On middle class woes (and personal responsibility)

Hey, why not make it two posts about personal responsibility in one afternoon, right? Let's go for it.

Since it's election season, you're about to be bombarded with misleading statistics from both sides talking about how good and terrible the economic recovery of the last four years has been. The Democrats will tell you (I've seen it ad nauseam already) that Obama has presided over 29 consecutive months of job growth. True, but missing the point.

As for the Republicans, they're likely to counter with something like this:

Although the economy shed thousands of middle-wage jobs during the Great Recession, the bulk of the employment gains since then have been in low-wage arenas such as retail, food-service, and home-care industries, according to a new report released by the National Employment Law Project, a liberal research group.

Low-wage jobs, defined as those that pay no more than $13.83 an hour, accounted for 21 percent of recession job losses but have accounted for 58 percent of the recovery growth.

At the same time, middle-wage occupations (jobs with an average hourly rate between $13.84 and $21.13) accounted for 60 percent of the jobs losses, yet accounted for only 22 percent of the job growth, according to the NELP study which analyzed federal census and labor data.

Indeed, one study showed that among those workers who lost jobs between 2009 and 2011 and subsequently found new jobs (many did not), a full one-third were accepting new jobs with a 20% or greater pay cut. That's a problem, and it shows a significant weakness beneath the declining headline unemployment rate that President Obama hopes to tout this fall. Clearly, not all jobs are created equal, and the recent trade-off has been a terrible one for most Americans, despite what the headline stories would love for you to believe.

This low-quality job growth only continues a steady trend of devastation of our country's middle class, a trend that I largely blame on misguided Fed policies of dollar debasement, all of which benefit the rich at the expense of the poor. But as Mish Shedlock wisely asks, who is really to blame here?

Citing a study from the Pew Research Center, Mish posted the following graphic:

He then wrote,

Note that 62% blame politicians and 54% blame financial institutions, but only 8% blame themselves. 

Five Questions 

1. Did banks force people to take out loans they could not pay back, or did people do so voluntarily? 

2. Who elects Congress? 

3. Do people make enough effort to understand interest rates, debt, the economic policies of politicians, exponential math and its implications, the untenable nature of public union pension plans and promises? 

4. Do a significant number of people (if not the majority) get their economic views (assuming they have any economic views) from The View, Oprah, The Talk, or CNBC? 

5. Why did PEW leave off the Fed and Fractional Reserve Lending from the list of answers? 

Two Bonus Questions 

1. Would the majority of respondents know anything at all about the Fed and Fractional Reserve lending had the PEW listed those options? 

2. Who is really to blame for what is happening?

Preach on, Mish.

If you want to blame the banks or the politicians for all of your problems, fine. Go ahead. It's as good a cop-out as any. But at the end of the day, it is OUR unwillingness to pull our money out of the banks (or to stop borrowing money from them), it is OUR unwillingness to hold politicians accountable for their incompetence, it is OUR continued refusal to stand up for ourselves and take even the slightest modicum of responsibility for our own nation's destiny that is to blame for all of the negative outcomes of the last 10 to 15 years (or more).

The housing bubble and its ugly aftermath could not have existed without the greed and financial illiteracy (call it "innumeracy" if you must) of the majority of the nation's citizenry. Ditto the burgeoning debt crisis that threatens to rob a generation or more of its retirement. As I've mentioned here before, if you make yourself a target, then you're practically guaranteed to be taken advantage of sooner or later. This was all our own doing, but we've seemingly lost our ability as a nation to take responsibility for our own decisions (or refusal to make decisions, whatever).

I'm all about personal responsibility, and I always have been. Therefore, I don't blame Congress, because I haven't done anything significant in my life to change the composition or approach of our Congressmen. Congress does what it does because we haven't required them to do anything differently.

So I do blame myself, because I obviously haven't done enough to change the world in which I live. And in a sense, taking ownership of that is incredibly liberating. Are you willing to do the same?

[National Journal]

Cell phone ban update

A couple of years ago, I wrote a post railing against the idiocy of cell phone bans in cars (and Transportation Secretary Ray LaHood's self-described "rampage" against automotive cell phone usage). I wrote then,

Secretary LaHood himself recognized the need for "personal responsibility", which has been in a precipitous decline over the past several decades. You don't create personal responsibility by legislating choices away from the people; quite the opposite, in fact. The more people rely on the government to save them from themselves, the less incentive they will have to make the right choices in the first place (or to deal with any developing problems on their own). Over-reliance on the government has been a key factor behind the disappearance of personal responsibility in America. 

Often, these types of policies and bans are quick-fix responses to avoid taking on more complicated issues. The fact is, distracted drivers existed on the road long before cell phones were prevalent, and they'll exist even if we do ban cell phones in cars entirely. We need to focus on the real problem--irresponsible, unqualified drivers--rather than their symptom, cell phone usage.

