One day during this past fall term, I stepped into the elevator at work, and was nearly overcome by the stench of cigarette smoke. Since smoking is prohibited in all state buildings, including college buildings, I wondered if someone had been smoking in the parking garage (also not allowed, but not enforced on our campus), next to the elevator access door.
I mentioned the smell to one of our staff. He explained the source of the problem. The majority of the students in our respiratory care program smoke, and when they get their short breaks, they rush, en mass, from their third floor classroom, to the elevator and step outside the building, where they fire up their smokes for 10 minutes, and then at the last minute cram themselves back in the elevator carrying the putrid smell with them.
I have always found it disturbing that such a high percentage of our students smoke, and that every break between classes is a cigarette break. But as an asthma sufferer, I find it obscene that the majority of our respiratory care students are smokers. These are the people who hope to be entrusted with the care of people who suffer from breathing disorders.
Kentucky ranks number 1 in the percentage of adults who are smokers. More than 28 percent of Kentuckians smoke (2007 CDC report) . A study done in 1999-2000 found that 23 percent of pregnant women in Kentucky smoked. Though I have no hard data, I'm certain that both figures are higher in eastern Kentucky than in the urban portions of the state.
The political power of tobacco interests and smokers in Kentucky shows in the low cigarette taxes; only 30 cents per twenty-pack in 2008, lower by at least half compared to all but one of the state surrounding Kentucky. Other evidence of political power: the state of Kentucky has declared smokers a "protected class," and it is illegal to discriminate against smokers in employment and education (Cincinnati Enquirer October 22,2008), despite the well documented fact that smokers are more expensive employees than non-smokers. They are more likely to be absent, their medical costs are higher on average, and they always seem to be out taking a smoking break when you need them.
It seems more than reasonable to me that being a non-smoker should be a requirement for entry into certain fields of employment -- respiratory therapy being one of those. If nothing else, allied health programs (nursing, respiratory care, radiography, physical therapy assistant, and so forth) ought to put a high priority on developing "quit smoking" programs for their students. Many medical facilities, even in Kentucky, are creating smoke free campuses; that is they are eliminating smoking not only in all their buildings, but in all the outside areas between the buildings. Imagine being some one who smokes a pack or more a day, and discovering that in your job at a hospital or medical complex that you have to walk a block or more, and then stand on a busy public street in order to smoke. The Appalachian Regional Hospital (ARH) chain that serves eastern Kentucky has not yet moved in the direction of smokeless campuses, but not all graduates of allied health programs in eastern Kentucky will remain in the region.
Kentucky needs to consider raising cigarette taxes as well. It makes good health policy and would provided needed revenue.
Sunday, December 28, 2008
Thursday, December 11, 2008
Without all that troublesome knowledge
It is the end of the semester, the final day, final deadline for all written work. One of my students, handed me an entire semesters worth of work -- six essays on topics from as long ago as August -- today. Unlike some faculty, I do accept late work, but I do penalize it, on the earliest essays she will lose at least 50 percent of the points as a late penalty. This isn't particularly unusual. Every semester I have a few students who do this, wait until the last few days of the semester and turn in a pile of essays.
This student's essays were well written, no problems with grammar, sentence structure, spelling or punctuation. They were neat (although hand written which is unusual in this day and age). They were original, no plagiarism -- for which I was deeply grateful. All too often the student who waits until the last day to turn in the semesters work, hopes to slide past you with egregiously plagiarized work, copied in large part (or in whole) from some Internet site. [Somehow they never seem to realize that if they could find the information, so can I]. What disturbed me about these essays, was something, unfortunately, not unique to this student -- there was no evidence in the essays that she had even opened, much less read, any of the assigned readings, or learned anything at all from the course materials. Instead she held forth on her personal opinions about American society, opinions that she'd held before she entered my classroom, and which were no more informed today, after 16 weeks by the facts and research, than they had been when she started the class.
One of the problems with our college students (and one that is fairly wide spread today) is that a larger and larger percentage of the students attending community and lower level state colleges do not actually want a college education (and are not prepared for it in any case). What they want is a good job that will pay a living wage. They have no interest in learning, no thirst for knowledge. In fact, many of them actively resist learning anything new, especially things that might challenge their most precious prejudices and preconceptions. But they have been told (over and over from many sources) that if they want to decent job they have to get a college degree.
So they do want credit for classes and they'd prefer A's over B's and B's over C's -- although they don't want to have to learn anything to get those grades, they want me to give them a grade for spouting back what they already knew when they walked into the classroom. [Note math teachers and sciences teachers do not have this particular problem, because students realize they don't know anything about math and science when they walk into the class -- the problem math and science teachers face is students who want good grades for "trying" regardless of whether or not they actually learn anything.
The source of the problem lies in our economic system which bit by bit has stripped away most of the jobs (manufacturing, basic materials fabrication) that used to exist that would provide a decent, living wage for someone with a high school diploma (or less). We've sent those jobs to other countries (where a living wage is a lot less, and therefore profits are higher), or we've replaced live workers altogether with robots and computerized, programmable technology.
My students are right; to get a decent job that will pay a living wage today, generally does require at least a two year degree, if not a bachelor's degree or more. They just want to get the degrees, as my husband likes to say "without all that troublesome knowledge."
This student's essays were well written, no problems with grammar, sentence structure, spelling or punctuation. They were neat (although hand written which is unusual in this day and age). They were original, no plagiarism -- for which I was deeply grateful. All too often the student who waits until the last day to turn in the semesters work, hopes to slide past you with egregiously plagiarized work, copied in large part (or in whole) from some Internet site. [Somehow they never seem to realize that if they could find the information, so can I]. What disturbed me about these essays, was something, unfortunately, not unique to this student -- there was no evidence in the essays that she had even opened, much less read, any of the assigned readings, or learned anything at all from the course materials. Instead she held forth on her personal opinions about American society, opinions that she'd held before she entered my classroom, and which were no more informed today, after 16 weeks by the facts and research, than they had been when she started the class.
