Who Built What?

Here's the complete quote:

“There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.”

It's pretty clear that he's saying if you've got a business, you didn't build the roads and bridges. It wouldn't make sense to say that if you "have" a business, you didn't "build" it -- that might be the case in some cases, but everybody knows that some entrepreneurs are out there working long hours to develop products, service, and customers, and are genuinely building businesses.

So the whole Republican rant against this phrase is misguided and/or dishonest.  But there's an additional level of dishonesty going on here.  Yes, there's a small number of true entrepreneurs out there who have built businesses, and if Obama had really said that, they'd have just cause for taking offense.

But the vast majority of "businessmen" didn't do that -- they simply rose to the top of existing businesses, and, when it those positions, were able to dip their hands into the torrent of cash that flowed through the company.  This goes for the vast majority of CEOS of big companies today, and it also goes for all the executives who spend their days thinking of ways to trick consumers into paying more than they should for their products -- like fat free half and half and frozen dairy desserts.  The true 1% (at least the ones who still are out there earning an income, as opposed to living off of past windfalls) is made up of a lot more people like that -- i.e.skimmers -- than of people who "built" businesses.    

Longevity findings

A lengthy article in Slate today explains that a recently released, long-anticipated study on monkeys failed to show that caloric restriction increased lifespan.  It turns out that these monkeys -- even the ones without caloric restriction -- all outlived even the restricted monkeys from the trial everyone knows about.  And it turns out the explanation was simply that they got better food:

It didn’t take him long to realize that the animals’ food was more important than anyone had thought. The NIA monkeys were fed a natural-ingredient diet, made from ground wheat, ground corn, and other whole foods; the Wisconsin animals ate a “purified” diet, a heavily refined type of food that allowed the researchers to control the nutritional content more precisely. Because the NIA monkeys were eating more natural ingredients, de Cabo realized, they were taking in more polyphenols, micronutrients, flavonoids, and other compounds that may have health-promoting effects.

Furthermore, the NIA diet consisted of 4 percent sucrose—while in the Wisconsin diet, sucrose accounted for some 28 percent of the total calories. High sugar consumption is thought to be a primary driver of obesity, diabetes, and possibly some cancers. “In physics, a calorie is a calorie,” says de Cabo. “In nutrition and animal physiology, there is more and more data coming out that says that the state of the animal is going to depend more on where the calories are coming from.”


--

So that's what I'd like to eat from here on in --  a natural-ingredient diet, made from ground wheat, ground corn, and other whole foods.  If they fed it to monkeys, it can't be all that expensive.  Where can I get me some?  Who will be the first to package it and get rich?

Babbitt - A Must Read

I'm not all that far into it, but I can tell it's a book for the ages.  It was written 90 years ago in 1922 and is therefore in the public domain by one year (yippee), and it reminds us that things really weren't so different 90 years ago after all.  Siblings still squabble with each other over nothing, parents don't understand or even like each other, and society blunders along through a morass of false advertising and corruption.  A fairly hilarious scene at the breakfast table where the conversation starts with Ted (17) complaining about having to read Shakespeare in "cold blood" (as opposed to watching it on a stage with special effects), his mother noting that there are some things in Shakespeare that aren't very nice (i.e. are bawdy), and Babbitt thinking to himself that he's in above his head -- since neither of his primary newspapers had written an editorial on the issue, he found it hard to form an original opinion.

The conversation then moves to correspondence courses, and Babbitt decides right then and there that they may well have some merit, and might be even better than some of the stuff that's taught in schools.  They go through a number of them -- the discussion of the correspondence course on boxing is particularly funny; Ted wants to be prepared for the day when he is walking with his sister or his mother and someone makes a "slighting" remark toward one of them.  Babbitt is intrigued by the piano courses, and assumes that with all the progress that has been made on efficiency, someone probably really has figured out a way to teach piano mastery without all the bothersome practice.

All one has to do is watch a few infomercials to realize that nothing has changed all that much.

