HEALTH

Doug Olson:  “I’m all for the health care reform bill if the benefits you mention in yesterday’s column are realized.  But you know the insurance companies have armies of lawyers reviewing the law to determine how to deny pre-existing conditions and practice rescission after a claim is made, while still staying within the letter of the requirements.  How do we know the benefits AARP lists will actually come to pass?”

☞  We have a President and an HHS Secretary deeply committed to making this work, with a few lawyers and levers of their own.  The bigger threat, it seems to me, are Republicans hell-bent on repealing it.

UNDERWATER MORTGAGES

Re Wednesday’s strapped California homeowners:

Kevin Knopf:  “If someone knowingly defaults on their house rather than go through bankruptcy aren’t they taking advantage of the structure of society?  So, isn’t it unethical/immoral to default on your mortgage?  Doesn’t it hurt the rest of us who struggle to make our mortgage payments no matter what?”

☞  Well, if the lender prefers a deed in lieu, so it loses less money than it would going through the considerable expense and delay of bankruptcy, that’s at least some concession to “doing the right thing.”  And, look: a nonrecourse loan (as most home mortgages are in California) is a nonrecourse loan.  The lender knew that going in.

What some people are doing – as referenced here (thanks, Kia) – is immoral, in my view.  They’re living rent-free, making it as hard as possible for the lender to kick them out.  I’m sorry, but I think that’s really low.

LIBERTARIANISM

Michael Martin:  “I hesitate to belabor the point but it is so common and you don't seem to recognize it.  Sure the libertarians believe that government should protect THEIR property, but they do not recognize that the existence of their property is entirely a consequence of society.  So, sure they expect that other people should protect their property but what do they offer in recompense?  What do they offer to support and sustain the society that creates their wealth? . . . The more enlightened rich have different views.  Warren Buffett, for example, or even Bill Gates’ father.  They understand that individual rights may be inalienable, but they also know that to secure those rights governments are instituted.  Government in a democracy has more to do than protect the rich; as I recall the preamble to the Constitution that instituted our government, it asserts it is to promote the common welfare of all people in that society.  Libertarians believe they are free from any obligations to society or to the common welfare of those in that society.  Maybe you don’t consider that immoral, but for libertarians to insist that they have no obligation to a society that sustains them, but insist that the society has obligations to sustain them seems grossly asymmetric to the point I don't know how to describe immorality without including it.”

☞  Not all libertarians are rich, and many do feel, and fulfill, an obligation to society – but voluntarily, which they believe is the moral way this should be organized.  That said, while we might differ around the edges, I’m with you. 

PARETO

Rob:  “A quick comment regarding your May 28 piece, in which a reader cited the Pareto Principle (80%  - 20%) to explain wealth distribution.  Probability "laws" only work when the game hasn't been rigged. So the Pareto Principle is only a diversionary tactic when attempting to discuss the US economy. Paul Krugman effectively covered this here.”

☞  In part:

. . . the 80-20 fallacy. It's the notion that the winners in our increasingly unequal society are a fairly large group — that the 20 percent or so of American workers who have the skills to take advantage of new technology and globalization are pulling away from the 80 percent who don't have these skills.

The truth is quite different. Highly educated workers have done better than those with less education, but a college degree has hardly been a ticket to big income gains. The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. Over the longer stretch from 1975 to 2004 the average earnings of college graduates rose, but by less than 1 percent per year.

So who are the winners from rising inequality? It's not the top 20 percent, or even the top 10 percent. The big gains have gone to a much smaller, much richer group than that.

A new research paper by Ian Dew-Becker and Robert Gordon of Northwestern University, "Where Did the Productivity Growth Go?," gives the details. Between 1972 and 2001 the wage and salary income of Americans at the 90th percentile of the income distribution rose only 34 percent, or about 1 percent per year. So being in the top 10 percent of the income distribution, like being a college graduate, wasn't a ticket to big income gains.

But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that's not a misprint.

. . . The idea that we have a rising oligarchy is much more disturbing. It suggests that the growth of inequality may have as much to do with power relations as it does with market forces. Unfortunately, that's the real story. . . .

☞  And the Republicans saw to it that their tax burden would be slashed, to boot.  The Bush years – with the perhaps unwitting support of Joe the Plumber, et al – were a positively grand time to be rich and powerful.