One of the problems with our college students (and one that is fairly wide spread today) is that a larger and larger percentage of the students attending community and lower level state colleges do not actually want a college education (and are not prepared for it in any case). What they want is a good job that will pay a living wage. They have no interest in learning, no thirst for knowledge. In fact, many of them actively resist learning anything new, especially things that might challenge their most precious prejudices and preconceptions. But they have been told (over and over from many sources) that if they want to decent job they have to get a college degree.
So they do want credit for classes and they'd prefer A's over B's and B's over C's -- although they don't want to have to learn anything to get those grades, they want me to give them a grade for spouting back what they already knew when they walked into the classroom. [Note math teachers and sciences teachers do not have this particular problem, because students realize they don't know anything about math and science when they walk into the class -- the problem math and science teachers face is students who want good grades for "trying" regardless of whether or not they actually learn anything.
The source of the problem lies in our economic system which bit by bit has stripped away most of the jobs (manufacturing, basic materials fabrication) that used to exist that would provide a decent, living wage for someone with a high school diploma (or less). We've sent those jobs to other countries (where a living wage is a lot less, and therefore profits are higher), or we've replaced live workers altogether with robots and computerized, programmable technology.
My students are right; to get a decent job that will pay a living wage today, generally does require at least a two year degree, if not a bachelor's degree or more. They just want to get the degrees, as my husband likes to say "without all that troublesome knowledge."
Wednesday, November 26, 2008
roots of anti-intellectualism in recent years
In the wake of this November's election of Barack Obama, dozens of media commentators have heralded this as a welcome respite in the anti-intellectualism that has dominated American society and American politics for the past thirty years.
One media pundit (sorry I can't remember who) has said that Obama, unlike other presidents of the last forty years is "openly intellectual." Sure Clinton was a scholar during his college years, but he down played his scholarly background behind a folksy southern persona, leading voters to think that he just might be a "red-neck." [By the way, if Jeff Foxworthy is right, I too just might be a red-neck, since the instructions on how to reach my house include "and then you turn off the paved road" and my house originally came with wheels].
It is tempting to say that the roots of anti-intellectualism in American politics come from the simple lack of brainpower of the common man (or woman). They aren't so smart so they mistrust anyone who is openly interested in the life of the mind and intellectual ideas. Given that Obama, "openly intellectual" as he is, garnered the largest percentage and larger number of the popular vote in recent history, suggests that such a simple explanation is not sufficient. Perhaps that is the motivation of a few individuals here and there, but it doesn't help to account for the way in which anti-intellectualism is structured into our society, especially into our educational system. Also it doesn't explain why Republicans candidates and voters are more likely to exude contempt of intellectual accomplishment even more than Democrats do.
The key to understanding anti-intellectualism is found in our economic system and its current troubles. It is clear, beyond doubt, that our economy depends upon people buying things. When consumer confidence goes down, and people cut back on their purchases, our economy tanks. Regardless of all the sanctimonious sermons about people spending more than they earn, and going into credit card debt, the reality is, that our economy has been built on people spending beyond their means.
In troubled times like these, the rational choice for individuals is to save their money and not spend it, but what makes sense for individuals is exactly opposite what is needed to recharge the economy. Certainly there are economic systems that do exist and have existed that do not rest on consumerism and credit, but ours is not one of them.
When the health of the economy depends upon ordinary people spending and consuming larger and larger quantities of material goods, society must provide incentives to make people desire to spend beyond their means. One important tool in doing this is to attach cultural and social values to material things. Advertising is one means of doing this. Through advertising values of family, success, achievement, sexiness, love, and many others, are attached to material products.
More than a hundred years ago, Thorsten Veblen coined the term "conspicuous consumption" to describe the role of consumption in establishing status. The only thing that has changed since Veblen's time is that the use of consumption of luxury goods has been pushed further and further down the income scale. As a result, even low income teenagers will pay $36-$46 dollars for an Abercrombie & Fitch logo t-shirt, rather than $4-$6 for a similar quality blank t-shirt at Walmart. Where the wealthy rely on their peers knowledge of designers style (if you couldn't recognize a Chanel suit, a Lily Pulitzer frock, or an Dior gown, on sight your opinion hardly mattered), lower middle class and working class young people rely on large graphics of "high class" names spread across their chests, backs and down their arms.
When consumption is the bedrock of the economy, and appeals to status are crucial to encouraging continual consumption, there is little room to tolerate alternative, non-consumption based sources of status. Intellectual, creative and artistic pursuits -- except to the degree that they represent monetary exchange -- need to be actively discouraged since they can distract people away from consumption.
Degrees are fine, especially if they come from expensive schools, its knowledge and thinking that are viewed as bothersome. About fourteen years ago, the commencement speaker at the public four year college where I was then employed was a politically appointed state bureaucrat in a Republican administration. He congratulated the graduates on receiving their degrees, and then offered himself as an example of someone who had managed to get a college degree "without letting college change" him, or his beliefs and opinions in any way. This young Republican bureaucrat was proud of the fact that he had come through four years of college unscared by any troublesome knowledge that would undermine in any way the prejudices and attitudes with which he had entered college.
Similarly, art that commands high sale prices is fine, but art for art's sake is not. Negative attitudes toward the National Endowment for the Arts, and the artists that it supports demonstrate this latter view. Conservatives consider the only good art is that which has commercial value. The only artistic value is the value of the market place.
