Morning Report – Here’s Janet 2/11/14

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Markets are flat on no real news. Bonds and MBS are down.

Janet Yellen will have her first sit-down with Congress today in her new role as Federal Reserve Chairman. The prepared remarks are here. Regarding monetary policy, she will more or less continue on the path that the Bernanke Fed started:

“Turning to monetary policy, let me emphasize that I expect a great deal of continuity in the FOMC’s approach to monetary policy. I served on the Committee as we formulated our current policy strategy and I strongly support that strategy, which is designed to fulfill the Federal Reserve’s statutory mandate of maximum employment and price stability.”

Other than that, the Fed expects the economy to improve moderately. Testimony begins at 10:00 am EST.
Separately, hawkish voting member Charles Plosser is speaking today as well.
The NFIB Small Business Optimism Report is out, and it shows sentiment increased slightly in January, although they note that inventories are too high – remember that the 4.1% Q4 GDP number was driven by inventory build. It looks like the demand for that inventory has yet to materialize. That said, optimism about future sales and hiring jumped, so perhaps businesses are seeing something (foot traffic, inquiries, etc) that has yet to percolate into the data. That said, 94.1 is still a depressed number (100 is more or less average), and government is driving a big part of that, with taxes as the #1 problem and government regulation as #2. Poor sales comes in at a distant third. Bill Dunkelberg is a limited government guy, so take his interpretation of the data with that in mind, but still it does speak to a bifurcation in the market, where the big S&P 500 names are doing fantastic and small businesses are struggling.

76 Responses

  1. More on the let’s give people coverage that nobody will take. cruel, in my opinion.

    http://www.bizjournals.com/denver/news/2014/02/10/study-denver-area-has-plenty-of-docs.html

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  2. I’m sure the state will simply require accepting medicaid as a condition to licensing at some point…

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    • Brent:

      I’m sure the state will simply require accepting medicaid as a condition to licensing at some point…

      I’m not positive, but I think this is how the UK gets doctors to participate in the NHS rather than simply catering to privately insured patients.

      Like

  3. not funny, Brent.

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  4. It’s exactly what will happen. We all know it.

    Edit: Are Medicare and Medicaid already linked? I.e. if you accept Medicare then you have to accept Medicaid?

    If not that will come first, along with tying it to any patient who receives a PPACA subsidy.

    Basically the same methodology that’s used to coerce Federal speed limits, drinking ages and the Title IX college sports mandates.

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  5. No, they are separate. you can pick one or the other.
    medicaid provider enrollments are done at the state level.

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  6. “No, they are separate. you can pick one or the other.”

    Not for long.

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  7. I can’t think of any policy that would make the physician shortage worse.

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  8. Yes, but then that helps ensure equal “access”, i.e. it sucks for everyone.

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  9. and that’s the important thing.
    money finds a way.

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  10. also

    Two separate bills and two separate votes on:

    1. A clean debt limit through March 2015
    2. A bill on Military Veterans’ COLA applying to new service members paid for with 2024 mandatory sequester.

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    • Ace has a good post up today posing an interesting challenge:

      Here’s my test to determine how serious someone is about the Constitution…name a policy you would like to see either enacted or outlawed that is not supported by the Constitution and then admit it. I don’t mean something silly like “I hate broccoli and think it should be outlawed” but something that goes to the heart of your politics and beliefs.

      I once posed a similar challenge to the left on PL a long time ago. Shockingly no one took me up on it.

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  11. #2 Means “only applying to new service members” correct? I.e. restoring the COLA cuts for existing members.

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  12. Good piece:

    ” “Access Is Overrated”
    The New Yorker’s Jane Mayer, winner of the 2013 I.F. Stone Medal for Journalistic Independence, on the adversarial nature of reporting
    By Jane Mayer”

    http://www.nieman.harvard.edu/reports/article/103042/Access-Is-Overrated.aspx

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  13. that’s my understanding at this point.

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  14. Janet Yellen says that in 30 years, our debt to GDP ratio would become unsustainable…

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  15. I don’t get Ace’s example though (license plate readers and surveillance state generally). Seems that a 4th amendment argument.

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  16. “our debt to GDP ratio would become unsustainable…”

    good thing we’re encouraging some to cut back on their hours and likely enroll in Medicaid and/or heavily subsidized insurance.

