PAUL KRUGMAN: The Health Care Racket
Welcome To Pottersville

Is the health insurance business a racket? Yes, literally — or so say two New York hospitals, which have filed a racketeering lawsuit against UnitedHealth Group and several of its affiliates.

I don’t know how the case will turn out. But whatever happens in court, the lawsuit illustrates perfectly the dysfunctional nature of our health insurance system, a system in which resources that could have been used to pay for medical care are instead wasted in a zero-sum struggle over who ends up with the bill.

The two hospitals accuse UnitedHealth of operating a “rogue business plan” designed to avoid paying clients’ medical bills. For example, the suit alleges that patients were falsely told that Flushing Hospital was “not a network provider” so UnitedHealth did not pay the full network rate. UnitedHealth has already settled charges of misleading clients about providers’ status brought by New York’s attorney general: the company paid restitution to plan members, while attributing the problem to computer errors.


The legal outcome will presumably turn on whether there was deception as well as denial — on whether it can be proved that UnitedHealth deliberately misled plan members. But it’s a fact that insurers spend a lot of money looking for ways to reject insurance claims. And health care providers, in turn, spend billions on “denial management,” employing specialist firms — including Ingenix, a subsidiary of, yes, UnitedHealth — to fight the insurers.

So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums.

Of course, rejecting claims is a clumsy way to deny coverage. The best way for an insurer to avoid paying medical bills is to avoid selling insurance to people who really need it. An insurance company can accomplish this in two ways, through marketing that targets the healthy, and through underwriting: rejecting the sick or charging them higher premiums.

Like denial management, however, marketing and underwriting cost a lot of money. McKinsey & Company, the consulting firm, recently released an important report dissecting the reasons America spends so much more on health care than other wealthy nations. One major factor is that we spend $98 billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting — costs that don’t exist in single-payer systems.

And this is just part of the story. McKinsey’s estimate of excess administrative costs counts only the costs of insurers. It doesn’t, as the report concedes, include other “important consequences of the multipayor system,” like the extra costs imposed on providers. The sums doctors pay to denial management specialists are just one example.

Incidentally, while insurers are very good at saying no to doctors, hospitals and patients, they’re not very good at saying no to more powerful players. Drug companies, in particular, charge much higher prices in the United States than they do in countries like Canada, where the government health care system does the bargaining. McKinsey estimates that the United States pays $66 billion a year in excess drug costs, and overpays for medical devices like knee and hip implants, too.

To put these numbers in perspective: McKinsey estimates the cost of providing full medical care to all of America’s uninsured at $77 billion a year. Either eliminating the excess administrative costs of private health insurers, or paying what the rest of the world pays for drugs and medical devices, would by itself more or less pay the cost of covering all the uninsured. And that doesn’t count the many other costs imposed by the fragmentation of our health care system.

Which brings us back to the racketeering lawsuit. If UnitedHealth can be shown to have broken the law — and let’s just say that this company, which is America’s second-largest health insurer, has a reputation for playing even rougher than its competitors — by all means, let’s see justice done. But the larger problem isn’t the behavior of any individual company. It’s the ugly incentives provided by a system in which giving care is punished, while denying it is rewarded.

Marjoe Gortner–An American Hero
Posted by gasmonso
http://religiousfreaks.com/


I felt it necessary to revive an American legend from obscurity. Marjoe Gortner was the youngest evangelical preacher when he was ordained at the tender age of four. He traveled the country with his parents holding revival meetings and “healing” the sick. With every town visited, the family bilked more and more money from their faithful followers.

In the late 60’s though, all that went awry when Marjoe had a change of conscience. He decided to make one last revival tour and bring along a film crew this time. Marjoe was about to expose to the world the true inner workings of his family and other ministers. Marjoe gave detailed information on how he and countless others deceive the faithful out of millions and get nothing but praise in return.

The resulting film, Marjoe, won the 1973 Academy Award for best documentary. Watch the preview below and add this movie to your must-see list. Enjoy!

All hail Pottersville!
The "bad" town in "It's a Wonderful Life" jumps and jives 24/7 with hot bars and cool chicks -- while "wholesome" Bedford Falls is a claustrophobic snooze.
Dec. 22, 2001 | 'Tis the week before Christmas, and all through my house and 250 million others, people are blubbering helplessly as George Bailey overcomes despair and discovers that he really did have a Wonderful Life. I have no desire to rain on Frank Capra's heartwarming, seasonally-sanctioned parade. Let cynics deny that a brief sojourn in a counterfactual limbo conjured up by a bumbling, liver-spotted angel can really produce a life-changing epiphany. Let jaded roues deride George as an infantile weenie whose courtship of Mary comes to fruition only because she prudently massaged her scalp with Spanish Fly before he arrived. Such criticisms are mean-spirited, if not downright un-American. But even a master sometimes flubs a brushstroke, and there is a glaring flaw in Capra's great canvas.

I refer, of course, to Pottersville.

In Capra's Tale of Two Cities, Pottersville is the Bad Place. It's the demonic foil to Bedford Falls, the sweet, Norman Rockwell-like town in which George grows up. Named after the evil Mr. Potter, Pottersville is the setting for George's brief, nightmarish trip through a world in which he never existed. In that alternative universe, Potter has triumphed, and we are intended to shudder in horror at the sinful city he has spawned -- a kind of combo pack of Sodom, Gomorrah, Times Square in 1972, Tokyo's hostess district, San Francisco's Barbary Coast ca. 1884 and one of those demon-infested burgs dimly visible in the background of a Hieronymus Bosch painting.

There's just one problem: Pottersville rocks!

Pottersville makes its brief but memorable appearance during that tumultuous scene when George, who has just been bounced from Nick's Bar and is beginning to seriously freak out, rushes down the main street. A large neon sign -- the first of many -- announces "Pottersville." As sirens sound in the distance and a big band wails jazz, George staggers on, into an unfamiliar nightlife district that has replaced the town he knew. In a rapid montage, we see a neon bar sign saying "Blue Moon." Another announces "Fights." Yet another blares "Midnight Club -- Dancing." There's a pool and billiards joint and a pawnbroker shop. A large marquee announces "Girls Girls Girls -- 20 gorgeous girls -- 3 acts." The "Indian Club" gaudily sports a kitschy neon sign depicting the face of a brave. The "Bamboo Room" promises a more Oriental setting. As the disbelieving George stares at the teeming entrance of the "Dime a Dance" joint ("Welcome jitterbuggers"), a scuffle breaks out -- some floozy is resisting being thrown into the paddy wagon. "I know every big shot in this town!" she shrieks as the gendarmes manhandle her. In horror, George recognizes the floozy -- it's Violet, the town flirt from his previous existence, now apparently turned full-fledged professional. After his protests almost land him in the pokey too, he stumbles off in shock and grabs a taxi.

George's confusion, even dismay, is understandable -- it's always a shock when the laws of space and time cease to apply. But if he'd hung out for a while, had a few drinks in the Indian Club, dropped a couple dimes in the dance hall, maybe checked out the action at the burlesque, he would have gotten a whole new take on the situation. Pottersville has its problems -- its bartenders can be undeniably ill-humored, for example -- but compared to the snooze-inducing Bedford Falls, it jumps. In the immortal words of Jeffrey "Janet Malcolm" Masson, it's a place of "sex, women, fun."

The gauzy Currier-and-Ives veil Capra drapes over Bedford Falls has prevented viewers from grasping what a tiresome and, frankly, toxic environment it is. When Marx penned his immortal words about "the idiocy of rural life," he probably had Bedford Falls in mind. B.F. is the kind of claustrophobic, undersized burg where everybody knows where you're going and what you're doing at all times. If you're a Norman Rockwell collector, this might not bother you, but it should -- and it certainly bothered George Bailey. It is all too easily forgotten that George himself wanted nothing more than to shake the dust of that two-bit town off his feet -- and he would have, too, if he hadn't gotten waylaid by a massive load of family-business guilt and a happy ending engineered by God himself.