What sort of surprised me was to realize that technology hadn't really changed all that much either, despite all of the obvious enhancements all around us.  I.e. he had a car (although it took a lot more care and work than a car does today, and convertibles were cheaper than sedans), electricity, lighting, a vacuum cleaner, and apparently a very large and somewhat luxurious bathroom, although admittedly the whole family seemed to share it (the idea of a master bath was still some years off apparently).  The house sounds very comfortable and well appointed, although the description ends by pointing out that "it was not a home."

Ok, sure, technology has changed, and we have become even more spoiled and pampered in our efforts to keep ourselves comfortable.  But there's no doubt that the Babbitts - a middle class family -- lived more comfortably 90 years ago than do 95% of the citizens of the world today.  And although they didn't have cell phones, I think it's fair to say that they lived more comfortable, safer lives than many many Americans today.

The self-description of the boxer-turned-evangelist could apply to today's breed:

"Rev. Mr. Monday, the Prophet with a Punch, has shown that he is the world's greatest salesman of salvation, and that by efficient organization the overhead of spiritual regeneration may be kept down to an unprecedented rock-bottom basis. He has converted over two hundred thousand lost and priceless souls at an average cost of less than ten dollars a head."

His speech was priceless:

"There's a lot of smart college professors and tea-guzzling slobs in this burg that say I'm a roughneck and a never-wuzzer and my knowledge of history is not-yet. Oh, there's a gang of woolly-whiskered book-lice that think they know more than Almighty God, and prefer a lot of Hun science and smutty German criticism to the straight and simple Word of God. Oh, there's a swell bunch of Lizzie boys and lemon-suckers and pie-faces and infidels and beer-bloated scribblers that love to fire off their filthy mouths and yip that Mike Monday is vulgar and full of mush. Those pups are saying now that I hog the gospel-show, that I'm in it for the coin. Well, now listen, folks! I'm going to give those birds a chance! They can stand right up here and tell me to my face that I'm a galoot and a liar and a hick! Only if they do—if they do!—don't faint with surprise if some of those rum-dumm liars get one good swift poke from Mike, with all the kick of God's Flaming Righteousness behind the wallop! Well, come on, folks! Who says it? Who says Mike Monday is a fourflush and a yahoo? Huh? Don't I see anybody standing up? Well, there you are! Now I guess the folks in this man's town will quit listening to all this kyoodling from behind the fence; I guess you'll quit listening to the guys that pan and roast and kick and beef, and vomit out filthy atheism; and all of you 'll come in, with every grain of pep and reverence you got, and boost all together for Jesus Christ and his everlasting mercy and tenderness!"

And I like Paul Riesling's fantasy -- which I think a lot of married men today almost certainly share:


". . . . I bet if you could cut into their heads you'd find that one-third of 'em are sure-enough satisfied with their wives and kids and friends and their offices; and one-third feel kind of restless but won't admit it; and one-third are miserable and know it. They hate the whole peppy, boosting, go-ahead game, and they're bored by their wives and think their families are fools—at least when they come to forty or forty-five they're bored—and they hate business, and they'd go—Why do you suppose there's so many 'mysterious' suicides? Why do you suppose so many Substantial Citizens jumped right into the war? Think it was all patriotism?"

. . . .

"Good Lord, I don't know what 'rights' a man has! And I don't know the solution of boredom. If I did, I'd be the one philosopher that had the cure for living. But I do know that about ten times as many people find their lives dull, and unnecessarily dull, as ever admit it; and I do believe that if we busted out and admitted it sometimes, instead of being nice and patient and loyal for sixty years, and then nice and patient and dead for the rest of eternity, why, maybe, possibly, we might make life more fun."

. . . .

"Look here, old Paul, you do a lot of talking about kicking things in the face, but you never kick. Why don't you?"