The ordinary individual who expresses distrust, fear and contempt for intellectualism or artistic creativity, is not thinking about promoting consumerism, but there are those in positions of leadership and influence, in government and the media, who are consciously undermining non-commercial sources of status and life satisfaction such as intellectual and artistic endeavor.
One media pundit (sorry I can't remember who) has said that Obama, unlike other presidents of the last forty years is "openly intellectual." Sure Clinton was a scholar during his college years, but he down played his scholarly background behind a folksy southern persona, leading voters to think that he just might be a "red-neck." [By the way, if Jeff Foxworthy is right, I too just might be a red-neck, since the instructions on how to reach my house include "and then you turn off the paved road" and my house originally came with wheels].
It is tempting to say that the roots of anti-intellectualism in American politics come from the simple lack of brainpower of the common man (or woman). They aren't so smart so they mistrust anyone who is openly interested in the life of the mind and intellectual ideas. Given that Obama, "openly intellectual" as he is, garnered the largest percentage and larger number of the popular vote in recent history, suggests that such a simple explanation is not sufficient. Perhaps that is the motivation of a few individuals here and there, but it doesn't help to account for the way in which anti-intellectualism is structured into our society, especially into our educational system. Also it doesn't explain why Republicans candidates and voters are more likely to exude contempt of intellectual accomplishment even more than Democrats do.
The key to understanding anti-intellectualism is found in our economic system and its current troubles. It is clear, beyond doubt, that our economy depends upon people buying things. When consumer confidence goes down, and people cut back on their purchases, our economy tanks. Regardless of all the sanctimonious sermons about people spending more than they earn, and going into credit card debt, the reality is, that our economy has been built on people spending beyond their means.
In troubled times like these, the rational choice for individuals is to save their money and not spend it, but what makes sense for individuals is exactly opposite what is needed to recharge the economy. Certainly there are economic systems that do exist and have existed that do not rest on consumerism and credit, but ours is not one of them.
When the health of the economy depends upon ordinary people spending and consuming larger and larger quantities of material goods, society must provide incentives to make people desire to spend beyond their means. One important tool in doing this is to attach cultural and social values to material things. Advertising is one means of doing this. Through advertising values of family, success, achievement, sexiness, love, and many others, are attached to material products.
More than a hundred years ago, Thorsten Veblen coined the term "conspicuous consumption" to describe the role of consumption in establishing status. The only thing that has changed since Veblen's time is that the use of consumption of luxury goods has been pushed further and further down the income scale. As a result, even low income teenagers will pay $36-$46 dollars for an Abercrombie & Fitch logo t-shirt, rather than $4-$6 for a similar quality blank t-shirt at Walmart. Where the wealthy rely on their peers knowledge of designers style (if you couldn't recognize a Chanel suit, a Lily Pulitzer frock, or an Dior gown, on sight your opinion hardly mattered), lower middle class and working class young people rely on large graphics of "high class" names spread across their chests, backs and down their arms.
When consumption is the bedrock of the economy, and appeals to status are crucial to encouraging continual consumption, there is little room to tolerate alternative, non-consumption based sources of status. Intellectual, creative and artistic pursuits -- except to the degree that they represent monetary exchange -- need to be actively discouraged since they can distract people away from consumption.
Degrees are fine, especially if they come from expensive schools, its knowledge and thinking that are viewed as bothersome. About fourteen years ago, the commencement speaker at the public four year college where I was then employed was a politically appointed state bureaucrat in a Republican administration. He congratulated the graduates on receiving their degrees, and then offered himself as an example of someone who had managed to get a college degree "without letting college change" him, or his beliefs and opinions in any way. This young Republican bureaucrat was proud of the fact that he had come through four years of college unscared by any troublesome knowledge that would undermine in any way the prejudices and attitudes with which he had entered college.
Similarly, art that commands high sale prices is fine, but art for art's sake is not. Negative attitudes toward the National Endowment for the Arts, and the artists that it supports demonstrate this latter view. Conservatives consider the only good art is that which has commercial value. The only artistic value is the value of the market place.
The ordinary individual who expresses distrust, fear and contempt for intellectualism or artistic creativity, is not thinking about promoting consumerism, but there are those in positions of leadership and influence, in government and the media, who are consciously undermining non-commercial sources of status and life satisfaction such as intellectual and artistic endeavor.
Thursday, November 13, 2008
failure of the sociological imagination
The topic in my social problems class today was drug abuse. We looked at the data, and tracked the trends, outlined the extent of the problem. Then we turned to the question of "why?" -- why so much more drug abuse in our region than in the past. [We live in the epicenter of the Oxycontin phenomenon.]
We looked at the issues of the availability of drugs, of the economic and social conditions, of the cultural attitudes encouraged by the media, the pharmaceutical industry, and the medical profession, that pills are a solution to most of life's problems (sexual problems - take Viagra, anxious in social situations - take Paxil, etc.).
One of the students in the class, Mary*, has worked on several local media projects and films about drug abuse in this region, and as a result has talked to a lot of people who have become entangled in abuse. Mary pointed out that the reason given by most of the people that she talked to was that they couldn't cope with the pressures and problems of their lives and took drugs to relieve the pressure, to be distracted, to forget about things for a while. Mary noted that this reason made her mad and disgusted. She didn't think it was a valid reason; that people were just weak and that should just learn to deal with things as she did. The other students in the class offered their agreement with Mary. They too viewed drug abuse as weakness and moral failing to which they were immune.