I still firmly believe the words that I wrote then—I think the "nanny state" concept is flawed at its core, because it encourages people to outsource responsibility for their actions. That "loss of personal responsibility" dynamic is one that I've more recently discussed in this post and this post, from varying angles. And wouldn't you know it, there's some more recent data that backs up my original hypothesis.

You can take the driver away from the cell phone, but you can't take the risky behavior away from the driver. That's the conclusion of a new study, which finds that people who talk on their phones while driving may already be unsafe drivers who are nearly as prone to crash with or without the device. The findings may explain why laws banning cell phone use in motor vehicles have had little impact on accident rates.

The study involved 108 people, equally divided into three age groups: 20s, 40s, and 60s. For each person, the researchers correlated answers on a questionnaire with data collected from on-board sensors during a 40-minute test drive up Interstate 93 north of Boston...

No cell phones were allowed during these trips. Instead, before they got behind the wheel, the study participants filled in answers about how often they used a cell phone while driving, how they felt about speeding and passing other cars, and how many times in the last year they had been warned or cited for speeding, running traffic lights and stop signs, and other infractions. The team grouped the participants into "frequent users" (those who talked on the phone while driving a few times a week or more) and "rare users" (those who talked while driving a few times a month or less).

Compared with people who rarely talked as they steered, frequent cell phone users drove faster, changed lanes more frequently, spent more time in the left lane, and engaged in more hard braking maneuvers and rapid accelerations, according to the SUV's onboard equipment. Frequent cell phone users, for example, zoomed along about 4.4 kilometers per hour faster on average and changed lanes twice as often, compared with rare users.

"These are not 'oh-my-god' differences," says study leader Bryan Reimer, a human factors engineer at the Massachusetts Institute of Technology (MIT) in Cambridge. "They are subtle clues indicative of more aggressive driving." What's more, he says, other studies have linked these behaviors to an increased rate of crashes. "It's clear [from the scientific literature] that cell phones in and of themselves impair the ability to manage the demands of driving," Reimer says. But "the fundamental problem may be the behavior of the individuals willing to pick up the technology."

Right. The fact of the matter is, if you ban cell phones in cars, there will still be idiots out there who are fiddling with the radio, screwing with their iPad, trying to do their hair (or shave) while driving, or just, you know... speeding and switching lanes all over the place.

Simply put, the people who are most likely to use their phones in their cars ARE ALREADY BAD DRIVERS, so to blame their accidents on their cell phones is basically ludicrous—it's a basic and classic correlation-versus-causation screwup, which we're seeing all over the place these days. We can blame as many accidents as we want on "cell phone use", but the implicit assumption in doing so is that absent a cell phone, the driver in question would have been paying attention and doing everything right. I think that assumption is wrong, and I think that this study helps back up my belief.

As long as we are allowing bad drivers to obtain licenses and continue driving in dangerous fashions, there will be accidents out on the roads. The only thing we should be looking to ban is bad drivers, and I haven't seen any legislation out there that attempts to do that (unless... driverless cars... nahhhhh). If there was, I'd support it in a heartbeat.

[Science]

Quote of the Week (Paul Ryan edition)

Alright, time to jump into things post-Labor Day. I hope you're all enjoying your fall, even though it won't "officially" start for a couple more weeks. It's football season, so it's fall, simple as that.

Of course, it's also an election year, which means that fall is going to be... just mind-numbingly annoying. I'm going to try my best to ignore the majority of the political noise over the next couple of months, because so much of it is specifically designed to inflame and distract and do anything but talk about the actual issues which are plaguing our country—issues which our politicians refuse to address, and for which voters refuse to hold our politicians accountable—but I digress. Wait, where was I?

So at any rate, while I'm going to try to ignore most of the political noise, this week's Quote will indeed be somewhat political in nature. No, I'm not going to quote Jon Stewart or Stephen Colbert, even though it would've been incredibly easy to do so (a perfect example from Stewart: "Do you know how hard it is to get money down in Tampa that doesn't have body glitter on it?"... you see, it's funny because Tampa is loaded with strip clubs). Instead, I'm going to let Paul Ryan do what apparently comes naturally to him: tell a lie. Without further ado...

This week's QUOTE OF THE WEEK

"I hurt a disc in my back, so I don't run marathons anymore... I had a two hour and fifty-something [personal best]... I was fast when I was younger."
                                     - Republican Vice Presidential nominee Paul Ryan

Wow. That is fast. That's a sub-7 minute mile pace, sustained for a whole marathon. I'm impressed. That's not easy.