"Nobody does. Habit too strong. But—Georgie, I've been thinking of one mild bat—oh, don't worry, old pillar of monogamy; it's highly proper. It seems to be settled now, isn't it—though of course Zilla keeps rooting for a nice expensive vacation in New York and Atlantic City, with the bright lights and the bootlegged cocktails and a bunch of lounge-lizards to dance with—but the Babbitts and the Rieslings are sure-enough going to Lake Sunasquam, aren't we? Why couldn't you and I make some excuse—say business in New York—and get up to Maine four or five days before they do, and just loaf by ourselves and smoke and cuss and be natural?"

Hmm....  I honestly thought I heard him say "cuss and wear old pants."  That's better, as far as I'm concerned.  Yet it's not in the gutenberg version.  It was either right here or somewhere when George was thinking about it.  But I can't find it there either.

Ahh:  Here it is:

He was fretting, "What a family! I don't know how we all get to scrapping this way. Like to go off some place and be able to hear myself think.... Paul ... Maine ... Wear old pants, and loaf, and cuss."

Interesting that I couldn't find that passage by searching for old, or cuss, or pants, but it finally showed up AFTER googling confirmed it was in the book, on a search for "loaf".  Bizarre.

Fat Free Half-and-Half

Another fairly misleading product involving cream (see post on fake ice cream alert).  The half-and-half in the title makes you think there's cream in there.  But since it says "fat free" you know darn well that there isn't.

You can guess what it is -- it's just skim milk (if there were any milkfat it wouldn't be fat free) plus sugar and corn syrup.  Oh yeah, and artificial color -- to mask the corn syrup.  So they've just taken the cheapest kind of milk and thickened it with artificially-whitened corn syrup, and sold it at a "cream-like" like price.

And of course, they put it right next to regular (i.e. real) half-and-half on the shelf (where you can buy it by accident) and they sell it at the same price.

In fact, I (inadvertently) paid even MORE than the real half and half price recently.   I was at Target and saw a sign that said half-and-half $1.62 (or maybe $1.64) for a quart.  But the ONLY kind of half-and-half they had was the fat free kind.  I took it (first and last time), and it rung up at $2.24 (or thereabouts).

So I just paid $2.24 for a quart of skim milk and corn syrup.

There's a 1% skimmer out there laughing himself silly.

UPDATE Sept 6 2012

I still haven't finished the fat free half and half that I bought at Target.  But it's been in the refrigerator the whole time.  The expiration date on it is Sept. 30, 2012, presumably it was ultrapasteurized or something..  But today, it was all clumpy and unusable.  What an awful product, on so many levels.
 

Republicans As The Party of Fiscal Responsibility

I was reasonably conservative for many years.  My reasoning probably sounded a lot like the Republican Party line nowadays -- that giving people government handouts saps their incentives to do work, and anyone who is willing to work hard can get a job and can get ahead in today's America.  I still feel pretty much the same way.  But it is no longer a particular meaningful point in the question of which party to support.  Both parties have come to agree with me, and both parties have worked to reform welfare and make living on the dole less attractive (it actually was fairly attractive in the mid-1990s, back when I was representing indigent people in court).

But the Republicans seem to still be loudly proclaiming this basic point -- that they are the party of fiscal responsibility, and their program will include forcing more people to fend for themselves.  That's fine for some, although now that welfare has been reformed, it's not quite such a big issue for me.

What bugs me is that it is this kind of rhetoric that enables Republicans to claim that they are the party of fiscal responsibility.  But they just aren't.  Most obviously, look at both Reagan and George W. Bush.  They both ran up deficits by cutting taxes and spending money on defense.  And their Republican cronies supported them 100 percent of the way.  

Fareed Zakaria -- What's Worse Than Admitting to Plagiarism?

Answer to the title:  Admitting that you've got other people doing your writing for you.  If Zakaria had really written the piece in question all by himself, he would never in a million years have copied word for word what someone else had written.  What happened here, almost certainly, is that someone in Zakaria's employ copied and pasted a bunch of articles and cobbled together an opinion piece for Zakaria, using mostly other people's thoughts, and -- as a result of pure sloppiness -- a couple of sentences worth of someone else's words.