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  17. Do you believe her? Do you believe she believes it?

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  18. I once posed a similar challenge to the left on PL a long time ago. Shockingly no one took me up on it.

    the left thinks that “promote the general welfare” is a blank check for the anything with good intentions to be Constitutional.

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    • Brent:

      the left thinks that “promote the general welfare” is a blank check for the anything with good intentions to be Constitutional.

      Which just shows its lack of seriousness about the Constitution. I often wonder if we will see another amendment to the Constitution ever again. I can imagine an amendment being added for some administrative purpose or another, similar to the 27th – and last – amendment passed in 1992 (which, BTW, was actually proposed in 1789 and took over 200 years to get ratified). But it is hard to imagine an amendment which substantively altered the relationship between the government and citizens being needed anymore given the preponderance of “living constitutionalism” which makes altering the Constitution much easier than altering it, er, constitutionally via the amendment process.

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  19. Do you believe her? Do you believe she believes it?

    Well, Japan’s debt to GDP ratio is over twice ours and they haven’t imploded yet. Of course they have been stuck in a no-growth malaise for a decade, but she probably buys the more cowbell argument about Keynsian pump priming.

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  20. “promote the general welfare”

    which is stupid. also, you lose standing to bitch about having your rights violated when gov does something you dont’ like. sorry, we voted. necessary and proper. and this is commerce.

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  21. if you don’t like your plan … change it! see #5

    https://www.regtap.info/uploads/library/Guidance_for_Issuers_5CR_020714.pdf

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  22. Yellen says rising inequality “one of the most disturbing trends facing the nation at the present time.”

    Of course Fed policy has nothing to do with it…

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  23. “I often wonder if we will see another amendment to the Constitution ever again.”

    I’d say that as long as Wickard v Filburn is upheld then no.

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  24. From the Onion piece:

    “We got to talking about immigration, and I really wanted him to undermine his argument for stricter border controls by saying something disparaging of Latinos, but apparently his opinions are based entirely on national security issues instead of race—which is super irritating,”

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    • Huh?

      Some lawmakers, though, have claimed that the mere threat of the employer mandate is causing companies to shed full-time workers in the hope of keeping their staff size below 50 and avoiding the requirement.

      Administration officials dispute that this is happening on any large scale. Further, Treasury officials said Monday that businesses will be told to “certify” that they are not shedding full-time workers simply to avoid the mandate. Officials said employers will be told to sign a “self-attestation” on their tax forms affirming this, under penalty of perjury.

      Why would anyone sign this certification? Is there some kind of legal penalty for reducing one’s workforce in response to the law?

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  25. Why would anyone sign this certification? Is there some kind of legal penalty for reducing one’s workforce in response to the law?

    I believe the government can deem your part-time workers to be full time equivalent if you did it just to escape the mandate…

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    • I really and truly don’t know how anyone can defend the existence of our regulatory bureaucracy. It does not represent the rule of law. It is rule by bureaucratic whim.

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    • Truly the Twilight zone:

      If an employee’s share of the premium for employer-provided coverage would cost the employee more than 9.5% of that employee’s annual household income, the coverage is not considered affordable for that employee. Because employers generally will not know their employees’ household incomes, employers can take advantage of one or more of the three affordability safe harbors set forth in the final regulations…

      So the law must have “safe harbor” provisions written into it in order to mitigate the fact that, as written, the law requires something that even the law admits is impossible for an employer to knowingly comply with.

      Pure and unadulterated insanity.

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  26. Nova, this?

    “The other method is the look-back measurement method under which an employer may determine the status of an employee as a full-time employee during a future period (referred to as the stability period), based upon the hours of service of the employee in a prior period (referred to as the measurement period). The look-back measurement method for identifying full-time employees is available only for purposes of determining and computing liability for an Employer Shared Responsibility payment, and not for purposes of determining if the employer is an applicable large employer.”

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  27. Oh thank God. I was worried they’d half-ass it.

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  28. I really and truly don’t know how anyone can defend the existence of our regulatory bureaucracy. It does not represent the rule of law. It is rule by bureaucratic whim.

    We’re making a more perfect union, bagger!

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  29. of course if they just fired people to get under the limit, that is probably ok.

