how to think will they be prepared to succeed in a world where knowledge is changing every day.
Different educational philosophies have different political implications. Professors lecturing to hundreds of students dutifully and quietly taking notes reinforce a hierarchical system of authority and obedience, where the right people have the right answers. Lively discussion around a seminar table encourages equality and the value of individual opinions. This form of pedagogy is messy and can seem less efficient than memorizing the right answers. The lack of one right answer to every question can be confusing to those who seek simplicity in a complex world.
The liberal arts pedagogical tradition developed alongside American democracy, and contributes to its continuing strength. It is now being copied in many European countries as a reaction against hierarchical educational systems, in which the professor is a mini-monarch in an authoritarian classroom.
The liberal arts emphasis on skills does not go unchallenged in its American home. There are also people in the US who believe that education is about memorizing facts. Some people accept science only if it affirms answers they already know, and censor history if it does not tell the stories they favor. The conservative critique of American higher education is actually a complaint about the openness of the liberal arts tradition.
Others emphasize facts because they insist on short-answer testing as the only way to maintain high standards in public schools. President Bush’s No Child Left Behind was based on continual testing and tended to transform curricula into teaching for particular tests. President Obama’s Race to the Top also relies heavily on tests to rate school systems. Because testing skills is much more difficult than testing knowledge, the more public schools are rated by tests, the more that teaching will focus on facts.
Surrounding Henan University is a high fence with a few gates guarded by uniformed security personnel. You need an ID card just to enter the library. The university is a closed world, protected from wider society.
The American liberal arts college is open. There are no fences to keep the public out. There are no obstacles to challenging professorial authority. There are no questions which may not be asked.
Steve Hochstadt
Springbrook, WI
published in the Jacksonville Journal-Courier, July 17, 2012
Tuesday, June 19, 2012
What the Rest of the World Thinks
As you are reading this, I am flying to China for three weeks. China has now passed the United States as the world’s leading economic power.
That’s true at least for a bare majority of Americans surveyed this spring, 41%, with 40% rating the US as the top economic power. As the Chinese economy has boomed while ours has stagnated, these ratings have continued to shift away from the US. In Western Europe, home of our strongest allies and some of our largest trading partners, the great majority pick China. The Japanese rate us about equal. One of the few places where the majority of people surveyed think the US is still the world’s leading economic power is in China itself.
Such ratings are not the same as actual economic power. But much of politics and economics depends on favorable perceptions, which are inexorably shifting toward China.
This is one example of how the Pew Research Center’s international surveys offer much to think about in today’s interconnected world. For example, the current use of drone aircraft to target our enemies is very unpopular across the world. While Americans support this tactic 62% to 28%, majorities everywhere else disapprove, especially in the Middle East. I don’t think we should put our foreign policy up to a global vote, but we need to pay attention if killing a few Al Qaeda leaders alienates millions of people, Muslims and non-Muslims.
The global survey offers useful evidence about the success of President Obama’s foreign policies. Compared with President George Bush in 2008, many more people across the globe have confidence in Obama “to do the right thing regarding world affairs”: five times as many in Western Europe, three times as many in Japan and Mexico, more in Russia and China.
The conservative criticism that Obama ignores our allies and favors countries who oppose us is contradicted by perceptions across the world. Obama’s reelection is favored by over 70% of western Europeans, but rejected 3 to 1 in Arab countries and in Pakistan.
Although the United States remains popular in most parts of the world, very few people believe that we care about what they think. In most countries, fewer than 10% say that the US takes their interests into account “a great deal”, while in nearly every country surveyed a majority, mostly a very large majority, answer “not too much” or “not at all”. Except China, again. This markedly contrasts with our own perceptions: 77% of Americans said we take the interests of other countries into account “a great deal” or “a fair amount”.
The results of these surveys should influence how we vote in November. While solving our domestic economic problems is the number one issue for voters, foreign policy is also important to our future. For example, had we not started wars against Iraq and Afghanistan, our national budget would look very different. The research project “Costs of War” at Brown University's Watson Institute for International Studies estimates that the total cost of these wars will reach at least $3.7 trillion. That is a sizable chunk of our current $15 trillion national debt.
Those political leaders who talk openly about attacking Iran, mostly Republicans, would be committing more trillions to another unnecessary war.
Many politicians today, especially conservatives, appear to disdain the opinions of people outside of the US. Their attacks on the United Nations, disparaging comments about our allies in Europe, and generally go-it-alone attitudes toward international problems could hurt American economic prospects. Republican attacks on President Obama often call his policies “European” as a way of disparaging his American patriotism.