There is no such thing as privacy in Bedford Falls. The place is like Bentham's Panopticon with picket fences. Take the scene in which George and Mary have just gotten married and are taking a taxi to their bridal suite in the abandoned house. The two newlyweds are simply trying to get in some heavy necking before they arrive at the freezing, waterlogged, no doubt lead-paint-riddled dump in which they're supposed to consummate their marriage -- is that too much to ask? Yes, it is too much to ask in Bedford Falls, because in Bedford Falls there is only one taxi driver: Bert. Not content with his sole claim to fame, having an obnoxious, potato-nosed puppet on "Sesame Street" named after him (which is actually far more than he deserves), the intrusive Bert insists on breaking into the hot and heavy moment with the inane statement, "If either of you two see a stranger around here, it's me." This gross violation of the see-no-evil taxi driver code sends the discomfited George off into a ludicrous speech which he concludes by making embarrassing "randy" animal noises.
Infamous

Nightlife? Geneva in the days of Calvin had more action. In Bedford Falls, the big diversion of an evening is to walk down to the library (while being constantly greeted by nosy "friends") and see if it will close at 9:00 or 9:01. The sole bar in town appears to be Martini's, a rest home which has a policy against admitting anyone under the age of 60. The strict family values of its devoutly Catholic Neapolitan owner, heavily watered drinks, the constant attention of a kindly bartender who knows your mother and a particularly anodyne menu of Christmas music are the attractions of this morgue, where your chances of getting lucky range between nil and zero.

When it comes to entertainment, the situation is similarly bleak. After George Bailey is tricked by Clarence into returning to Bedford Falls (a fate to which an icy death in the "charming" local river is preferable), he runs ecstatically down the main street, now restored to its full moribundity, and passes the local movie house. "The Bells of St. Mary's and 2nd great feature," the marquee reads. There is no other choice -- it's "Bell's of St. Mary's" or nothing.

A film guide sums up "The Bells of St. Mary's" thusly: "Rambling, embarrassingly winsome sequel to 'Going My Way,' with Crosby's crooning priest transferred to a rundown parish where Barry Fitzgerald's roguish twinkle is replaced by [Ingrid] Bergman's wholesome (but roguish) nun."

Being forced to watch this movie for all eternity would be like finding yourself in one of those "Twilight Zone" episodes in which the same torture keeps happening again and again. (Yes, there is "2nd great feature," but who would dare risk all on that terrifying dice-roll? Since this is Bedford Falls, it is almost certainly "Here Come the Waves," an unspeakable 1944 Sinatra spoof in which Bing Crosby plays the heart-throb of the bobby-sox set.)
P.2
Hard drinks for men who want to get drunk fast
By contrast, Pottersville offers a rich variety of nightlife and entertainment. There is something for every taste and every budget. Pool and billiards sharpen hand-eye coordination. Dime-a-dance joints promote bonhomie. Prize fights and strip clubs provide weary citizens with much-needed catharsis. And a pawnshop makes it possible for those temporarily short on funds to participate in the full range of the community's activities.

And, of course, there are the town's many fine taverns. Alas, we will never know what delights are hidden behind the door of the Indian Club or the Bamboo Room, the Midnight Club or the Blue Moon. But we do have firsthand knowledge of one hostelry -- Nick's, formerly Martini's, the first place into which George and Clarence stumble and from which they are rapidly ejected. And if Nick's is any indication, a night out in Pottersville is not one to forget.

The first thing we see in Nick's is a black piano player, stomping out some righteous honky tonk. A Lauren Bacall-type babe at a crowded table catches the eye. Tough-looking men in fedoras and worldly-wise broads in low-cut dresses are bellied up to the bar. In a word, it's a happening place -- until George and the egregious Clarence come in.

It is not my brief to defend the subsequent actions of Nick, the owner and bartender. No one can deny that his behavior is choleric and menacing, or that it contains disturbing elements of homophobia and disrespect for Christianity. Yet a fair-minded look at the scene reveals that Clarence's provocations were, in fact, intolerable.

Let us review the scene. Nick, who is clearly very busy, asks the two men what they want. George orders a double bourbon. Clarence dreamily says, as if to himself, "I was just thinking ... it's been so long..."

Nick is understandably impatient. "Look, mister, I'm standing here waiting for you to make up your mind," he says.

But this only spurs Clarence on to an even more prolonged and irritating fit of thinking to himself out loud. "That's a good man," he says. "I was just thinking of a flaming rum punch -- no, it's not cold enough, not nearly cold enough...I've got it -- mulled wine! Heavy on the cinnamon and light on the cloves. Off with you, my lad, and be lively."

Many bartenders, after being subjected to this insufferably patronizing sermon -- "Off with you, my lad, and be lively"? "That's a good man"? -- on top of being ordered to make an insultingly impractical drink, would simply reach behind the bar and bring down a baseball bat upon the head of the offending customer. To his credit, Nick does not. Instead, he delivers a speech that, while perhaps not as gracious as it could have been, is a model of frankness and concision. "We serve hard drinks for men who want to get drunk fast," he tells Clarence, "and we don't need any 'characters' hanging around to give the joint 'atmosphere.'"

Any bartender can attest that the prominent posting of these words in every bar in America would immeasurably improve the drinking experience of millions.
Infamous

The denouement, which ends with Clarence and George being physically thrown out of the bar into the snow, is regrettable, but at this point almost inevitable. The die is cast when Nick hears George furtively ask Clarence if he has any money and any place to spend the night -- questions that would give rise to suspicions in the minds of men who have seen less of the world than our host. By the time Clarence begins claiming that "every time you hear a bell ring an angel gets his wings" and asserting that he is hundreds of years old, Nick's actions are virtually preordained. Firmly, yet politely, he asks the two men to leave -- even offering them a choice of the door or the window. Yes, calling them "pixies" is uncalled for -- but we must remember that this was an earlier, less enlightened era.

There is one last objection that can be leveled against Pottersville -- its name. Yes, "Pottersville" does reek of Donald Trump-like vulgarity -- but is that such a bad thing? Being named after a ruthless captain of industry casts a long, Ayn Randian shadow over a city, giving tacit permission to its inhabitants to pursue their pleasures in the enveloping moral darkness. If there was a town named Caligula City in the late Roman Empire, it probably slammed.

I have made, I believe, a definitive case that Pottersville has gotten a bad rap and that Bedford Falls is grossly overrated. But if there are any who are still unconvinced, I would just like to remind them of one little detail: in the real world, Potter won.

We all live in Pottersville now. Bedford Falls is gone. The plucky little Savings and Loan closed down years ago, just like in George's nightmare. Cleaned up, his evil eyebrows removed, armed with a good PR firm, Mr. Potter goes merrily about his business, "consolidating" the George Baileys of the world. To cling to dreams of a bucolic America where the little guy defeats the forces of Big Business and the policeman and the taxi driver and the druggist and the banker all sing Auld Lang Syne together is just to ask for heartbreak and confusion when you turn off the TV and open your front door.

So don't fight it. It's a Pottersville world! Welcome jitterbuggers! Get me -- (ka-ching!) -- I'm giving out wings!

Wal-Mart selling a t-shirt with the insignia of Nazi Germany’s 3rd SS Division Totenkopf.

On Nov. 9, 2006, a blog named Bent Corner revealed Wal-Mart was selling a t-shirt with the insignia of Nazi Germany’s 3rd SS Division Totenkopf.

On Nov. 13, 2006, Wal-Mart said it would stop selling and immediately remove the t-shirts with the Nazi insignia.

But, last week, bloggers from Consumerist were still able to buy the offensive t-shirt at a Wal-Mart store in Georgia.

This outrage prompted 21 bi-partisan members of the U.S. Congress, led by Rep. Jan Schakowsky, to write Wal-Mart and say, “We are gravely dismayed about Wal-Mart’s inaction on its pledge to remove this product from its stores, and we ask that you take immediate steps to comply with last November’s commitment to remove this offensive merchandise from your shelves.”

Please sign our petition calling on Wal-Mart to immediately end its use of Nazi imagery, once and for all:

http://www.wakeupwalmart.com/feature/nazishirts/

Unfortunately, this is not the first time Wal-Mart has used a Nazi image.

Last year, Wal-Mart used a Nazi image in a newspaper ad attacking a local community group in Arizona. The Anti-Defamation League, our campaign and public officials all denounced Wal-Mart’s ad, and Wal-Mart was forced to pull the ad and apologize to the public.

Now, it’s time to stop Wal-Mart’s use of Nazi imagery once and for all.