I asked the class to consider why it might be that more people today found themselves unable to cope with problems and pressure without drugs. I was hoping that they might think about ways in which the circumstances of living in the region had changed. I hoped they might think about how family situations and child rearing had changed (two working parents for example), how job opportunities had declined in the region, how out migration had reduced family networks, how political changes and budgetary cuts meant less in the way of social support, and finally how stagnating middle class and working class incomes and rising costs had eroded the standard of living.
Mary, however, suggested that circumstances had not changed that much, that it all boiled down to people being "weaker" today than they were in the past. People, she suggested weren't willing to "deal with" things as they were in the past (or as she implied as she was). The rest of the class vocally concurred with this view.
So I asked the class, if people were "weaker" today, how had that happened. What was it that had changed to make them weaker? This is the problem with us sociologists, we always think there is a reason for changes that they don't just come out of the air. Unfortunately Mary's response was, "it just happened. I don't don't want to call it evolved [we know from previous classes that Mary doesn't believe in biological evolution], it just happened." Mary suggested that people just naturally changed for the worse over time. Other students in the class offered agreement. There wasn't any reason for change, it just happened they all agreed. Society gets worse, people get worse. People today are weak -- except for us -- that's why they abuse drugs, was the unanimous opinion of my students.
We stopped the discussion at that point to see a short film made locally about Oxycontin abuse in the region. While I tinkered with the VCR, rewinding the film and cuing it up, I could hear Mary speaking quietly with the woman next to her. She was recounting her own history with the use of Paxil for the "terrible anxiety" she suffered after her baby was born, and how she "would not have been able to cope" without her doctor's help and the medication. I could tell by Mary's tone of voice that she did not consider her own inability to cope without medication to be a sign of weakness.
Despite my best efforts this is clearly a group of students who have not grasped the sociological imagination -- that ability to see connections between the biography of the individual and the broader social, economic, political and cultural trends that C. Wright Mills collectively called "history." Worse than that they seem to lack empathy for others, and the ability to see "there but for fortune go I."
____________
*names changed to protect identity.
We looked at the issues of the availability of drugs, of the economic and social conditions, of the cultural attitudes encouraged by the media, the pharmaceutical industry, and the medical profession, that pills are a solution to most of life's problems (sexual problems - take Viagra, anxious in social situations - take Paxil, etc.).
One of the students in the class, Mary*, has worked on several local media projects and films about drug abuse in this region, and as a result has talked to a lot of people who have become entangled in abuse. Mary pointed out that the reason given by most of the people that she talked to was that they couldn't cope with the pressures and problems of their lives and took drugs to relieve the pressure, to be distracted, to forget about things for a while. Mary noted that this reason made her mad and disgusted. She didn't think it was a valid reason; that people were just weak and that should just learn to deal with things as she did. The other students in the class offered their agreement with Mary. They too viewed drug abuse as weakness and moral failing to which they were immune.
I asked the class to consider why it might be that more people today found themselves unable to cope with problems and pressure without drugs. I was hoping that they might think about ways in which the circumstances of living in the region had changed. I hoped they might think about how family situations and child rearing had changed (two working parents for example), how job opportunities had declined in the region, how out migration had reduced family networks, how political changes and budgetary cuts meant less in the way of social support, and finally how stagnating middle class and working class incomes and rising costs had eroded the standard of living.
Mary, however, suggested that circumstances had not changed that much, that it all boiled down to people being "weaker" today than they were in the past. People, she suggested weren't willing to "deal with" things as they were in the past (or as she implied as she was). The rest of the class vocally concurred with this view.
So I asked the class, if people were "weaker" today, how had that happened. What was it that had changed to make them weaker? This is the problem with us sociologists, we always think there is a reason for changes that they don't just come out of the air. Unfortunately Mary's response was, "it just happened. I don't don't want to call it evolved [we know from previous classes that Mary doesn't believe in biological evolution], it just happened." Mary suggested that people just naturally changed for the worse over time. Other students in the class offered agreement. There wasn't any reason for change, it just happened they all agreed. Society gets worse, people get worse. People today are weak -- except for us -- that's why they abuse drugs, was the unanimous opinion of my students.
We stopped the discussion at that point to see a short film made locally about Oxycontin abuse in the region. While I tinkered with the VCR, rewinding the film and cuing it up, I could hear Mary speaking quietly with the woman next to her. She was recounting her own history with the use of Paxil for the "terrible anxiety" she suffered after her baby was born, and how she "would not have been able to cope" without her doctor's help and the medication. I could tell by Mary's tone of voice that she did not consider her own inability to cope without medication to be a sign of weakness.
Despite my best efforts this is clearly a group of students who have not grasped the sociological imagination -- that ability to see connections between the biography of the individual and the broader social, economic, political and cultural trends that C. Wright Mills collectively called "history." Worse than that they seem to lack empathy for others, and the ability to see "there but for fortune go I."
____________
*names changed to protect identity.
Wednesday, November 05, 2008
reaping the whirlwind
The 44th President of the United States gave an awesome, inspiring, uplifting speech last night. But Obama's was not the only fine speech of the evening. The real John McCain, the reasonable, thoughtful, American patriot, gave a moving speech in which he conceded the presidency to Barack Obama.
For the full text and video see CNN.
If Senator John McCain had conducted his entire campaign the way he conducted his concession speech, last night might have had a different outcome. Last night we saw the man of integrity, the man for whom "country first" is an abiding truth not a campaign slogan. It was painfully clear at several points during the speech (including the one captured in the photo below) that McCain is dismayed with the kind of vitriol that his campaign inspired in many of his supporters.
McCain's speech, the reaction of some of the crowd and McCain's discomfort with that reaction, reminds me of Hosea 8:4,7.