Zakaria is a "brand" -- the ghost writer can get more money (and, in a way, more recognition) writing for Zakaria than he could writing for himself.  And Zakaria can make more money -- and have more fun -- doing stuff other than writing.

So the whole debate of "gee, it was only two sentences, what's the big deal" vs "how dare he try to pass someone else's prose off as his own" is way off the mark.  Someone needs to ask him point blank whether he really writes his own stuff.  And then we need to start checking up on everyone else . . . .

Update:  After writing and posting this I googled around, just to see how unoriginal I was.  Again, many others beat me to it.  Interestingly, the "farmed-out work" theory appears mostly in blogs, or comments to blogs.  The mainstream are still taking what Fareed says at face value, and then deciding whether the plagiarism is worth getting worked up about.  And now they are finding other examples of alleged plagiarism in his work (including his book about the "Post-American World" which I started but didn't finish), again without raising the obvious question.

Harry Reid, Jon Stewart, and Romney's Tax Returns

Without even trying, I've seen three different conservative commentators point to the fact that "even" Jon Stewart thinks that Harry Reid was unreasonable in repeating (or possibly inventing) unsubstantiated rumors to the effect that Romney hadn't paid any tax at all in the last ten years.  The commentators clearly missed Stewart's broader point -- that this kind of speculation is irresponsible no matter who does it, and that Republicans seem to do it a lot more than Democrats.  He followed the Reid piece immediately with clips from Fox News where the commentators were just sitting around spinning out reckless allegations based upon (e.g.) a couple of blogs that one of them had just read that morning.  The whole "birther" movement was based on sheer speculation about the circumstances of Obama's birth.

I happened to be on a long drive on Monday, and I managed to catch what seemed to be an endless stream of hours of Hannity repeating exactly the same thing over and over again -- shame on Harry Reid for making these scurrilous allegations -- how would he feel if we started making stuff up about him beating his wife?

But Hannity never ever (as far as I heard, although admittedly I tuned him out from time to time, metaphorically and literally) addressed the question of whether or not ordinary taxpayers and voters are entitled to have a look at a few more years of Romney's tax returns before putting him in charge of the country and at least potentially the country's tax policy.

I've always assumed that my tax returns would be available to certain prospective employers (they are certainly available to prospective lenders), and if I were to run for President I'd assume the public would want to see them.  If I were running for President, I would also assume that some day, historians (my future biographers) will have access to them.  So if Romney has been as circumspect as I have been, he shouldn't have anything to fear, and in fact he might as well just get the process over with now.  There's no "principled" reason why he shouldn't disclose them -- or if there is, I haven't heard one.

So that leaves only the glaring possibility that Romney doesn't think that his tax returns will go over very well with the public.  His proud stance that he didn't pay "a penny more" than he owed raises the question of just how he can be sure that's the case -- how much money did he pay how many accountants and tax lawyers to ensure that he didn't pay the government "a penny more" than he owed?

If nothing else, the publication of these tax returns would help the public work through some of the issues that many of us have with the tax code -- why should clever tax lawyers and accountants be able to earn obscene livings by simply helping to ensure that certain insanely rich taxpayers don't pay "a penny more" tax than a literal reading of the tax code (loopholes and all) says they "owe"?  Why does our economy reward that kind of obviously anti-social behavior?  And is there anything we can do about it?

The Romney tax return issue is also interesting for the fact that it's an essentially non-partisan issue --whether or not a candidate should disclose certain information about himself -- and yet the opinion divides almost perfectly along partisan lines (with the exception of a few conservative commenters who think he SHOULD release the returns, but probably don't realize how damaging they could be).  It's just like the issue of the birth certificate, or Obama's college transcripts.  As a voter, I'd like to see all of it; but for some reason, recent tax returns of an admitted tax avoider seem very relevant in this economy, and in a political climate where tax policy is a central issue.