Please sign our petition: http://www.wakeupwalmart.com/feature/nazishirts/

The day when companies like Wal-Mart could lie to the American people and get away with it are over.

Death Threats for Councilman Who Won’t Stand for the Pledge
By Matthew Rothschild

February 12, 2007

Tom Rawles won’t stand for Bush’s Iraq policy--or for the Pledge of Allegiance, either.

He’s no leftwing protester. He’s a registered Republican and a libertarian who voted for Bush in 2000. A lawyer, he also is a member of the city council of Mesa, Arizona, and formerly a Maricopa County board member.


Most of his colleagues on the city council did not take kindly to his decision not to stand for the Pledge or to recite it at the January 22 meeting.

He vowed then to continue his protest until the troops come home.

So at the February 5 meeting, he remained seated and quiet while the other members rose to recite the Pledge.

He says he decided to go public with his protest after Bush acknowledged in early January that his Iraq policy could be described as “a slow failure.” Rawles terms Bush’s decision to send more troops “a slower failure.” As he puts it, “Why put more American lives in danger while we delay the inevitable?”

He says he wanted to wake people up: “I thought, if I want to get Americans to think about this war and quit becoming complacent, then I should hit them where it hurts, and get their attention.”

That he did.

His act of conscience has brought death threats: “One said, ‘Put a bullet in me,’ and the other said, ‘Bury me in the concrete my company makes.’ (I work for a company that leases land to a business that makes concrete.)”

Both of those threats came online, in reader responses on newspaper websites, he says.

He got another one over the phone, he says.

“Someone should take you out back behind the council building and beat the shit out of you,” the caller said, reports Rawles.

According to the AP, “Police briefly provided him with protection before deciding that the threats were no reason for alarm.”

“My wife was a little more concerned about it than I was,” Rawles says. “People were just mouthing off, spouting off, venting, being stupid.”

While he’s not worried about his own safety, Rawles is worried “about the future of freedom in this country,” he says. “We are so afraid of almost everything that we’re willing to trade in our freedoms for this false sense of security the government is trying to provide. We don’t seem to want any diversity of opinion. And if there is dissent, we even want uniformity in dissent.”

He compares citizens with this attitude to a herd of musk oxen.

“It scares the bejeezus out of me,” he says.

In Mesa, there is a move afoot to make Rawles face a recall.

“I can’t imagine a better final political campaign to be involved in,” he says, “than whether the First Amendment is alive or dead in Mesa, Arizona.”

Deadly Denial of Dental Care
tompaine.com


It is hard to make the travesty of 12-year-old Deamonte Driver’s death more plain than reporter Mary Otto did in Wednesday’s story about him in The Washington Post:

Twelve-year-old Deamonte Driver died of a toothache Sunday.

A routine, $80 tooth extraction might have saved him.

If his mother had been insured.

If his family had not lost its Medicaid.

If Medicaid dentists weren't so hard to find.

Deamonte Driver had a toothache that led to an infection that spread to his brain. A long, $200,000 hospital stay couldn't save his life.

Deamonte's family lives in Prince George’s County, Maryland, within about a half-hour’s drive from the U.S. Capitol. In the Capitol, the conversation about universal health care coverage is dominated by why it can’t happen — it’s wrong to get the government too involved; we can’t buck the powerful insurance and pharmaceutical companies; we can’t raise taxes to cover the costs, even if those taxes would mean more efficiency and, most importantly, better health.

Those of you who believe that universal health care is either a political pipe dream or some crazed socialist idea that is best used as a talking point to bludgeon a Democratic candidate during an election campaign, please step up and explain why Alyce Driver should lose her son because of the lack of it.

Of course, it is not just the Driver family who finds that a trip through the trapdoor-riddled health care maze constructed for low-income people can be fatal. The Institute of Medicine said, based on a 2002 study, that roughly 18,000 people in the United States die each year because of a lack of health insurance. When that report was released, Mary Sue Coleman, co-chair of the committee that wrote the report, was quoted in a statement as saying, “Because we don't see many people dying in the streets in this country, we assume that the uninsured manage to get the care they need, but the evidence refutes that assumption."

Alyce Driver is a working mother, but her low-wage jobs did not provide health insurance. Her children were eligible for Medicaid, but dental care under Medicaid, as the Post story documents, is particularly problematic. Fewer than one in three children enrolled in Medicaid receive preventative dental care in Maryland, and only 900 of the state’s 5,500 dentists accept Medicaid because of the low reimbursement rates. But Maryland children are better off than those in Virginia, where only one in four Medicaid children receive preventative dental care.

Compounding the problem was that Driver lost her Medicaid coverage during a period when she had to stay in a homeless shelter. She apparently missed some paperwork that had been sent to her. Deborah Weinstein, executive director of the Coalition on Human Needs, said that people losing their coverage as they slip in or out of homelessness is not uncommon.

“Dental coverage is required of children who are in Medicaid. But you read in that article the many ways that does not happen,” Weinstein said.

"Unfortunately, this story is poignant illustration of the inadequacy of our current child health insurance system," said Casey Aden-Wansbury of the Children's Defense Fund. "That Deamonte and his brother went untreated for dental problems for such a long period of time because they could not find a provider willing to serve them is morally intolerable in this country—the richest in the world."

The Children's Defense Fund has a legislative proposal for a health insurance system that ensures that all eligible children will not only be automatically enrolled but also retain coverage by eliminating pervasive existing bureaucratic barriers that too often deny health coverage to children when they need it most, as happened to Deamonte. The organization is also seeking an increase in reimbursement rates for dentists and other child health providers to ensure all children timely access to all medically necessary care, including early dental prevention, screening, diagnostic and treatment services.

Getting Congress to focus on the dental care problem faced by the Driver family is difficult, Weinstein said, because “the trouble is, there are multiple problems and they all need fixing.”

“Of course, we need a much more comprehensive solution,” she said.

That would be a solution that doesn’t deny working mothers like Alyce Driver a chance to give her son $80 worth of dental care that would have saved his life.

Every night 754,000 in US homeless: study
Wed Feb 28, 6:28 PM ET

WASHINGTON (AFP) - On any given night 754,000 people across the United States are homeless, according to a new government study on the problem released Wednesday.

The Department of Housing and Urban Development, in its first study of the scope of the national homelessness problem in 23 years, said that its "snapshot" study based on a three-month period in 2005 showed that two-thirds of the homeless population are men, 16 percent are women, 59 percent are ethnic minorities, 41 percent are in the 31-50 age range and 21 percent are children.

It also said that nearly one in five of the adult homeless are military veterans.

However, Philip Mangano, executive director of the United States Interagency Council of Homelessness, said that the snapshot survey does not represent the full extent of homelessness across the country, as measured throughout the year.

"There is a divergence of opinion among researchers about the number of people who are experiencing homelessness in the course of a year," Mangano said.

"Some say it might be as high as one percent of the US population (three million people); others say it might be as high as two million."

Reverse Reparations: Race, Place, and the Vicious Circle of Mass Incarceration*
by Paul Street
March 04, 2007
Zmag.org


“TOWNS PUT DREAMS IN PRISONS”

Sometimes it's the silences that speak the loudest. Consider, for example, a page-one article that appeared in the New York Times in the summer of 2001 under the title "Rural Towns Turn to Prisons to Re-ignite Their Economies." According to this piece, non-metropolitan America was relying like never before on prison construction for jobs and economic development. Formerly, Times reporter Peter Kilborn noted, rural communities had depended for employment and economic development on agriculture, manufacturing, and/or mining. Now, however, they were counting on mass incarceration to deliver the goods. Reporting that “245 prisons sprouted in 212 of the nation’s 2,290 rural counties” during the 1990s, Kilborn quoted the cheerful city manager of Sayre, Oklahoma, which had just opened a prized new maximum-security lockdown. "There's no more recession-proof form of economic development," this local official told Kilborn, than incarceration because "nothing's going to stop crime."

By Kilborn’s account, “prisons have been helping to revive large stretches of rural America. More than a Wal-Mart or a meatpacking plant, state, federal, and private prisons, typically housing 1,000 inmates and providing 300 jobs, can put a town on solid economic footing.” Thanks to money brought in through taxes on prisoners’ telephone calls, sales taxes paid by prisoners and prison staff, and to water, sewer, and landfill fees, Killborn added, Sayre’s city budget increased from $755,000 in 1996 to $1,250,000 in 2001, permitting the town to set aside 15 percent of its revenues for capital improvements. No such savings or investment were possible before the prison, when Sayre “was surviving largely on federal crop support payments to its dwindling farm population” in the wake of the collapse of the state’s oil and gas industry(1).