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  30. that’s it. and i may have posted the wrong reg. i’ve updated the link.

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  31. Boehner even has to vote on this one!

    Fingers crossed they don’t get to 18. Not one R should vote until ALL D’s vote for it.

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  32. But no matter what it’s better then the status quo!

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  33. Further, a spotty payment rate (50% in Washington and 66% in Nevada) creates a risk that the demographics of the paid exchange population may be older — and possibly sicker — than even the national signup data have signaled.

    http://news.investors.com/politics-obamacare/021014-689516-obamacare-enrollment-signups-stagnate-lag-2014-targets.htm#ixzz2t31Vsnt5

    Awesome!

    Better then the status quo!

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    • BTW, do you think the writers of these laws/rules deliberately come up with Orwellian names to use, or are they just possessed of a total lack of self-awareness? “The Employee Shared Responsibility Payment”? For crissakes, it’s a fucking fine for breaking the law! Call it what it is.

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  34. “an employer may determine” implies that the choices is up to the employer. NoVA is that accurate?

    Scott, it’s deliberate of course.

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  35. Mark, don’t forget the greatest tragedy of all, rich people unable to snow ski 100 years from now.

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  36. It’s weird that the hack, Greg Sargent, can’t find a chick to write for him.

    Misogyny?

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    • @Chambers просто помню года три назад я её по телевизору видел .мне она показалась очень симпатичной. А сейчас какая-то стрёмная, а ведь с годами никто лучше не становится. поэтому пора бы ей заскочить уже в последний вагон

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  37. “You haven’t weighed in on Obama’s continued and deliberate failure to faithfully execute the laws”

    I haven’t studied the regulatory leeway Congress granted in the laws I am aware that he is selectively enforcing. The one case I am most familiar with, discretion on undoc minors, is not in any way extraordinary, from what I have read, but, again, I have not read the source documents. I saw that the DC trial court ruled that not only “Chevron” deference supported IRS position on ACA subsidies but that the statute was not ambiguous. But, again, I did not read the case.

    A serious legal opinion would require that i actually study the statutes, the legislative histories, and the precedents. Sometimes we hit an area here with which I have familiarity. Not this one.

    I am unqualified to comment knowledgeably. If/when the ACA subsidies case goes to the Supremes I am sure I will read all the briefs and then I will have an opinion I can support.

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    • Mark:

      I have not read the statute either, but according to Jonathon Adler:

      “The text of the Patient Protection and Affordable Care Act provides that the employer mandate provisions “shall apply” after December 31, 2013. The Treasury Department claims that it has broad authority to offer “transition relief” in implementing the law. That may often be true, but not here. The language of the statute is clear, and it is well established that when Congress enacts explicit deadlines into federal statutes, without also providing authority to waive or delay such deadlines, federal agencies are obligated to stay on schedule. So, for instance, federal courts routinely force the Environmental Protection Agency to act when it misses deadlines and environmentalist groups file suit.”

      Beyond the strict legalities, though, do you think it is a proper exercise of executive power for O to do what he has repeatedly done? Is this kind of routine “delaying” the enforcement of a major piece of legislation, especially as an obvious electoral strategy, something that past presidents have regularly done, or is it rather unprecedented from what you know?

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      • This TWS article says that no one has standing to sue Obama over his refusal to enforce the law. But why wouldn’t an employer with greater than 100 employees have standing to sue? Afterall, such an employer is being harmed from a competitive point of view, in that his costs have been driven up by the enforcement of the law against him, while any competitors that falls under the 100 employee threshold are spared those costs simply as the result of the executive’s refusal to enforce the law.

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        • On the 100 employee entity there would be no standing now because no harm can be proven now. After the fact, when comparisons from actual dollars spent are available, when a body of evidence to support “harm” is developed, I would think standing would become less of an issue.

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        • Mark:

          How is it that environmentalists have standing to sue over EPA regulatory delay? What provable harm can they demonstrate?

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        • Scott: A bunch of biologists testify that the salamanders are dying from the nitrates in the water that exceed the statutory limits. The statutory limits are exceeded because the EPA is not enforcing the statute and the untreated sewage is leeching into the river. The salamanders are protected species. Films of biologists taking samples from contaminated spots and demonstrating their measurements are shown next to films of them taking samples from uncontaminated spots.