It would be irresponsible for me to somehow "believe" that I knew that he paid zero taxes during that year (but of course, if GE can do it, why can't Mitt Romney?), but until I see the returns, I will assume that there is plenty in there to be outraged about.

I read recently that the one tax policy that Romney has been clear about is that he would repeal the estate tax.  While Obama's performance has been less than stellar on that issue, that's reason enough not to let Romney get anywhere close to the White House.

Invade Switzerland?

My recent post about off-shore tax havens -- where $32 trillion dollars of questionably-gotten wealth is stored -- caused me to wonder why we don't just invade Switzerland, Bermuda, Dubai, etc. simultaneously, take the wealth, and then use it to pay down our debt.  The invasion would be temporary -- we'd simply do whatever is necessary to extract the assets from those bank accounts, and then when that "mission is accomplished" we'd reinstall the original Swiss government, as if nothing had happened.  If done correctly -- with the appropriate awe-inspiring mission name (operation Blatant Heist?) -- the mission could be accomplished with little or perhaps even no bloodshed.

As usual, I'm not the first person who has had this thought; Mohan Kannegal suggested it in October 2011 as a way for Europe to solve its ongoing crisis, Robert Hurley suggested it in 2009 (and in turn found his blog being monitored by the Swiss Government), there's an mp3 available on Amazon called "I want to Invade Switzerland," and I'm sure there have been others.  Kannegal appears to have been joking, because in the end he proposes that the invasion be conducted by Berlusconi and his paramours.  Hurley's main concern seems to be tracking down the money siphoned off (i.e. stolen from U.S. taxpayers) during the rebuilding of Iraq, which he thinks probably ended up in accounts in Dubai.

There is also considerable scholarship out there on the question why Hitler didn't invade Switzerland; apparently, he didn't like the Swiss and had several plans on the drawing board (plans which acknowledged the difficulty of such an enterprise, given the terrain), but in the end just didn't get around to it.  Might have turned out differently if he had been more successful elsewhere.

The Swiss in WWII expected an invading force of 15 Italian divisions and 11 German divisions -- 300,000-500,000 men.  But today's warfare is very different.  We've shown in Iraq and Afghanistan that we can inflict significant damage without risking any of our troops.  And if we explained the endgame to the Swiss government and the Swiss people -- and perhaps offered them a hundred billion dollars of our take -- we might be able to accomplish the whole thing with little or no bloodshed.

I have not yet researched the question of whether physically invading Switzerland and toppling its government would automatically give us access to the wealth stored in Swiss banks.  I do not even know what form that wealth takes.  Part of my reason for naming "Bermuda, Dubai, etc." above, and calling for a simultaneous invasion, is that I have a feeling that the Swiss bankers nowadays might have a method of wiring the money out of the country on a moment's notice; we might only be able to solve that problem if we simultaneously conquer every place where the money might conceivably be wired.  I also don't know enough to know whether the money might be wire-able and thus salvageable to a non-tax haven country; perhaps they could simply break it up and wire it to a bunch of different US and English banks without anyone knowing it.  If it's legal -- or even if it's just not detectable -- there would doubtless be an array of non-haven bankers salivating to receive such transfers.  But these are problems for others to ponder and solve.  So when I say "invade Switzerland" I mean do everything that is necessary to take over its banks and the wealth they hold.

Nor have I looked into how we could square such an invasion with the United Nations.  Do we just need Security Council approval?  Or everyone's?  It does seem that the vast majority of countries stand to gain from the plan.  The problem is that the governments of those countries might not be so happy about it . . . .

When you think about it, the case for invading Switzerland is a lot stronger than that for invading Iraq or Afghanistan.  In those cases, the vast majority of the population had nothing to do with the actions that justified our invasion -- they did not elect their governments, and probably did not favor the government's policies.  And yet we invaded both, and killed a large number of innocent civilians in the process.  As I understand it, our main justification for doing so was to prevent  additional attacks on the United States.  But we'll never know if it "worked," or if the hostility that we've provoked will ultimately lead to worse attacks.