A different story on the same topic appeared under the title "Ionia Finds Stability in Prisons" in the Detroit News just 12 days before Kilborn’s piece. It told the enlightening tale of how the semi-rural Michigan town of Ionia, located halfway between Lansing and Grand Rapids, had recently become one of the state's fastest growing and "most improved" communities thanks its five thriving penitentiaries together employing 1,584 workers who collectively made $102 million a year. "The state's urban centers dump their felons," the Detroit News reported, "in prison towns and forget about them. Suburbs balk at housing felons, envisioning escapees trampling through their gardens and hiding out in their tool sheds." But "Ionia," the paper noted, "sees things from the other end of the spectrum. The prisons bring, of all things, security." According to Detroit News reporter Francis Donnelly, Ionia’s “penitentiaries, five veritable Great Lakes of cash, provide sustenance to every sector of [Ionia’s] once-dry economy: jobs for residents, customers for stores, revenue for the city government,” including “nearly $1.2 million of the city’s $3.8 million budget” (2).

A February 2001 Chicago Tribune article titled “Towns Put Dreams in Prisons” told a comparable story from Illinois. In “downstate” Hoopeston, Illinois, the Tribune reported, there was “talk of the mothballed canneries that once made this a boom town and whether any of that bustling spirit might return if the Illinois Department of Corrections (IDOC) comes to town.” “You don’t like to think about incarceration,” Hoopeston’s mayor told the Tribune, “but this is an opportunity for Hoopeston. We’ve been plagued by plant closings.” The mayor, the Tribune reported, was lobbying IDOC to permit his town to host a prison so that it could enjoy some of the economic benefits that came to Ina, Illinois when the “Big Muddy” prison was constructed in 1993.

Before “Big Muddy” went up, the Tribune noted, Ina “took in just $17,000 a year in motor fuel tax revenue. Now the figure is more like $72,000. Last year’s municipal budget appropriation was $380,000. More than half of that money is prison revenue. Streets that were paved in chipped gravel and oil for generations soon will all be covered in asphalt. An $850,000 community center that doubles as a gym and computer lab for the school across the street is being paid for with prison money.”

Because much state and federal tax revenue is allocated on a per capita basis, the Tribune noted, “a prison population that puts no strains on village services is a permanent windfall for a little town such as Ina.” “It really figures out this way,” Ina’s mayor Andy Hutchens told the Tribune: “this little town of 450 people is getting the tax money of a town of 2,700.” “And those people in that prison,” Hutchens added, “can’t vote me out of office” (3).

The extent of some “downstate” Illinois communities’ sense of dependence on the prison “windfall” was clear in a Tribune article that appeared nearly a year later when then-Illinois Governor George Ryan announced the impending closure of the state’s rural Vienna Correctional Center. A page-one Tribune story on resulting local union protests, noted that “at a time when other industry in Illinois’ southern end is weak, Vienna and other prisons dotting the farm fields are considered a force as much for economic development as for public safety.” As coal mines closed during the 1970s, the paper observed, displaced southern Illinois workers turned to the Vienna and later the Shawnee correctional facilities for jobs. Further:

“When their children graduated from high school, parents encouraged them to start a career in what appeared to be a dependable industry. ‘That was the only thing going on when I was coming up, that and the mines and the rock quarries,’ said Larry Flynn, who went to work at Vienna in 1985. ‘It ain’t bad work and there are good benefits, if you can handle the stress.’ The pay is good too. A correctional officer can make about $40,000 a year, not bad in a place where new homes sell for less than $100,000.”

“Over time,” the Tribune added, “the local economy has grown up around the prison like a vine” (4).

Each of these newspaper articles did an excellent job telling an important story about a striking and relevant contemporary issue. In a nation founded largely on agrarian-republican ideals, prisoners now outnumber farmers. Filled primarily by inmates of urban origin, most of the United States’ “correctional” lockdowns are found in rural areas. Two and a half decades of massive American prison construction has combined with the rural fallout of corporate-neoliberal globalization to turn mass incarceration into an often desperately sought “growth industry” for non-metropolitan jurisdictions. As Tracy Huling has ominously noted, “the acquisition of prisons as a conscious economic development strategy for depressed rural communities and small towns in the United States has become widespread.” Along with “gambling casinos and huge animal confinement units for raising or processing hogs and poultry,” Huling observes, “prisons have become one of the three leading rural economic enterprises as states and localities seek industries that provide large-scale and quick opportunities” (5).

But each article also made three critical omissions for those who wish to understand the meaning and impact of the rise of a giant rural American prison industrial complex fed by primarily urban, human “raw material.” The first thing missing was any appropriate sense of horror at a society in which local officials sell the nightmare of mass human confinement as a ticket to the American Dream. As Huling observes, “hundreds of small rural towns and several whole regions have become dependent on an industry that itself is dependent on the continuation of crime-producing conditions” [emphasis added] in other parts of the nation (6).

What are we supposed to make, morally, of a situation in which crime and imprisonment for some are seen as sources of economic “security” for others? When prisons become “a force as much for economic development as for public safety,” citizens in a democracy worth its name should shudder with horror. Such a state of affairs raises (or ought to raise) sharp moral questions regarding the dominant U.S. social order and the economic options it offers to its populace (7).


REVERSE REPARATIONS

The Urban Kept of Color

The second thing missing was the stark racial dimension of the new rural prisonomics. By the time each of the articles appeared, the most striking aspect of America’s correctional boom beyond its sheer magnitude – the U.S. emerged as the world’s leading incarceration state during the 1990s – was its heavily racialized nature. Between 1980 and 2000, the number of black men in jail or prison grew fivefold (500 percent), to the point where, as the Justice Policy Institute reported in 2002, there were actually more black men behind bars than enrolled in colleges or universities in the United States. On any given day, United States Bureau of Justice Statistics director Jan Chaiken reported in 2000, 30 percent of African-American males ages 20 to 29 were under correctional supervision – either in jail or prison or on probation or parole. The nation’s disproportionately urban black populace comprised 12.3 percent of the US population, but blacks made up nearly half of the roughly 2 million Americans behind bars by the turn of the millennium. The incarceration rate for African-Americans was 1,815 per 100,000 compared to 609 per 100, 000 for Latino-Americans, 99 for Asian-Americans, and 235 for American whites. For black adult males the incarceration rate was a remarkable 4, 484 per 100,000, compared to 1,668 per 100,000 for Hispanic males and 1,318 for white males. Reflecting astonishing racial disparities in the waging of America’s domestic “War on Drugs,” roughly one in ten of the world’s prisoners was an African-American male by the onset of the 21st century (8 ).

In 15 percent black Illinois, 64 percent of the state’s prisoners were African-Americans. The state’s incarceration rate for blacks was 1,550, compared to 127 for whites, per 100,000. There were nearly 20,000 more black males in the Illinois state prison system than the number of black males enrolled in the state's public universities(9). Reflecting the strong correlation between blackness and urban residence in a still highly segregated state and nation (10) 70 percent of the state’s prisoners came from the Chicago metropolitan area, home to 83 percent of the state’s African-Americans. Ten inner-city Chicago zip codes (including five on the city’s predominantly black West Side and four on the city’s predominantly black South Side) received 25 percent of Illinois prisoners released in the years 2000, 2001, and 2002. All of those zip codes, equal to less than a quarter of the city’s zip codes, were disproportionately nonwhite for the city as a whole. Eight were at least two thirds black (in a 37-percent black city) and six were at least 96 percent black (11).

The Caucasian Country Keepers

The color of the “downstate” keepers was a different matter. Eighteen of the twenty adult correctional facilities constructed between 1980 and 2000 in Illinois were located in rural counties that are disproportionately white for the state. Just four of the state’s twenty new (post-1980) prison towns had black municipal populations above the state-average. In three of these cases this was only because census authorities count prisoners as residents of the towns in which they are involuntarily warehoused, not their communities of pre-incarceration residence.