Photo credit: CNN/Art
"I urge all Americans who supported me to join me in not just congratulating him, but offering our next president our good will and earnest effort to find ways to come together to find the necessary compromises to bridge our differences and help restore our prosperity, defend our security in a dangerous world, and leave our children and grandchildren a stronger, better country than we inherited.
Whatever our differences, we are fellow Americans. And please believe me when I say no association has ever meant more to me than that.
It is natural. It's natural, tonight, to feel some disappointment. But tomorrow, we must move beyond it and work together to get our country moving again."
-- John McCain, United States Senator
For the full text and video see CNN.
If Senator John McCain had conducted his entire campaign the way he conducted his concession speech, last night might have had a different outcome. Last night we saw the man of integrity, the man for whom "country first" is an abiding truth not a campaign slogan. It was painfully clear at several points during the speech (including the one captured in the photo below) that McCain is dismayed with the kind of vitriol that his campaign inspired in many of his supporters.
McCain's speech, the reaction of some of the crowd and McCain's discomfort with that reaction, reminds me of Hosea 8:4,7.They have made kings,
But not with My sanction;
They have made officers,
But not of My choice.
Of their silver and gold
They have made themselves images,
To their own undoing.
They sow wind,
and they shall reap whirlwind---
Standing stalks devoid of ears
And yielding no flour.
If they do yield any,
Strangers shall devour it.
Photo credit: CNN/Art
Saturday, October 25, 2008
Spreading the wealth $257 dollars at a time
Salon.com has a wonderful, satirical piece, dripping with irony, by a mythical "Bob the Banker"
Enough said.
| "The numbers don't lie. So here they are.* So, as I said, I make $280,000 annually after business expenses. I'm married and filing jointly. Under Obama, my itemized deductions would actually increase slightly — I'd get $49,420 in itemized deductions, while under McCain I'd get $48,975. But my personal exemptions would increase slightly under McCain — he'd give me $6,911, whereas I'd only get $6,132 from Obama. That leaves my taxable income at $213, 766 under Obama, $213,433 under McCain. Now we have to factor in the bracket cutoff, which for 2009 is $208,850. Anything below that figure for married couples filing jointly is taxed at the fourth tier, 28 percent. Any income above it, until you get up to near $400,000, is taxed at the fifth tier. And this is where the raving income-redistribution scheme of Barack Robespierre Obama kicks in. As you can see, my taxable income is about $5,000 higher than the cutoff. McCain is going to tax that $5,000 at the current rate, which is 33 percent. But Obama's crazed plan calls for raising that rate to — get ready for it — 35 percent. And here's what this means. Under McCain, my total tax bill would be $48,254. Under Obama, it would be $48,511. That's a difference of $257. I'll say it again: Two hundred and fifty-seven dollars. That's not two hundred and fifty-seven dollars I, or America, can afford. Things are tough right now. Average working Americans like me are really struggling. They're angry. And when they see the effects of Obama's spread-the-wealth lunacy on an average angry struggling American like me, they'll be even more angry, average, and struggling. Let me lay it out for you. Right now, I take home about $19,000 a month after the government skims off its share. And I don't have to tell you that $19,000 a month isn't what it used to be. Take my Jaguar. Do you have any idea how much it costs just to have that thing tuned up? It's like a BMW repair bill on steroids. We're talking $500 just to open the hood. The hard times are taking a toll on my family life, too. My wife has had to completely cut out having her colors done, and her personal shopper is threatening to walk if we keep cutting back on her hours. We're tightening our belts, but you can only tighten so far before there's no more room to pull. Then there's food prices. All across America, families are angry and struggling as they try just to get by. We're in the same boat. It's getting harder and harder just to put food on the table. We're only eating filet mignon twice a week, and under Obama's crazed far-left regime, we may have to completely give up Maine lobster and Macanudo cigars. And those are just a few examples. I could go on and on. The point is, under Obama Big Government is going to take $21.40 out of my pocket every month — money I could use to start another business, help the economy grow, or watch a couple of softcore porn movies on demand." *All figures about the comparative tax bills under Obama and McCain come from an interview with Gerald Prante, an economist at the nonpartisan Tax Foundation. |
Enough said.
Thursday, October 09, 2008
Answering a students question
Recently, one of my students asked what sociology might make of the current financial crisis. As I explained in the class, the current financial crisis is multidimensional, and has a number of different causes. The housing collapse of the housing market and the housing financing market is just one of several threads in the situation, but it helps illustrate some sociological principles of interest to us -- such as the distinction between use value and exchange value.
The use value of a house is that it protects its occupants from the elements, from cold or heat, rain or sleet. The use value includes the functionality of its bathrooms and kitchens. Its use value also includes the pleasure the owners get from privacy or from enjoying the way their house looks or feels. Moreover, ownership versus renting housing adds use value through the ability to make changes, alterations, and modifications to the home, the freedom to have pets, put up fences, and outbuildings that might be restricted by leases or rental agreements. The use value of a house can decline -- wiring and plumbing can break down, roofs can leak, paint can fade and crack, families can grow larger and the space may no longer be adequate, or undesirable "neighbors" can move in next door (like a strip mine)and lessen the pleasure or privacy derived from the home. But declines in use value tend to be slow and incremental. The decline in housing value over the past year or two has been a decline in exchange value, not use value; a decline in what one can sell one's home for (exchange it in the market place). The recent plunging market or exchange value of houses across the country has little to do with the use value of homes. Moreover, the rise in housing costs over the past two decades, had little to do with increases in the use value of housing. So why did housing prices rise so much, and why have they now crashed? How does the housing market and the financial market interconnect?