Mitt Romney constantly attacks European governments as failed socialists, when in fact rightward leaning parties have been in power in Germany, England, and France. In January, Romney purposely put a wedge among NATO allies by saying, “I don't believe in Europe. I believe in America.” European newspapers have noted that Republicans portray Europe not as a kindred continent, but as the kind of dystopian society the US might become should the wrong person win.
It appears that China is the biggest target for Republican politicians trying to win votes by criticizing foreigners. In the October Republican debate, Romney said, “And on day one, I have indicated, day one, I will issue an executive order identifying China as a currency manipulator. We'll bring an action against them in front of the WTO for manipulating their currency, and we will go after them.” Rep. Dana Rohrabacher from California compared the Chinese government to Adolf Hitler during Congressional debate last week.
I would not make a good Chinese citizen, because I value political freedoms and human rights. But thoughtless attacks on the nation which holds much of our debt demonstrates the same kind of failed foreign policy which got us into unnecessary wars.
I won’t be sending columns back from China, but when I return I will write about what I see there.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, 19 June 2012
That’s true at least for a bare majority of Americans surveyed this spring, 41%, with 40% rating the US as the top economic power. As the Chinese economy has boomed while ours has stagnated, these ratings have continued to shift away from the US. In Western Europe, home of our strongest allies and some of our largest trading partners, the great majority pick China. The Japanese rate us about equal. One of the few places where the majority of people surveyed think the US is still the world’s leading economic power is in China itself.
Such ratings are not the same as actual economic power. But much of politics and economics depends on favorable perceptions, which are inexorably shifting toward China.
This is one example of how the Pew Research Center’s international surveys offer much to think about in today’s interconnected world. For example, the current use of drone aircraft to target our enemies is very unpopular across the world. While Americans support this tactic 62% to 28%, majorities everywhere else disapprove, especially in the Middle East. I don’t think we should put our foreign policy up to a global vote, but we need to pay attention if killing a few Al Qaeda leaders alienates millions of people, Muslims and non-Muslims.
The global survey offers useful evidence about the success of President Obama’s foreign policies. Compared with President George Bush in 2008, many more people across the globe have confidence in Obama “to do the right thing regarding world affairs”: five times as many in Western Europe, three times as many in Japan and Mexico, more in Russia and China.
The conservative criticism that Obama ignores our allies and favors countries who oppose us is contradicted by perceptions across the world. Obama’s reelection is favored by over 70% of western Europeans, but rejected 3 to 1 in Arab countries and in Pakistan.
Although the United States remains popular in most parts of the world, very few people believe that we care about what they think. In most countries, fewer than 10% say that the US takes their interests into account “a great deal”, while in nearly every country surveyed a majority, mostly a very large majority, answer “not too much” or “not at all”. Except China, again. This markedly contrasts with our own perceptions: 77% of Americans said we take the interests of other countries into account “a great deal” or “a fair amount”.
The results of these surveys should influence how we vote in November. While solving our domestic economic problems is the number one issue for voters, foreign policy is also important to our future. For example, had we not started wars against Iraq and Afghanistan, our national budget would look very different. The research project “Costs of War” at Brown University's Watson Institute for International Studies estimates that the total cost of these wars will reach at least $3.7 trillion. That is a sizable chunk of our current $15 trillion national debt.
Those political leaders who talk openly about attacking Iran, mostly Republicans, would be committing more trillions to another unnecessary war.
Many politicians today, especially conservatives, appear to disdain the opinions of people outside of the US. Their attacks on the United Nations, disparaging comments about our allies in Europe, and generally go-it-alone attitudes toward international problems could hurt American economic prospects. Republican attacks on President Obama often call his policies “European” as a way of disparaging his American patriotism.
Mitt Romney constantly attacks European governments as failed socialists, when in fact rightward leaning parties have been in power in Germany, England, and France. In January, Romney purposely put a wedge among NATO allies by saying, “I don't believe in Europe. I believe in America.” European newspapers have noted that Republicans portray Europe not as a kindred continent, but as the kind of dystopian society the US might become should the wrong person win.
It appears that China is the biggest target for Republican politicians trying to win votes by criticizing foreigners. In the October Republican debate, Romney said, “And on day one, I have indicated, day one, I will issue an executive order identifying China as a currency manipulator. We'll bring an action against them in front of the WTO for manipulating their currency, and we will go after them.” Rep. Dana Rohrabacher from California compared the Chinese government to Adolf Hitler during Congressional debate last week.
I would not make a good Chinese citizen, because I value political freedoms and human rights. But thoughtless attacks on the nation which holds much of our debt demonstrates the same kind of failed foreign policy which got us into unnecessary wars.
I won’t be sending columns back from China, but when I return I will write about what I see there.
Steve Hochstadt
Jacksonville IL
published in the Jacksonville Journal-Courier, 19 June 2012
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