Visitors to outwardly white Ina, Illinois would be surprised to learn from the Census Bureau that that community is officially 42 percent African-American. The explanation, of course, is found in the distorting impact of Big Muddy’s predominantly black prison population on the government’s local race tabulations (12).

Things are much the same in other states where the nation’s disproportionately urban black population supplies most of the raw material for the “correctional” industry. In New York, prison and census researchers Peter Wagner and Rose Hyer note, three-fourths of the state’s prisoners come from the New York City metropolitan area. Eighty percent of the state’s inmates are black or Latino. Ninety-one percent of them are warehoused in predominantly white “upstate” sections of New York. Those sections host all of the 38 New York state prisons constructed between 1982 and 2000. At the Attica prison, home to a notorious bloody conflict between predominantly nonwhite (and New York City-based) prisoners and predominantly white prison guards, state policemen, and National Guardsmen in September 1971, blacks and Latinos’ together comprised 80 percent of the inmate population by the mid 1990s. Attica’s prison staff remained 97 percent white “because Attica itself has not moved. It remains in a rural, overwhelmingly white region of New York State” (13).

“Prisoners of the Census”

Thanks to the savagely racialized nature of America’s geographically slanted prison demographics and the government’s practice of counting prisoners as if they reside in their prison’s census tract, the United States is dotted with a large number of non-metropolitan jurisdictions that are much more officially black than they appear in their commercial and residential districts. New York is home to eleven rural counties where black prisoners make up 64 percent or more of total black population. Across the nation, Wagner and Heyer find, there were 173 counties with more than half of their black populations behind bars in 2000.

One such jurisdiction is Ionia County in Michigan, officially home to 2,867 black Americans, all but 165 of whom were warehoused in Ionia’s (the town) five prized penitentiaries. The most extreme example is Brown County, Illinois. By official census count, it was 18 percent black in 1999, more proportionately African-American than all but four counties in Illinois. “All but 5 of the 1,265 blacks reported by the Census Bureau in Brown County,” note Wagner and Heyer, “are incarcerated residents of somewhere else. The large black population of Brown County is a statistical fiction” (14).

“A Massive Transfer of Value”

If prisons filled by disproportionately black “urban felons” have become a critical source of “economic development” in disproportionately white rural America, then they are also and at the same time a form of what might be called “reverse racial reparations.” According to the distinguished criminologist Todd Clear, the “economic relocation of resources” from black to white communities that results from racial disparities and related spatial patterns in mass incarceration are considerable. “Each prisoner represents an economic asset that has been removed from that community and placed elsewhere [emphasis added]….The removal may represent a loss of economic value to the home community, but it is a boon to the prison community.” By Clear’s estimation in the late 1990s, “each prisoner represents as much as $25,000 in income for the community in which the prison is located, not to mention the value of constructing the prison facility in the first place. This can be a massive transfer of value: A young male worth a few thousand dollars of support to children and local purchases is transformed into a $25, 000 financial asset to a rural prison community. The economy of the rural community is artificially amplified, the local city economy artificially deflated” (15).

Generally quite poor, prisoners deflate the income profiles of downstate communities, making prison towns eligible for extra poverty-directed public dollars. The prisoners do not benefit, however, from the rural roads, schools, and bridges built with public funds tied to prison development. At the same time, prisoners put relatively minimal strain on local infrastructure beyond occasional trips to court and the use of prison shower and toilet facilities.

They do not benefit from the enhanced political power that prisons bring to rural jurisdictions. Politically disenfranchised prisoners (inmates can vote in only two U.S. states, both in predominantly white New England) count towards the representation of the electoral districts in which they are incarcerated, not the districts from which they came, and to which most of them return (16).

Altogether, it makes for a disturbing picture, full of unsettling parallels and living links to chattel slavery. Under the modern mass imprisonment regime in the “land of the free,” millions of young black men are involuntarily removed from their home urban environments to serve as voiceless economic, budgetary, and political assets in distant rural destinations where they are kept under lock and key by white-majority overseers. It is difficult to imagine a more pathetic denouement to America’s long, interwoven narratives of class and racial privilege. The chilling implications are not lost on black inmates, some of whom (one instructional staff member within the Illinois Department of Corrections reports) cynically refer to themselves as “economic development” (17).

VICIOUS CIRCLE

The third thing missing from the newspaper accounts quoted at the beginning of this chapter is the terrible effect of racially disparate mass incarceration on the labor market experience and related economic and life chances of the disproportionately black inmates who provide critical raw material for America’s prison boom. The story of mass imprisonment’s role in transferring wealth out of urban and black communities is incomplete without factoring in the significant negative impact that felony records and prison histories have on future earnings and employment. If the prison boom has created some measure of economic stability and security – just how much is a matter of increasing skepticism and debate (18 ) – for white non-metropolitan communities, it exacerbates economic insecurity and instability for the highly disadvantaged and hyper-segregated (by both race and poverty) inner-city communities that provide so much of the correctional complex’s “raw material.” It worsens the already considerable economic under-development of the black inner city and its residents.

Mass Incarceration as Racially Regressive State Intervention

According to a recent social-scientific survey of more than 3,000 employers nationwide, more than 60 percent of employers would not knowingly hire an ex-offender. By comparison, 92 percent of those employers would likely hire a current or former welfare recipient and 83 percent would hire someone who had been unemployed for a year (19). Reflecting this employer bias and a host of related barriers, the best social science research finds that incarceration carries a 10 to 20 percent “wage penalty.” Ex-prisoners on average experience no real wage increases in their twenties and thirties, when young men who have never been incarcerated tend to experience rapid wage-growth. Prison time serves to channel individuals away from skilled occupations and into job sectors characterized by low wages, limited job stability, and fewer opportunities for advancement. It significantly disrupts the career-building process as ex-offenders are left to start back at square one with respect to gaining a foothold in a particular occupation.

Incarceration particularly closes off employment avenues for ex-offenders in the public sector, where employers are now extremely concerned about the criminal records of applicants and where black employment is disproportionately concentrated. “The effect of prior incarceration on the likelihood of securing government employment,” sociologist Devah Pager notes, “is dramatic,” corresponding to a 61 percent reduction in the odds of holding a government job after a stay in prison (20).

Since incarceration rates are especially high among those with the least power in the labor market – young and unskilled minority, particularly African-American, men – U.S. incarceration significantly exacerbates racial inequality. Racially disparate mass incarceration means that imprisonment’s negative labor market effects will disproportionately affect blacks. “The relative rates of incarceration are so heavily skewed towards blacks,” notes Pager, that “any effect, however small, will have substantial consequences for racial disparities.”

Thanks to its racially disparate labor market and related (under-) developmental consequences, the prison industrial complex has become a significant form of racially regressive and highly regulatory state intervention in the US labor market and economy. Sociologists Bruce Western and Katherine Beckett find that “the penal system has a pervasive influence on the life chances of disadvantaged minorities.” Further:

“Although typically the preserve of criminology, incarceration appears to shape aspects of inequality that are of traditional interest to stratification researchers. It seems likely that status attainment, school-to-work transitions, and family structure are all influenced, perhaps even routinely, by the penal system in the current period of high incarceration. From this perspective, the usual list of institutional influences on social stratification – schools, the families, and social policy – should be expanded to consider the coercive redistribution of life chances through incarceration” (21).

Even without criminal marking and prison backgrounds, of course, African-Americans are disproportionately and often deeply disadvantaged in competitive job markets by low skills, poor schools, fragile family structures, racial discrimination in hiring and promotion, and geographic isolation from the leading sectors of job growth. When felony records and prison histories are thrown into that terrible cauldron of economic misery, the labor market difficulties experienced by many inner-city residents are deepened. Imprisonment becomes a cause as well as a reflection of the severe economic under-development that drains leading prisoner return neighborhoods of the economic resources necessary to enable meaningful prisoner reentry. The savage irony, of course, is that the dreadful labor market situation of ex-offenders combines with numerous other factors to make it likely that the majority of released prisoners will commit new crimes and return to prison (22).

Cloaking Real Black Male Unemployment

Along the way, racially disparate mass confinement works to reduce society’s awareness of the very labor black labor market disadvantage it worsens by artificially suppressing the official black male unemployment rate. By the mid-1990s, Western and Becky Pettit found, that rate would have been 39 percent if prisoners had been factored in to the calculations (23). Following the late sociologist Pierre Bourdieu, we might say that the negative intervention of the state’s authoritarian and regressive right hand in the form of mass incarceration obstructs public understanding of a problem – massive black unemployment (especially intense in the inner city) – that might, if properly grasped, help spark positive progressive and intervention by the more social and democratic left hand of the state (24).