Let's begin with talking about the rising cost of housing. First, the facts on how the cost of housing has risen. In 1970 the median (mid-point) family income was $7,550 a year, and in 1965 the median (mid-point) price of a new home was $23,300. So the cost of the average, mid-point house was only 3.1 times the income of the average (mid-point) family's income. By the year 2000 the median (mid-point) new housing cost was $169,000, while the 2000 median (mid-point) family income was $41,990, making the average, mid-point house 4 times the average (mid-point) family's income. In other words it was a whole lot harder for the average family to afford the average house. Thing were even worse by 2007. In 2007, the median price of a new home had jumped to $247,900 while the median family income had only risen to $50,233, making the average, mid-point new house 4.9 (or almost 5) times the average, mid-point, family income.
Why did the cost of housing rise so much? For one thing, there was increased demand for housing, population grew. But even more important was that the age structure of the population changed. Beginning in 1965, a big "boom" of young people (the Baby Boomers who were born beginning in 1945) began to hit their 20's and begin looking to start families and buy houses. There was a huge flood of new home buyers moving into the market in the late 1960's and early 1970's. But these were mostly young people with young families, and they did not have large incomes, so even though there was a demand for new houses, the cost of those houses remained modest to meet the incomes of the young families that needed them. By 1990 and 2000, however, the number of young couples and young families looking for housing was fewer than the numbers of middle aged (40's and 50's) Baby Boomers looking to purchase housing (either to upgrade as they received promotions or to change due to their children growing up and leaving home). These middle aged Boomer house hunters had high incomes and were interested in more luxury in their homes. Luxury is to some extent related to use value; some of the greater cost of luxury items comes from them being longer lasting, more durable, more reliable, or just working better. But some luxury is purely a matter of exchange value (a result of supply and demand). The luxury good may not be more functional or useful, and is some times actually less so, depending upon the needs of the houses residents. For example, a synthetic Corian counter top will probably last longer, resist stains better, and require less maintenance than a marble slab counter top, but has a lower exchange value.
Home developers and builders were far more interested in providing homes for these more affluent buyers than they were in providing homes for the smaller number of young couples and young families with less money to spend. The reason is that there is more profit to be made from an expensive, high end house than there is from a smaller lower cost house. For example, if a developer can make a 20% profit (over costs) on a new house (a modest estimate just for arguments sake, profits are sometimes higher and sometimes lower), then the developer makes $20,000 on a $100,000 house, but $100,000 on a $500,000 house. The developer can only build so many houses, and the amount of time to build a house $100,000 house is not much less than to build a $500,000 house, so clearly the preference would be to build $500,000 houses, if you can find buyers for them.
Rising costs of housing were beginning to price a larger percentage of Americans out of home ownership in the 1980's and 1990's. Those lower income Americans wanted homes and had few choices at the low end of the price spectrum (since developers prefer to build higher cost houses). The percentage of families being home owners began to drop in the 1990's. What should have happened when home purchasing began to slide was that builders should have started to offer more lower cost housing. But they didn't do that, because developers and builders really wanted more buyers for their higher end houses. At the same time financial sector was looking for new opportunities for profit(in the interest they charged on loans). The interests of the building sector and the interests of the financial sector coincided, and focused on trying to find ways to expand credit to new customers, and make more people able to afford the rising cost of housing.
Between 1980 and 2007 the financial industry turned to the federal government to have the government remove some of the controls and regulation that limited lending practices. Lobbying by the banks and other financial institutions contributed to the repeal or overturn of several key laws that had existed to regulate the financial industry, giving banks and financial institutions more freedom to loan money to people who previously would not have qualified either because they were borrowing for risky projects (like "flipping" houses) or because their income or credit history was not suitable. Some of these changes made by Congress began in the 1980's but most took place between 1999 and 2004.
The financial sector, freed from controls over lending practices developed some new types of loans, such as new types of Adjustable Rate Mortgages that reset to much higher rates after a period of time, and "interest only" loans that require payment only of interest for an initial period before principle payments kick in. The lenders begin to target people who have been priced out of the housing market, with loans that looked affordable or at least the initial few years of payments look affordable, but which are actually well beyond the means of the consumer. As a result, people making the median income of $50,000 a year, were buying median houses of $200,000, because the banks and other lending institutions were making the first few years of payments something that was affordable. [A family with $50,000 income should not be purchasing a home worth more than $100,000, and even that's pushing it -- but the number of homes less than $100,000 are few and hard to find and often not large enough for young growing families].
So a housing industry (developers and builders) looking for more profits and a banking/finance industry looking for more profits (and allowed to make more risky loans by removal of regulation), offered loans to speculative borrowers and "subprime" (lower income) borrowers, loans that those borrowers could not really afford in the long run. Speculative borrowers are people who buy a house they can't really afford to pay for in the long run, in order fix it up and sell it for a higher price, and make a profit. Called "flipping" the buyer of the house is not planning on living in the house and can only afford to make a few months worth of payments. Their plan is to remodel the house and make it attractive to high end buyers, in homes of making $50,000 to $200,000 in profit in a couple months time.
The banking and finance industry had argued that it was okay to make loans that would have low payments initially and after some years would reset to higher payments because (so the argument went) people's salaries and earning went up as they got older, and the economy expanded over time and wages and salaries increase. The problem is that while it was true that salaries and wages had increased during the 1990's (from 1993 to 1999), the same was not true from 2000 to 2007. Wages and salaries stagnated, and did not keep up with inflation. In recent years, the increasing costs of petroleum and energy caused inflation to rise much faster than wages and salaries.