          A bunch of forestry experts testify that the golden cheeked warbler cannot live in a clear cut. The statute says no clear cutting in the habitat of the GCW. But the EPA doesn’t enforce it, even in National Forests. Films are shown of field work.

          Some examples involve humans and acid rain or polluted water supplies.

          Usually the evidence gathering has largely preceded and precipitated the statutory response, so it is pretty easy to do a demo soon after the EPA does not enforce the statute, and thus put on a dog and pony show for a preliminary injunction.

          The Sierra Club can find a friendly entity with presumed standing. Most state parks and wildlife commissions and state agencies and local municipalities will have standing about water issues, air issues, and the like. The Endangered Species Act may expressly invest standing in citizens, btw; I don’t recall.

          OTOH

          Imagine you are the major employer who must comply. How are you going to measure your damage? I think it would be by showing that numerous small employers now have a competitive advantage and have cut into your profit margin. That would take at least a year to prove. So if I wanted instant relief for you I would go lobby the Administration. Unless you can think of another measure of damages, I think your lawsuit is unlikely to be a winner, even after you have enough to allege standing.

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        • Mark:

          I get it if the Endangered Species Act specifically gives standing, but outside of that I don’t understand how any person can possibly demonstrate a real and provable harm from the hypothetical future extinction of a salamander. At least not any more real harm than the hypothetical future harm to a business of being placed at a competitive disadvantage.

          That a salamander has more standing to sue in our court system than actual citizens who are being discriminated against by government enforcement policies just shows how screwed up the nation has become.

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        • Scott – ESA standing cuts two ways. I didn’t have the case cite at hand earlier. The statute does permit citizen suits. In Bennett v. Spear, 117 S.Ct. 1154 (1997)the Supremes ruled that also meant businesses and states could sue under the Act to prevent over-enforcement. Texas has won some of these suits.

          Some of the commentary about that case:

          The ESA contains a citizen suit provision which states, “any person may commence a civil suit on his own behalf.”(4) The Court interpreted this language broadly in order to allow the citizen suit provision to negate the arguably narrower requirements of the zone of interests test. Whereas the zone of interests test might restrict standing to environmentalists alone, the Court’s reasoned, the “any person” provision kept the door open. In a treatise-like explanation, the Court set out a comprehensive analysis of standing requirements under the U.S. Constitution, the Administrative Procedure Act, and the statute at issue in this case – the Endangered Species Act.

          Standing and the United States Constitution

          Under Article III of the Constitution, standing requires an “injury in fact,” a connection between the plaintiff’s injury and the defendant’s acts, and the possibility of a favorable outcome for the plaintiff.(5)

          The irrigation districts pointed to the reduction of water released to them due to the FWS’ recommendation as the “injury in fact.” In addition, the irrigation districts suggested that the biological opinion’s powerful effect on the Bureau’s decision-making connects their injury to the actions of the FWS and the Secretary of the Interior. In their effort to show the third element, the irrigation districts reminded the Court that before the Biological Opinion, the Bureau had uniformly released water from the reservoirs without drastic restrictions. Given the modest constitutional standing requirements, the Court concluded that the irrigation districts met the burden and had standing under Article III.

          Scalia wrote the opinion for a unanimous court.

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        • Thanks, Mark.

          BTW, unbelievable finish tonight in the Syracuse-Pitt game. 3 lead changes in the final 10 seconds, and Orange remain undefeated on a heave from 10 feet behind the arc by freshman Tyler Ennis as time expired, 58-56. Great game.

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        • BTW, Mark….if a president instructed the IRS not to enforce tax laws against filers with income under, say, $75k, would anyone have standing to sue over this non-enforcement?

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        • if a president instructed the IRS not to enforce tax laws against filers with income under, say, $75k, would anyone have standing to sue over this non-enforcement?

          I’m tempted to say the Federal Reserve, Eurobank, China, Japan, Saudi Arabia, and Canada.

          [I don’t know].

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      • I highly respect Adler’s views. Probably would agree if I studied the matter.

        I don’t think it is unprecedented in that EPA slow walked stuff during R Admins – which led to lawsuits, as Adler pointed out.

        I typically think mandamus is the way to go on supposed administrative/executive delays. “Standing” is always a concern in federal court, of course.