Completing the Criminogenic Circle

Mass incarceration’s ironic criminogenic impact on the rural prison industry’s critical human raw material goes beyond the way it cheapens yet further the already degraded value of black, inner city labor power. As Clear has noted, the rampant arrest and incarceration of inner-city youth for drug crimes creates an ironic “replacement effect” that “cancels out the crime-prevention benefits of incapacitation.” In the face of a stable demand for illegal substances, mass arrest and incarceration “creates job openings in the drug delivery enterprise and allows for an ever-broadening recruitment of citizens into the illegal trade.” At the same time, mass incarceration deepens the presence of negative “social factors” that contribute to criminality in minority communities: broken families, inequality, poverty, alienation, and social disorder (25). It also ironically undercuts the deterrent power of prison. “As more people acquire a grounded knowledge of prison life,” Clear finds, “the power of prison to deter crime through fear is diminished.” Thus, Newsweek reporter Ellis Cose has found that prison has “become so routine” in some urban minority neighborhoods “that going in can be an opportunity for reconnecting with friends.” A drug-dealer from Maryland told Cose of his “panic on conviction. Having heard horror stories about young men abused inside, he fretted about how he would fend off attacks.” But “once behind bars, he discovered that the population consisted largely of buddies from the hood. Instead of something to fear, prison ‘was like a big camp’” (26).

It doesn’t help, of course, that inmate education and rehabilitation have been systematically de-legitimized and de-funded as the US has built a record number of new prisons in a spirit of what prisoner “reentry” expert Jeremy Travis calls “robust retributivism” (27). Also undermining successful ex-prisoner re-entry and feeding recidivism is the fact that prisons have been constructed at increasing distances from predominantly urban prisoners’ communities of origin. “Two thirds” of New York’s “new prisons have been built in rural areas,” Wagner and Heyer note, “despite research showing that incarcerating a prisoner close to home aids family visits and helps reduce the odds a prison will re-offend and be returned to prison” (28 ) Illinois’ disproportionately black and Chicago-based inmates have been further removed over time from family, community networks, and support services vital to successful reintegration – one of many ways in which place matters in the making of modern racial inequality (29).

The perverse, viciously circular, Orwellian, and self-fulfilling logic of racially disparate mass incarceration is darkly impressive. The currently existing mass imprisonment of “urban felons” from de-industrialized black neighborhoods is a major contributor to “the continuation of crime-producing conditions” upon which prison-hosting towns depend.

Opportunity Cost

In assessing mass incarceration’s negative, crime-encouraging impact on inner-city communities, we should also calculate and factor in the considerable anti-poverty and related public safety cost of spending billions of dollars on the imprisonment of inner city residents. Those funds would be more productively spent on educating, training, treating, training, and otherwise supporting people stuck in the nation’s many high-crime ghetto communities. They could also be dedicated to the enforcement of civil rights laws against racial discrimination in labor, real-estate, and financial markets. That discrimination provides critical context for the economic under-development of the nation’s most heavily crime and incarceration-intensive communities (30).

By the turn of the millennium, the Justice Policy Institute reports, it was “costing states, counties, and the federal government nearly $40 billion to imprison approximately two million state and local inmates, up from $5 billion in combined prison and jail expenditures in 1978. The massive growth in state prisoners over the past two decades has meant that one out of every 14 general fund dollars spent in 2000 was spent on prisons.” Public investment in incarceration was so extensive, indeed, that several large states spent as much or more money to incarcerate adults than they did to provide their citizens with college and graduate educations. States spent 60 cents on prisons for every dollar they spent on higher education, up from 28 cents in 1980 (31).


Meanwhile, the nation’s urban minority and rural public schools continued to suffer from persistent savage funding inadequacy and inequity. The nation’s hyper-segregated and widely under-funded educational system produced a regular stream of poorly educated graduates and drop outs that fed both the cell blocks and the guard staffs of the nation’s expanding network of increasingly rural penitentiaries (32).

COMMON GROUND ACROSS THE RACIAL AND SPATIAL PRISON DIVIDE?

Given some of what we are beginning to learn about the economic (as well as the social and spiritual) limits of prisonomics as a provider of “good jobs” and development to non-metropolitan Americans (33) I wish to conclude this generally disturbing discussion on a hopeful note. People and communities, it is becoming increasingly evident (34) on both sides of the at once spatially and racially loaded mass incarceration coin have some sound (if all too hidden) reasons for collaboration to collaborate in pursuit of progressive changes.

Both groups require and deserve decent, good-paying, and soul-nourishing jobs, the reconstruction and expansion of basic social-contractual safety nets, and significant public investments in things like public education, job-training, substance abuse treatment, universal health insurance, child care, public transportation, treatment – to mention just some of the most relevant and unmet program needs. They both need the US to shift from a low- road to a high-road path of balanced, high-wage, and worker- (instead of management and super-vision-) centered development (35).

They both need America to shift public resources from the at once regressive, repressive, and well-funded (in the U.S.) “right hand of the state” (including prisons and the military) to the more egalitarian, social, democratic, and less well-funded “left hand” of the state. They both need and deserve a greater share of the nation’s wealth, which tends to concentrate in the nation’s affluent white metropolitan suburbs and upscale urban neighborhoods, in zip codes where prisoners, ex-prisoners, and prison guards are rare indeed. They both need and deserve a greater say in local, regional, and national socioeconomic planning and management and in the allotment of globalization’s costs and benefits.

They both need and deserve meaningful development choices beyond the confines of an authoritarian, racist, zero-sum political economy that has generated the most unequal distribution of wealth in the industrialized world (36) and given intimately related rise to an internal, dangerously proto-fascistic and racist “Prison Nation.”

Alongside the encouraging fact that most Americans actually oppose the vicious circle of racially disparate mass incarceration (37) and that are few policy few policy mysteries on how to break that circle (38 ) these and other commonalities of interest between the prison-fed and the prison-feeding communities provide some basis for optimism regarding the prospects for rolling back racially disparate mass incarceration in the U.S.


* This essay was originally written in late summer of 2005, to be included in a book collection that was mysteriously and strangely butchered by an anonymous editor.

Paul Street can be reached at paulstreet99@yahoo.com. His next book is Racial Oppression in the Global Metropolis (New York, NY: June 2007).

NOTES

1. Peter Kilborn, "Rural Towns Turn to Prisons to Re-ignite Their Economies," New York Times, 1 August, 2001, A1.

2. Francis X. Donnelly, “Ionia finds Stability in Prisons,” Detroit News, 15 July 2001.

3. “Towns Put Dreams in Prisons,” Chicago Tribune, 20 March, 2001, 2C:1

4. “Prison Town’s Future in Doubt,” Chicago Tribune, 25 February, 2002. See also Francis X. Donnelly, “Ionia finds Stability in Prisons,” Detroit News, 15 July 2001; “Prison Delay Seems Like Life Sentence to Tiny Town,” Chicago Tribune, 8 March 2002.

5. Tracy Huling, “Building a Prison Economy in Rural America,” in Marc Mauer and Meda Chesney-Lind, Invisible Punishment: the Collateral Consequences of Mass Incarceration (New York, NY: The New Press, 2002), p. 197.

6.Huling, “Building a Prison Economy,”, p. 197.

7. For some troubling reflections in that regard see Paul Street, “’The Beacon to the World of the Way Life Should Be,’” Part III in Paul Street, Empire and Inequality: America and the World Since 9/11 (Boulder, CO: Paradigm Publishers, 2004), pp. 143-181.

8. Justice Policy Institute, Cell Blocks or Classrooms? The Funding of Higher Education and Corrections and Its Impact on African American Men (2002); Jan Chaiken, “Crunching Numbers: Crime and Incarceration at the End of the Millennium,” National Institute of Justice Journal (January 2000); Mother Jones and Justice Policy Institute, “Debt to Society” (2001), available online at /www.motherjones.com/news/special_reports/prisons; Human Rights Watch, World Report 2002: United States ; Human Rights Watch, Punishment and Prejudice: Racial Disparities in the War on Drugs (2000); Human Rights Watch, “Race and Incarceration in the United States,” February 27, 2002; “Nearly Two Thirds of U.S. Prisaon Population Are Blacks and Latinos,” Pure-News USA, March 2002; Paul Street, The Vicious Circle: Race, Prison, Jobs, and Community in Chicago, Illinois, and the Nation (Chicago, IL: Chicago Urban League, 2002).