Of course, some of the blame has to go to the consumers who borrowed more money than they could really afford. They were sometimes pressured by banks and loaning institutions to do so, and were not always given all the information that they needed to make good decisions. But do hold some responsibility for taking on more debt that they could afford. Substantial responsibility lies on the banks and financial institutions that saw loaning to subprime and speculative borrowers as a way to make more money in the short run, because they should have and could have foreseen what would happen. Some responsibility lies on the builders and developers who were unwilling to construct more affordable housing and accept slightly lower profits. Everyone was short sighted, they went for the big bucks up front, and ignored the high likelihood of big losses down the road.
Why does a problem like this in the home building/ home financing area of our economy have so much spill over into other areas? One reason is that the home construction industry is a huge purchaser of goods from other industries -- from raw materials (lumber, steel, glass, plastic), to manufactured products (carpet, appliances, furnaces, doors, counter tops, etc.). Also new home owners also spend a great deal of money themselves on new furnishings (furniture, drapes, lamps, etc.). This has always been true about the housing industry. However, one very new thing, that makes the problem with the housing and finance industry in 2008 a more serious problem is changes in the rules governing financial institutions.
In 1933, the Glass-Steagall Banking Act was passed that said that banking (taking people's money in checking and savings deposits, and making home loans and small personal loans), and that neither banks nor insurance companies could do "investment" (using their own capital to invest in business as well as helping connect people with capital to invest with businesses looking for capital to fund their activities). Banking, is an activity that the government insures, so that people know that their money is safe, and "banks" are required to hold on to a certain percentage of the money deposited to have it on hand at all times to meet depositors needs. Investment businesses make no promises at all about customers money, they take the money and place it in investments, the money is not insured, and there is no requirement to keep cash on hand, and no promise that investors will get any of their money back; although most of the time investors get more money back than they put in, there is no guarantee that this will happen -- banks on the other hand guarantee that every penny you put in you will get back, and insurance companies guarantee that if you pay your premiums without fail and you have a qualifying disaster then you will get more than your money back.
So the 1933 Glass Steagall act, said these businesses, which have very different purposes and very different requirements in dealing with money should not be allowed to be merged together in a single company. In 1999, that law was repealed, and this allowed banks, insurance companies and investment companies to all merge together into large financial institutions. This allows problems in one area of finance to spill over into other areas of finance -- for housing loan problems to affect business investment and vice versa.
The use value of a house is that it protects its occupants from the elements, from cold or heat, rain or sleet. The use value includes the functionality of its bathrooms and kitchens. Its use value also includes the pleasure the owners get from privacy or from enjoying the way their house looks or feels. Moreover, ownership versus renting housing adds use value through the ability to make changes, alterations, and modifications to the home, the freedom to have pets, put up fences, and outbuildings that might be restricted by leases or rental agreements. The use value of a house can decline -- wiring and plumbing can break down, roofs can leak, paint can fade and crack, families can grow larger and the space may no longer be adequate, or undesirable "neighbors" can move in next door (like a strip mine)and lessen the pleasure or privacy derived from the home. But declines in use value tend to be slow and incremental. The decline in housing value over the past year or two has been a decline in exchange value, not use value; a decline in what one can sell one's home for (exchange it in the market place). The recent plunging market or exchange value of houses across the country has little to do with the use value of homes. Moreover, the rise in housing costs over the past two decades, had little to do with increases in the use value of housing. So why did housing prices rise so much, and why have they now crashed? How does the housing market and the financial market interconnect?
Let's begin with talking about the rising cost of housing. First, the facts on how the cost of housing has risen. In 1970 the median (mid-point) family income was $7,550 a year, and in 1965 the median (mid-point) price of a new home was $23,300. So the cost of the average, mid-point house was only 3.1 times the income of the average (mid-point) family's income. By the year 2000 the median (mid-point) new housing cost was $169,000, while the 2000 median (mid-point) family income was $41,990, making the average, mid-point house 4 times the average (mid-point) family's income. In other words it was a whole lot harder for the average family to afford the average house. Thing were even worse by 2007. In 2007, the median price of a new home had jumped to $247,900 while the median family income had only risen to $50,233, making the average, mid-point new house 4.9 (or almost 5) times the average, mid-point, family income.
Why did the cost of housing rise so much? For one thing, there was increased demand for housing, population grew. But even more important was that the age structure of the population changed. Beginning in 1965, a big "boom" of young people (the Baby Boomers who were born beginning in 1945) began to hit their 20's and begin looking to start families and buy houses. There was a huge flood of new home buyers moving into the market in the late 1960's and early 1970's. But these were mostly young people with young families, and they did not have large incomes, so even though there was a demand for new houses, the cost of those houses remained modest to meet the incomes of the young families that needed them. By 1990 and 2000, however, the number of young couples and young families looking for housing was fewer than the numbers of middle aged (40's and 50's) Baby Boomers looking to purchase housing (either to upgrade as they received promotions or to change due to their children growing up and leaving home). These middle aged Boomer house hunters had high incomes and were interested in more luxury in their homes. Luxury is to some extent related to use value; some of the greater cost of luxury items comes from them being longer lasting, more durable, more reliable, or just working better. But some luxury is purely a matter of exchange value (a result of supply and demand). The luxury good may not be more functional or useful, and is some times actually less so, depending upon the needs of the houses residents. For example, a synthetic Corian counter top will probably last longer, resist stains better, and require less maintenance than a marble slab counter top, but has a lower exchange value.