Of course, cynics think we did it for the oil, or merely at the behest of those who knew that they'd get lucrative contracts for going in and rebuilding everything that we knocked down in the process of the invasion (thinking George Schultz, CLI, and Bechtel here).

To get support from the right people, our plans might have to include doing some damage.   Unfortunately, the "right people" in this day and age probably think that the possibility of Swiss Bank accounts and offshore tax havens is actually a good thing, or (if Hurley is right) are holders of those accounts themselves.

All in all, this may well be the ultimate case in which the ends would justify the means.  Indeed, we would take pains to ensure that the means are both bloodless and benevolent.  We could appoint a neutral judicial panel, which, in a fully transparent process, would look at each account and make a determination of where the funds should go.  In some cases -- if the account was owned by someone who earned the money through healthy capitalistic practices (say, Mitt Romney) -- we might even give most of it back.  But if it was money represents foreign aid that was stolen from its rightful recipients by a third world dictator -- or if it was siphoned off of U.S. Iraq rebuilding funds -- the outcome could be very different.

The Hurley blog says that the IRS (in 2009) was trying to get the names of 52,000 U.S. accountholders from UBS (a historically corrupt and/or very unlucky Swiss bank), and Wikipedia confirms this, and indicates that some settlement was reached in 2010 where the US got access to records for some (it doesn't say how many or what percent of te 52,000) tax evaders.  Apparently, they (and other European tax havens including Luxembourg, Liechtenstein, Andorra, and Austria) did relax the bank secrecy laws somewhat around this time.  But that's not the point.

The Hurley blog also quotes a Swiss official as saying that its banking secrecy laws essentially provide employment for one million people, and that doing away with those laws would cause those people to become unemployed.  Velcome to the global economy, volks!

Off Shore Tax Havens

More later, but for now, just read up on tax havens in James Henry's recent report, The Price of Offshore Revisited.  The link is to a summary of the report, which may or may not be available in full at the Tax Justice Network's website (I couldn't easily find it, although the summary says that all documents mentioned are at the website).

Bottom line is that $21-32 trillion dollars globally is being held in hidden, off-shore accounts.  While some of this money is doubtless the fair reward of enterprising capitalists like Mitt Romney, much of it is doubtless the ill-gotten gains of third world dictators and the like.  But the bottom line is that it should all be subject to taxation by somebody.  That's a LOT of money.

I heard him on the radio on Democracy Now explaining that part of the problem is US companies putting their intellectual property offshore.  Apparently, Google saved 3 billion dollars in taxes by parking its IP in Bermuda or somewhere.  Here's part of the transcript, which is available in full here:


AMY GOODMAN: What about large corporations? You talk about intellectual—moving intellectual property offshore—
JAMES HENRY: Yeah.
AMY GOODMAN: —corporations like Google and Pfizer.
JAMES HENRY: Right. Well, in our film, We’re Not Broke, which was a Sundance documentary, we discussed corporate tax evasion. And this is the latest trend in the software industry and also in the healthcare industry, drug industry. Pfizer, Google, Microsoft, companies like General Electric are parking their intellectual property, their brands and software, offshore in places like Bermuda and paying royalties to themselves and essentially parking the profits in these low-tax jurisdictions and not paying any taxes on it. So, Google last year saved about $3 billion by that. So if you have, you know, this core kind of value, intellectual capital, moving offshore to low-tax havens, where it’s never been produced, essentially is a kind of, you know, decapitalization of the U.S. And all of these countries [sic companies?] now also parked all these profits abroad to get tax breaks, and then they want a deal when they bring the money back. They want a repatriation tax cut, 5 percent.
AMY GOODMAN: So, what should happen?
JAMES HENRY: Well, we’ve tried this repatriation tax cut in 2004. It didn’t produce any jobs. And we shouldn’t—absolutely shouldn’t get in—the corporate—give in to this lobby. The corporate income taxes and personal income taxes have dropped steadily since the 1980s on high-income corporations. And, you know, at the same time, we’ve seen the growth of this offshore haven. So it isn’t driven by tax rates; it’s driven by greed.