9. Street, Vicious Circle, pp. 11-12; Illinois Board of Education, IBHE Data Book (2002); Illinois Department of Corrections, 2001 departmental data, retrieved December 11, 2001 at www.idoc.state.il.us. For comparison with New York, see Robert Gangi, Vincent Shiraldi, and Jason Ziedanberg, New York State of Mind? Higher Education vs. Prison Funding in the Empire State. 1988-1998 (New York, NY: Correctional Association of New York, 1998).

10. U.S. Census Bureau, “The Black Population in the United States: March 2002” (Washington DC: US Department of Commerce: US Census Bureau, April 2004), p.2; Paul Street, Still Separate, Unequal: Race, Place, Policy and the State of Black Chicago (Chicago, IL: Chicago Urban League, 2005), pp. 7-22. According to the census office, “over one half (52 percent) of all Blacks live in a central city within a metropolitan area, compared with 21 percent of non-Hispanic whites.”

11. Detailed prison release data from Illinois Department of Corrections, Department of Planning and Research, 2002; Street, Vicious Circle, pp. 17-20.

12. Paul Street and Dennis Kass, The Color of Job and Prison Growth: Race, Geography, Labor Market Opportunity, Unattached Youth, and Mass Incarceration in Illinois (Chicago, IL: Chicago Urban League, Summer 2001).

13. Peter Wagner and Rose Hyer, “Too Big to Ignore: How Counting People in the Prisons Distored Census 2000” (Prison Policy Initiative, April 2000, available online at www.prisonersofthecensus.org/toobig/toobig.shtml; Wagner and Hyer, “Thirty-Two Years After Attica: Many More Blacks in Prison But Not as Guards,” (Prison Policy Initiative, September 25, 2003).

14. Wagner and Heyer, “Too Big to Ignore;” Wagner and Heyer, “Outdated Methodology Impairs Census Bureau’s Count of Black Population” (Prison Policy Initiative, May 3, 2004); United States Census, Community Fact Sheet for Ionia County, available at http://factfinder.census.gov/home/ saff/main.html?_l ang=en.

15. Todd Clear, “Backfire: When Incarceration Increases Crime,” and Demetra Smith Nightingale and Harold Watts, “Adding It Up: the Economic Impact of Incarceration on Individuals, Families, and Communities,” in The Vera Institute of Justice, The Unintended Consequences of Incarceration (New York, NY: Vera Institute of Justice, January 1996).

16. Eric Lotke and Peter Wagner, “Prisoners of the Census: Electoral and Financial Consequences of Counting Prisoners Where They Go, Not Where They Come From,” Pace Law Review, volume 24:587 (2004): 587-607; Molly Dugan, “Census Dollars Bring Bounty to Prison Towns,” Chicago Reporter (July/August 2000), available online at http://www.chicagoreporter. com/2000/8-2000/prison/prison.htm; Paul Street, “‘Those People in that Prison Can’t Vote Me Out’: The Political Consequences of Felony Disenfranchisement,” Black Commentator, Issue 68 (December 11, 2003), available online at http://www.blackcommentator.com/68/68_stre...tml;Christopher Uggen, Jeff Manza, and Angela Behrens, “Ballot Manipulation and the ‘Menace of Negro Domination’: Racial Threat and Felony Disenfranchisement in the United States, 1850-2002,” American Journal of Sociology, volume 109 (2003): 559-605.

17. Paul Street, “ ‘Our Brothers Keeper’: The Thoroughly Dismal Science of Prison Economics,” Opportunity (July 2002): 48-52; Street, “Color Bind: Prisons and the New American Racism,” Dissent (Summer 2001); Street, “Mass Incarceration as Reverse Racial Reparations,” at www.ilworkforce.org/ Docs/ pdfs/Xoc/Oct2001/Paul Street.PDF.

18. See Huling, “Building a Prison Economy;” Ryan S. King, Marc Mauer, and Tracy Huling, Big Prisons, Small Towns: Prison Economics in Rural America (Washington DC: The Sentencing Project, 2003).

19. Harry Holzer, Steven Raphael, and Michael Stoll, “Perceived Criminality, Criminal Background Checks and the Racial Hiring Practices of Employers,” paper delivered at Institute for Policy Research, Northwestern University, May 5, 2001.

20. Bruce Western and Becky Pettit, “Incarceration And Racial Inequality In Men’s Employment,” Industrial and Labor Relations Review, 54 (October, 2000): 3-16; Bruce Western, “The Impact of Incarceration on Earnings,” paper delivered at the 2000 annual meetings of the Society for the Advancement of Socio-Economics (London); Devah Pager, “Criminal Careers: the Consequences of Incarceration for Occupational Attainment,” paper delivered at the Annual Meetings of the American Sociological Association, 2001.


21. Pager, “Criminal Careers;” Bruce Western and Katherine Beckett, “How Unregulated is the US Labor Market? The Penal System as a Labor Market Institution,” American Journal of Sociology, 104 (January 1999): 1030-1060.

22. William Julius Wilson, When Work Disappears: The World of the New Urban Poor (New York, NY: Vintage, 1997); Street, Still Separate, Unequal, pp. 27-152; Street, The Vicious Circle, pp. 3, 15-28, 32-39; ; Bruce Western, Jeffrey Kling, and David Weiman, “The Labor Market Consequences of Incarceration,” Crime and Delinquency, 47 (July 2001): 410-27. According to the Wall Street Journal in the spring of 2005, “there is an emerging belief” in the U.S. “that…the practical barriers facing ex-prisoners” seeing to reintegrate into society “make it more likely that they will slip back into a life of crime.” According to Journal reporter Gary Fields, “two-thirds of ex-felons return to police custody within three years of their release for new crimes or for probation or parole violations….” Gary Fields, “After Prison Boom, a Focus on Hurdles Faced by Ex-Cons,” Wall Street Journal, 24 May, 2005, A1. See also Joan Moore, “Bearing the Burden: How Incarceration Weakens Inner-City Communities” (1996), www.doc.state.ok.us/DOCS/ OCJRC/Ocrjc96/Ocrjc43.htm;” Sasha Abramsky, “When They Get Out,” Atlantic Monthly (June 1999); Jennifer Gonnerman, “Life Without Parole?,” New York Times Magazine (May 19,2002). On re-arrest rates, see Jeremy Travis, But They All Come Back: Facing the Challenge of Prisoner Reentry (Washington DC: The Urban Institute Press, 2005), pp. 93-70.

23. Bruce Western and Becky Pettit, “Incarceration and Racial Inequality in Men’s Employment,” Industrial and Labor Relations Review, 54 (October 2000): 3-16.

24. Pierre Bordieu, Acts of Resistance (New York: Free Press, 1998), p. 2. See also Paul Street, “Starve the Racist Prison Beast,” Black Commentator, Issue 65 (November 20, 2003).

25. Clear, “Backfire.”

26. Clear, op cit; Ellis Cose, “The Prison Paradox,” Newsweek , (November 13, 2000): 40-46.

27. Travis, But They All Come Back, p.xx.

28. Wagner and Heyer, “Thirty-Two Years After Attica.”

29.Paul Street and Dennis Kass, “The Color and Geography of Prison Growth in Illinois,” Chicago Urban Leaguer, v. 1, no.4 (Fall 2001): 5-7; available online at www.cul-chicago.org.; Street, Still Separate, Unequal; Sheryll Cashin, The Failures of Integration: How Race and Class Are Undermining the American Dream (New York, NY: Public Affairs, 2004).

30. Street, Still Separate, Unequal, pp. 123-153.

31. Justice Policy Institute and Mother Jones, “Debt to Society;” Justice Policy Institute, Cell Blocks or Classrooms; John Hagan and Ronit Dinovitzer, “Collateral Consequences of Imprisonment for Children, Communities, and Prisoners,” 1999) in Tonry and Petersilia, eds., Prisons, volume 26 of Crime and Justice: A Review of Research (Chicago: University of Chicago Press, 1999).