Home developers and builders were far more interested in providing homes for these more affluent buyers than they were in providing homes for the smaller number of young couples and young families with less money to spend. The reason is that there is more profit to be made from an expensive, high end house than there is from a smaller lower cost house. For example, if a developer can make a 20% profit (over costs) on a new house (a modest estimate just for arguments sake, profits are sometimes higher and sometimes lower), then the developer makes $20,000 on a $100,000 house, but $100,000 on a $500,000 house. The developer can only build so many houses, and the amount of time to build a house $100,000 house is not much less than to build a $500,000 house, so clearly the preference would be to build $500,000 houses, if you can find buyers for them.
Rising costs of housing were beginning to price a larger percentage of Americans out of home ownership in the 1980's and 1990's. Those lower income Americans wanted homes and had few choices at the low end of the price spectrum (since developers prefer to build higher cost houses). The percentage of families being home owners began to drop in the 1990's. What should have happened when home purchasing began to slide was that builders should have started to offer more lower cost housing. But they didn't do that, because developers and builders really wanted more buyers for their higher end houses. At the same time financial sector was looking for new opportunities for profit(in the interest they charged on loans). The interests of the building sector and the interests of the financial sector coincided, and focused on trying to find ways to expand credit to new customers, and make more people able to afford the rising cost of housing.
Between 1980 and 2007 the financial industry turned to the federal government to have the government remove some of the controls and regulation that limited lending practices. Lobbying by the banks and other financial institutions contributed to the repeal or overturn of several key laws that had existed to regulate the financial industry, giving banks and financial institutions more freedom to loan money to people who previously would not have qualified either because they were borrowing for risky projects (like "flipping" houses) or because their income or credit history was not suitable. Some of these changes made by Congress began in the 1980's but most took place between 1999 and 2004.
The financial sector, freed from controls over lending practices developed some new types of loans, such as new types of Adjustable Rate Mortgages that reset to much higher rates after a period of time, and "interest only" loans that require payment only of interest for an initial period before principle payments kick in. The lenders begin to target people who have been priced out of the housing market, with loans that looked affordable or at least the initial few years of payments look affordable, but which are actually well beyond the means of the consumer. As a result, people making the median income of $50,000 a year, were buying median houses of $200,000, because the banks and other lending institutions were making the first few years of payments something that was affordable. [A family with $50,000 income should not be purchasing a home worth more than $100,000, and even that's pushing it -- but the number of homes less than $100,000 are few and hard to find and often not large enough for young growing families].
So a housing industry (developers and builders) looking for more profits and a banking/finance industry looking for more profits (and allowed to make more risky loans by removal of regulation), offered loans to speculative borrowers and "subprime" (lower income) borrowers, loans that those borrowers could not really afford in the long run. Speculative borrowers are people who buy a house they can't really afford to pay for in the long run, in order fix it up and sell it for a higher price, and make a profit. Called "flipping" the buyer of the house is not planning on living in the house and can only afford to make a few months worth of payments. Their plan is to remodel the house and make it attractive to high end buyers, in homes of making $50,000 to $200,000 in profit in a couple months time.
The banking and finance industry had argued that it was okay to make loans that would have low payments initially and after some years would reset to higher payments because (so the argument went) people's salaries and earning went up as they got older, and the economy expanded over time and wages and salaries increase. The problem is that while it was true that salaries and wages had increased during the 1990's (from 1993 to 1999), the same was not true from 2000 to 2007. Wages and salaries stagnated, and did not keep up with inflation. In recent years, the increasing costs of petroleum and energy caused inflation to rise much faster than wages and salaries.
Of course, some of the blame has to go to the consumers who borrowed more money than they could really afford. They were sometimes pressured by banks and loaning institutions to do so, and were not always given all the information that they needed to make good decisions. But do hold some responsibility for taking on more debt that they could afford. Substantial responsibility lies on the banks and financial institutions that saw loaning to subprime and speculative borrowers as a way to make more money in the short run, because they should have and could have foreseen what would happen. Some responsibility lies on the builders and developers who were unwilling to construct more affordable housing and accept slightly lower profits. Everyone was short sighted, they went for the big bucks up front, and ignored the high likelihood of big losses down the road.
Why does a problem like this in the home building/ home financing area of our economy have so much spill over into other areas? One reason is that the home construction industry is a huge purchaser of goods from other industries -- from raw materials (lumber, steel, glass, plastic), to manufactured products (carpet, appliances, furnaces, doors, counter tops, etc.). Also new home owners also spend a great deal of money themselves on new furnishings (furniture, drapes, lamps, etc.). This has always been true about the housing industry. However, one very new thing, that makes the problem with the housing and finance industry in 2008 a more serious problem is changes in the rules governing financial institutions.
In 1933, the Glass-Steagall Banking Act was passed that said that banking (taking people's money in checking and savings deposits, and making home loans and small personal loans), and that neither banks nor insurance companies could do "investment" (using their own capital to invest in business as well as helping connect people with capital to invest with businesses looking for capital to fund their activities). Banking, is an activity that the government insures, so that people know that their money is safe, and "banks" are required to hold on to a certain percentage of the money deposited to have it on hand at all times to meet depositors needs. Investment businesses make no promises at all about customers money, they take the money and place it in investments, the money is not insured, and there is no requirement to keep cash on hand, and no promise that investors will get any of their money back; although most of the time investors get more money back than they put in, there is no guarantee that this will happen -- banks on the other hand guarantee that every penny you put in you will get back, and insurance companies guarantee that if you pay your premiums without fail and you have a qualifying disaster then you will get more than your money back.
So the 1933 Glass Steagall act, said these businesses, which have very different purposes and very different requirements in dealing with money should not be allowed to be merged together in a single company. In 1999, that law was repealed, and this allowed banks, insurance companies and investment companies to all merge together into large financial institutions. This allows problems in one area of finance to spill over into other areas of finance -- for housing loan problems to affect business investment and vice versa.
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