--
And yet, when companies like Pfizer, Google, Microsoft, and GE lobby, Congress listens.  Congress writes strong IP laws for these companies on the basis that strong IP somehow benefits the United States, but it is increasingly difficult to see where that benefit actually comes from.

For Profit Colleges -- Taxpayer Funded Ripoff?

Education as Industry.  Have we come full circle?  The original idea behind public education was, after all, simply to turn out students that would be good factory workers.  Proponents likened public education itself to a factory, with students as the finished products.  With the rise of the government-sponsored for-profit education "industry," the actual education of students has become a secondary consideration -- all that matters is profit.  And with government funds involved, the idea that the free market will somehow make everything alright simply doesn't apply.  When the government is throwing money at a problem, the only question for the "capitalists" is how much you can grab -- by complying with the letter (and rarely the intent) of the government program, and lobbying the government to ensure that the program stays in place or grows.

Senator Harkin released a report a couple of days ago that nicely illustrates the unintended consequences of government-sponsored student loan programs.  The result is exactly what you would expect in a "free market" society where everyone acts in their own self-interest.  There is a pot of money (the federal student loan pool), and the way to grab your share of it is obvious -- start (or expand) a for-profit university, and then recruit a bunch of students -- including the homeless, the out-of-work, the poor, the mentally ill, and the just plain unmotivated -- get their tuition money, and then let nature take its course.   The tuition is paid, so it doesn't matter if they graduate -- nearly half of the students never do. And since this is a for-profit business in a capitalistic society, the CEO can name his own price.  But never forget -- these are CEO salaries that are paid by taxpayer funds. 

Here are the key points from the Tamar Lewin's New York Times article on the subject:

"According to the report . . . taxpayers spent $32 billion in the most recent year on companies that operate for-profit colleges, but the majority of students they enroll leave without a degree, half of those within four months.  "

--Note that a Washington Post article from December 2010 (discussed below) described this as a "$30 billion industry" -- sounds like the price keeps going up (i.e. 32 is more than 30, AND the "industry" presumably has some source of income other than taxpayer money).  One thing I'm not seeing an answer to is the question -- if they are loans, aren't students supposed to pay them back?  I.e. is the $32 billion figure just the amount that covers defaulting students?  For students who are paying the loans back, the program shouldn't cost anything, should it?  Would be interesting to know what the "real" total being lent is.

Interesting that the money is spent on "companies that operate" the colleges, not the colleges themselves.

Quoting Harkin:  

“In this report, you will find overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation . . . .  These practices are not the exception — they are the norm. They are systemic throughout the industry, with very few individual exceptions.”

The for-profit colleges reacted by complaining that they have been "unfairly targeted."  There's actually a kernel of truth in that -- it would have been nice if not-for-profit colleges could have been studied as well, since the student loan programs have also doubtless distorted tuition costs, recruiting practices, and student outcomes there as well.  But first things first -- we know that the non-profits aren't paying their CEOs millions of dollars a year (although if I had to guess, a lot of the administrators of non-profits are overpaid). 

"Many Republicans see such colleges as a healthy free-market alternative to overcrowded community colleges, offering useful vocational training and education to working adults who will not attend more traditional institutions."