You see, when Romney chose Ryan to be his running mate, it seemed to be a solid, safe choice. Ryan had built a reputation on being/pretending to be tough on budgetary issues, and that's an issue that's seeming to resonate with voters this year (which I consider a positive, even if I think neither candidate is prepared to honestly do anything about it). Perhaps more importantly, Romney seemed to be avoiding the Sarah Palin landmine that exploded on John McCain four years ago—Ryan wasn't the type to say anything stupid, or get his name in the headlines, or anything like that. Hell, I'd even (sorta) praised the guy here on my blog once, and that's not easy for me to do. And hey, he's young and athletic, too!

But... um... whoops. You see, Paul Ryan never broke 3 hours in a marathon. He never even broke 4 hours. His best time was a 4:01 (not bad, just not overwhelmingly impressive), which just so happens to be about two minutes slower than Sarah Palin's personal best. That hour difference amounts to more than two minutes per mile, which is an obviously significant amount.

Could Ryan have just randomly screwed up here? Sure, it's possible, if not particularly probable for anyone who's spent more than a minute of their lives training for a marathon (believe me, I'd remember if I'd broken 3 hours up in Boston a couple of years ago).

But as I remarked on Twitter over the weekend, when you lie for a living, sometimes it's hard to know where the truth ends and fiction begins. And for Paul Ryan, it seems like lying is just quite simply what this guy does. To wit, after his incredibly misleading convention speech, none other than FOX FREAKING NEWS remarked that Ryan's speech "was an apparent attempt to set the world record for the greatest number of blatant lies and misrepresentations slipped into a single political speech." Um... yikes.

So, congratulations Mitt Romney. Your "uncontroversial" pick for running mate has already managed to put his foot in his mouth on repeated occasions, lying in a manner that has made even Fox News blush. That's not easy.

Hey, Ron Paul, you doing anything this November?

Song of the Week(end)

It's Labor Day weekend, the 'Hoos are kicking things off tomorrow against Richmond, and I'm ready for football season. Sorta. I'm still wondering what happened to my summer. Who knows... let's do this.

So with a nod to the College Gameday boys, here's Big & Rich with "Comin' to your City". Happy long weekend, people. Maybe next week I'll get cracking on some of those 30-something blog post drafts I've got in my queue...

Clip of the Week

A lot of good stuff this week, but one clip stands out above the rest.

I loved this catch by the Blue Jays' Rajai Davis, and this tag-team catch by a couple of San Francisco Giants was entertaining as well. I'm also interested to watch this documentary about the knuckleball, given my well-known love of Tim Wakefield. Elsewhere in the sports world, we had this spectacular goal from Lionel Messi, which you really have to watch in slo-mo to fully appreciate.

In other random news, I was wildly entertained by this video showing that monkeys reject unequal/unfair pay structures (I love monkeys), and I thought this time-lapse of Los Angeles at nightfall was incredibly well done. 

Finally, in the political realm, I may not totally agree with Senator Rand Paul's political views (I like his dad a great deal, but I happen to think Rand is a nutjob), but I just can't disagree with his rant against Congress and its ridiculous ways of doing business. He's right to complain, and I salute his efforts to bring transparency (and fairness) to our political process, even if it they are ultimately all for naught.

But hey, speaking of nutjobs, this dude made a bicycle entirely out of cardboard. That's insane! It's also awesome. It's also your Clip of the Week, because yeah.


Izhar cardboard bike project from Giora Kariv on Vimeo.

On review factories and web-based deception

I've written about the dangers of relying on internet reviews here once before—I also wrote a blog post discussing the practice known as "astroturfing"—but the concept of "review factories" was a new one to me. Of course, I can't say that I'm in the least bit surprised...

In the fall of 2010, [Todd] Rutherford started a Web site, GettingBookReviews.com. At first, he advertised that he would review a book for $99. But some clients wanted a chorus proclaiming their excellence. So, for $499, Mr. Rutherford would do 20 online reviews. A few people needed a whole orchestra. For $999, he would do 50.

There were immediate complaints in online forums that the service was violating the sacred arm’s-length relationship between reviewer and author. But there were also orders, a lot of them. Before he knew it, he was taking in $28,000 a month...

Reviews by ordinary people have become an essential mechanism for selling almost anything online; they are used for resorts, dermatologists, neighborhood restaurants, high-fashion boutiques, churches, parks, astrologers and healers — not to mention products like garbage pails, tweezers, spa slippers and cases for tablet computers. In many situations, these reviews are supplanting the marketing department, the press agent, advertisements, word of mouth and the professional critique...