        I copied/pasted some Russky stuff I found in the comments at the link George posted. No clue what it means.

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  38. ““an employer may determine” implies that the choices is up to the employer. ”

    I think so. I also think that the employer better determine an acceptable answer, lest something unfortunate happen.

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  39. @ScottC: “I don’t understand how any person can possibly demonstrate a real and provable harm from the hypothetical future extinction of a salamander.”

    If I really like salamanders, then it would harm me! But it seems like it’s less about a demonstration of harm and more an issue of compliance with existing statutes. They don’t have to demonstrate harm, per se, to stop something because it’s already against the law.

    Do you have to prove harm in order to sue an agency or the government to enforce the law or comply with regulations or mandates?

    I find the concern over endangered species interesting. Has it negatively effected the quality of life of anybody that the passenger pigeon is extinct? I mean, really? Or the dodo? Mostly, it seems to be a general and sometimes awfully vague feeling that creatures going extinct is bad, thus we should prevent it, though if a breed of dog that’s only been around for 400 years went “extinct”, I doubt there’d be much angst. Some, I’m sure.

    Are our lives worse qualitatively because there are no saber tooth tigers? Seems unlikely. So, we attempt to protect endangered species out of a sense that “heritage”, sort of like preserving historic locations.

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    • Kevin:

      Do you have to prove harm in order to sue an agency or the government to enforce the law or comply with regulations or mandates?

      Apparently yes. You need to be able to prove harm in order to have “standing” to sue. Unless, perhaps, you really like salamanders, and then I guess you automatically have standing regardless of whether there is any provable harm. 😉

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      • What if I cry every time a salamander is harmed in any way? Then arguably, anything I can say makes me sad I can sue over. If buildings make me sad because of the loss of nature, I can sue a developer on behalf of nature? I recognize that slippery slope arguments are often fallacious, but that seems like a slippery slope, to me.

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        • Kevin:

          I recognize that slippery slope arguments are often fallacious, but that seems like a slippery slope, to me. I recognize that slippery slope arguments are often fallacious, but that seems like a slippery slope, to me.

          I agree. Either that or the issue of “standing” ultimately rests on the whims of the judge hearing the case, which I guess means, ultimately, SCOTUS.

          Although if who has standing is actually written into the law, as Mark suggests, that is different.

          Like

  40. @Brent: “Acknowledging that the man’s right-wing views are more nuanced than one might expect, 36-year-old liberal Diana Hardwick confided to reporters Tuesday that her conservative acquaintance Brady Daniels is, quite frustratingly, not racist. “

    The Onion is funny, but I think the joke there is that a good, solid liberal would admit that a conservative’s position on immigration is not racist. 😉

    I’ve been told on more than one occasion that, being from the south, I am racist and can’t help it, as all southerners are racist and there’s nothing we can do about it. By very serious northern (and Canadian!) liberals. And protesting such a blanket condemnation, of course, proves the racism. Because . . . you know . . . racism!

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  41. My follow up to the freaks at TPM.

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    • Good article from Daniel Henninger at WSJ today. Behind the firewall, but the conclusion makes the point:

      Let’s cut to the chase: The real issue in the American version of [income inequality] is the low incomes of the inner-city poor. And let’s put on the table one thing nearly all agree on: A successful education improves lifetime earnings. This assumes one is living in an economy with better than moribund growth, an assumption no one in the U.S. or Western Europe can make anymore.

      If there is one political goal all Democratic progressives agree on it’s this: They will resist, squash and kill any attempt anywhere in the U.S. to educate those low-income or no-income inner-city kids in alternatives to the public schools run by the party’s industrial-age unions.

      Reforming that public-school monopoly is the litmus test of seriousness on income inequality. That monopoly is the primary cause of America’s post-1970s social-policy failure. And that monopoly will emerge from the Obama presidency and de Blasio mayoralty intact. So will income inequality.

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  42. @Troll: “You can’t individually achieve your way out of racism. The remedy is collective.”

    Is there a “collective” solution to anything that isn’t really a select few elites passing edicts and levying taxes in order to provide equity for the masses? Generally, every time I hear the words “collective solution”, it means laws, taxes, and confiscation of property via government agency. It never seems to mean convincing people to work together and make an honest-to-God collective effort to change or improve things.

    Like

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