--Sorry, it's not the "free market" when your whole industry is funded by government largesse.  Same with the pharmaceutical industry (explanation elsewhere -- patents, though necessary, are indisputably government largesse).  Here are some more takeaways:

• Enrollment tripled from 1998 to 2008, to about 2.4 million students. Colleges owned by publicly traded companies and private equity firms account for 3/4 of the students.
• In 2010, the colleges studied had nearly 10 times as many recruiters as career-services staff members (32,496 to 3,512).
• I wonder whether this "industry" has an appreciable effect on unemployment statistics.  It clearly provides at least 32,496 plus 3,512 jobs.  And my guess is that full-time students don't count towards unemployment, so some percentage of the 2.4 million enrolled students (those that are full-time) might otherwise be counted as unemployed.
• On average, the for profit education companies spent 22.4 percent of revenue on marketing and recruiting, 19.4 percent to profits and 17.7 percent to instruction.  
• The report doesn't say what is normal for a school, but 17.7 % for instruction seems very low.  And 19.4 percent profits!  Any economist will tell you that something is VERY wrong here.  You don't get profits -- much less 19.4 percent -- in a competitive marketplace.  Here, the "profits" simply reflect how much of the governmental pie you are able to "grab" without paying it to its intended beneficiaries -- the students, and society, that is supposed to benefit from a better-educated citizenry and workforce.
• CEOs got an average of $7.3 million; but Robert S. Silberman, Strayer Education's CEO, made off with $41 million (including stock options) in 2009.  The Washington Post article discussed below makes it clear that over the years, John Sperling skimmed over a billion dollars off of this government-funded racket.
• $8 million on lobbying in 2010; $8 million more in the first nine months of 2011.
• In most cases, more than 80 percent of revenue comes from taxpayers.
• The rule is that at least 10 percent of revenue must come from sources other than the Department of Education. Veterans' benefits count toward the 10%, so the companies are aggressively recruiting students from the military.
• The pot is getting bigger.  The Apollo Group (University of Phoenix) got $1.2 billion in Pell grants in 2010-11, plus $210 million from the G.I. Bill. But 2/3 of Apollo’s associate-degree students don't graduate.
• Associate-degree and certificate programs at for-profit colleges cost about four times as much as those at community colleges and public universities.
• The for-profits set tuition at almost exactly the maximum expected federal aid for a student.
• The report includes alarming anecdotes and emails that make clear that it's all about the student loans (Alta Colleges:“so we can grab more of the students’ Stafford.”)
• Students are misled -- recruiters tell students that the cost will be $4800 per term, but fail to mention that there are five or six terms a year rather than the usual two or three.  The students don't necessarily care, since they are using federal money anyway (although they should, since they'll have to pay it back).
• "At many schools, students learned only after the fact that their credits would not transfer to another college or university or qualify them for the professional licensing they sought."
• 96% of for-profit students take out loans, compared to 13% at community college and 48% at public universities.  Although for-profit students are only 13 percent of college students, they account for 47 percent of loan defaults.
• "Colleges with very high loan default rates in the two years after graduation (now changing to three years) lose their eligibility for federal student aid. As a result, the report found, many of the for-profit colleges try to move students having trouble with repayment into deferral or forbearance until they are past the years the government monitors."
• would be good to know how "high" is high enough to disqualify them.  In any event, its kind of sad that they can dodge the problems simply by delaying them.  I.e. by picking two or three years, that simply provides a roadmap that enables colleges to avoid the consequences.

-- Interestingly, as far as I can tell, the Washington Post has not yet reported on the Harkin report, although it's only been two days.  I did find this article from December 2010, which seems to be a fairly straightforward account of some of the problems, but which also mentions that the Washington Post Co. -- along with Goldman Sachs -- was (at least at the time) a major investor in what it calls the "$30 billion [for-profit education] industry."  The article itself (which spans 5 pages) paints a somewhat flattering portrait of billionaire for-profiteer John Sperling, but also quotes Harkin about some of the problems with the Pell Grants.  One theme of the article is that George W. Bush's administration loosened restrictions on for-profit colleges, whereas the Obama administration has been trying to tighten them.   Another example of Republican de-regulatory hypocrisy -- it's not "deregulation" when you're loosening restrictions on government handouts to billionaires.