“The wheels of online commerce run on positive reviews,” said Bing Liu, a data-mining expert at the University of Illinois, Chicago, whose 2008 research showed that 60 percent of the millions of product reviews on Amazon are five stars and an additional 20 percent are four stars. “But almost no one wants to write five-star reviews, so many of them have to be created.”

"Created," in this case, of course means "bought". In this case, you pay Todd Rutherford a few hundred bucks, he goes onto Craiglist and finds a bunch of people to write reviews for 15 bucks apiece, and then he pockets the remainder. Nice business. Unfortunately for Todd, it didn't take long for his business to be exposed as a scam, and GettingBookReviews.com is no longer operational. But many of its competitors no doubt still exist, and it's nearly impossible to know how many there are and which products they're reviewing.

I hadn't seen the research saying that 80% of Amazon reviews were 4 or 5 star reviews, but it's definitely an eye-opening statistic. The take-home lesson here is pretty simple—if you want to know whether the product you're buying on the internet is any good, do your own research. If you outsource your research to "anonymous" internet reviewers, and trust in their opinion without verification, then you'll get what you pay for (actually, you'll get what the company paid for, but I digress).

But if you do insist on trying to discern which internet reviews are legitimate and which are fake, then Barry Ritholtz has passed along a helpful little guide of what to look out for. I'm sure a lot of these tricks will be familiar to many of you already...

Of course, what I would suggest instead is that you do what I already do—ignore the 4 and 5 star reviews entirely, and just read all of the 1 and 2 star reviews, almost all of which are legitimate. Sure, an enterprising company could be paying people to write negative reviews about its competition, but it's much less likely. So if you're looking for advice from internet reviews, that's the place to go. But of course, there are always better places to go...

[Yahoo Finance]
(h/t Falkenblog and Barry Ritholtz)

Quote of the Week (Brockton edition)

Whoa, it's Thursday already? And I haven't written a single blog post yet this week? And there's seriously football on tonight? Like, real actual football? Man, what happened to my summer? And why do I have 38 unfinished blog drafts sitting in my queue? I mean seriously, 38?

Alright, it's time to get back to work around here, starting with your belated Quote of the Week. This one comes from an article that I came across while I was on vacation, and it follows in a theme that I first teed up in this blog post, and then briefly followed up on at the end of this blog post. On multiple occasions I've called for people to boycott the big banks because of their continued criminal behavior, because the banks won't get the message until we hit them in the pocket with it.

There have been a few consumer-led move-your-money campaigns over the past few years, but the simple fact is that large institutions (governments and corporations) can single-handedly keep these banks in business even if the consumer depositors don't. Not only can they do so, but they're almost guaranteed to do so, in large part because they need the banks in order to remain solvent (who else is going to finance their ever-increasing debts?).

But sooner or later, even those governments and corporations are going to say "enough is enough" (whether as a result of taxpayer pressure or their own decision-making process), and we may be nearing that tipping point. The LIBOR-fixing scandal and the bid-rigging scandal were both instances where banks boldly conspired to effectively (or directly) steal money from local governments, indicating a brash assumption on their parts that they are completely above the law and have governments in the palms of their hands (not a bad assumption, frankly, but almost certainly taken too far).

This is a severe miscalculation on the banks' part, a banking equivalent to biting the hand that feeds them. City and local governments are seriously pissed, and they're starting to fight back. How appropriate, then, that one of the first cities to come out swinging was Brockton, Massachusetts, the so-called "City of Champions", home to Rocky Marciano and Marvin Hagler. From The Boston Globe, via Naked Capitalism's Yves Smith:

This week's QUOTE OF THE WEEK

"Brockton will move its $170 million payroll account out of Bank of America, a move the city says makes good business sense but which advocates for residents facing foreclosure see as a just response to the national lender’s role in the subprime mortgage crisis."
                                        - The Boston Globe

For what it's worth, Brockton's City Treasurer went out of his way to stress that this was a strictly business decision, motivated by a better offer from local bank Eastern Bank. But he also admitted that he was sending a message to Bank of America with this move, and that he is revisiting the city's other working relationships with the bank (including school lunch accounts and health care trust funds) to see if they might be better served elsewhere.

Politicians and governments are funny beasts, and they have a tendency to change their tunes very quickly when public opinion shifts. Banks have been able to count on the support of government policies for many decades now, but it's clear that they've taken advantage of that support and in many cases betrayed the governments' trust. If at any point in the future any city government believes that there is more to be gained politically from leaving a bank than from continuing to support it, you can bet that those governments will make the politically popular move, banks' bottom lines be damned.

Might this Brockton decision be just an isolated incident in an otherwise unchanged environment? Quite possibly. But I'm wondering if this might be a warning shot, and if a tipping point might be nearer than many people (and banks) think. We'll see.

[Boston Globe]
(h/t Naked Capitalism)