32. Paul Street, Segregated Schools: Race, Class, and Educational Apartheid in the Post-Civil Rights Era (New York, NY: Routledge, 2005), pp. 49-76.

33. See Huling, “Building a Prison Economy;” King, Mauer, and Huling, Big Prisons, Small Towns. Among the economic limits, these and other authors note prisons’ tendency to favor job applicants outside their local community, their failure to provide strong linkages with other local industries, and their tendency to displace local unskilled labor with inmate-workers in local public service projects. Also economically problematic is the lingering stigma of mass confinement (which means that a prison town will rarely host any other industry) and the high turnover of turnover staff that results from the dangerous and stressful nature of much correctional work. Discussion of economic and other (including spiritual and social) limits and problems might be considered a fourth great silence in the articles mentioned at the beginning of this chapter.

34. See Paul Street, “Race, Place and the Perils of Prisonomics: Beyond the Big-Stick, Low-Road, and Zero-Sum Mass Incarceration Con,” Z Magazine, Vol. 18 July/August 2005.

35. On the distinction between a more worker-centered and “high road” and a more management-centered “low-road” economic strategy, see David M. Gordon, Fat and Mean: The Corporate Squeeze of Working Americans and the Myth of Managerial “Downsizing” (New York, NY: Simon and Schuster, 1996), which contains some fascinating and suggestive reflections on what he saw as the intimate interrelationship between (a) the United States’ massive racially disparate mass incarceration “garrison state” and ( authoritarian “low-road” and management –intensive/low-wage economics driven largely (in his analysis) by corporate-bureaucratic bloat.

36. Gordon, Fat and Mean; Donald Barlett and James Steele, America: Who Stole the Dream? (Kansas City, MO: Andrews and McMeel, 1996); Robert Pollin, The Contours of Descent: US Economic Fractures and the Landscape of Global Austerity (New York, NY: Verso, 2003); Marc Mirongoff and Maria-Luisa Miringoff, The Social Health of the Nation: How America is Really Doing (New York, NY: Oxford University Press, 1997); Economic Policy Institute, The State of Working America, 2003-2004 (Washington DC: Economic Policy Institute, 2004); Edward N. Wolff, Top Heavy: The Increasing Inequality of Wealth in the United States and What Can Be Done About It (New York, NY: The New Press, 2002).

37. Justice Policy Institute, Cutting Correctly: New Prison Policies for a Time of Fiscal Crisis (February 7, 2002) ; Peter D. Hart Research Associates, “Changing Public Attitudes Toward the Criminal Justice System” (Washington DC: Open Society Institute, 2002).

38. Street, The Vicious Circle, pp. 42-43. For positive solutions on the prisoner reentry side, see Jeremy Travis, But They All Come Back: Facing the Challenges of Prisoner Reentry (Washington DC: The Urban Institute Press, 2005).

Presence of Malice. Billy Wilder tours journalism's pus-filled heart in the long-lost Ace in the Hole.
By Jack Shafer
July 19, 2007

Kids remind themselves of what sort of monsters they are by imagining fiends and venomous snakes under their beds. Journalists do something similar by talking up Ace in the Hole, Billy Wilder's rarely screened desert noir from 1951 about a New York City reporter exiled to the drowsy Albuquerque Sun-Bulletin. Starting this week, everybody can live the nightmare thanks to the Criterion Collection, which has released Ace in the Hole on DVD, its first appearance in the United States on home video.

Ace in the Hole disturbs journalists because they recognize too much of themselves and their colleagues in the film's loathsome protagonist, Charles Tatum (Kirk Douglas). Like most classic film noir tough guys, Tatum is running from a sordid past. He's stranded in Albuquerque with no money and a car with bad tires and a burned bearing, so he ambles into the Sun-Bulletin office and pitches the straight-laced editor for a job. Tatum brags of having been fired from 11 papers. In New York, he says, a libel suit got him cashiered. In Chicago, it was a dalliance with the publisher's wife. "In Detroit I was caught drinking out of season," he says. When Tatum says, "I'm a pretty good liar. I've done a lot of lying in my time," he says it proudly. The truth about Tatum is surely much worse than he lets on.

Tatum craves a big story that will catapult him out of this "sun-baked Siberia" and back to New York newspaperdom on his own terms. Luckily for Tatum, journalism is a profession that extends lots of second chances, even to scoundrels. The editor gives Tatum a job, but a year passes before he finds a story he can plunder for career gain. Stopping for gas at a trading post/motel in the sticks, he learns of a tunnel cave-in that has trapped Leo Minosa, who runs the trading post with his floozy wife and his parents.

Janet Malcolm became famous in 1990 for writing in The Journalist and the Murderer that the journalist is a "confidence man, preying on people's vanity, ignorance, or loneliness, bargaining their trust and betraying them without remorse." Wilder's story anticipated her finding by four decades. Tatum takes charge of the rescue by postponing it. The rescue crew could pull Leo out to safety in a day by shoring up the tunnel, but Tatum needs time to turn the simple accident into a media circus. He convinces the corrupt sheriff, who is running for re-election, that a media circus managed by Tatum will make him a countywide hero. The sheriff blackmails the lead engineer into drilling down to Leo's tomb through solid rock, a process that will take a week.

How many journalistic sins does Tatum commit? He takes his time about telling anybody he's a journalist. He endangers the life of an innocent man for his own gain. He makes a slimy deal with the crooked cop. He repeatedly lies to Leo about the progress of the rescue. He smacks Leo's wife, who wants to escape the desert hell, and later shags her. When he writes her up in his stories, she's the "broken-hearted wife." He corrupts the Sun-Bulletin's boy photographer. And all the while he pretends to be a passive participant in the action. "I don't make things happen. All I do is write about them," he says.

And more: Tatum gets the sheriff to deputize him so that as an official member of the rescue team he can cut the other pressmen out of the story. He cynically calls the half-buried man his "ace in the hole." He exploits Indian superstitions about the mountain's aggrieved spirits with a circulation-building headline: "Ancient Curse Entombs Man."

Tatum is a vulture, except that genuine vultures know how to soar.

An instant city of 3,000 descends upon the scene by car and train to keep the vigil. Wilder frames the arriving hordes from above, making them look like hungry insects charging toward a meal.

Video file

The Leo rescue story catches on, first across the state and then nationally, and additional reporters from radio, television, and print set up shop. Leo's wife, Lorraine, played to a hardboiled crisp by Jan Sterling, charges admission to the spectacle. The scene becomes a literal circus when a passing carnival pays Lorraine to set up a Ferris wheel. As the rescue effort builds, Tatum quits the Sun-Bulletin and leverages the story's climax to a former boss in New York for the return of his old job.

If film noir illustrates the crackup of the American dream, as Rick Thompson has written, Ace in the Hole is an exemplar of the form. Wilder and co-writers Walter Newman and Lesser Samuels disparage society's institutions—the police, the press, marriage, the nuclear family, and even the church—as shams. Lorraine Minosa delivers an ice-cold excuse for avoiding church services: "Kneeling bags my nylons."

Wilder would later play his cynicism about newspapers for laughs in his creaky 1974 remake of The Front Page, but there are no laughs in Ace in the Hole. The forces for good—Leo's parents, the Sun-Bulletin editor and staff, the other late-to-arrive newspapermen—are powerless against Tatum's venality.

Wilder establishes Tatum's villainy from the beginning and seldom lets up. But the narrative unfolds entirely from Tatum's point of view. As cinematic sociology, Ace in the Hole regards the masses as stupid, ugly, vulgar, without scruples, easy to manipulate, and hungry for Tatum's fakery. If moviegoers took Wilder's view of the crowd personally, they returned the insult by ignoring Ace in the Hole. It bombed in its original release.

Although set in the early 1950s, Ace in the Hole feels contemporary, detailing the mechanics of how the press turns news ripples into tsunamis, and rides the ratings and the copies sold to the bank. Not to let my print brethren off the hook, but it's easy to visualize Charles Tatum as a cable network producer deploying camera trucks whenever a child tumbles down a well, a white woman goes missing, a shooter opens fire, a nut takes hostages, or a full-chested drug-taking celebrity drops dead. The press invites the nation to camp out and ride the Ferris wheel until the story finally dies. (Greta Van Susteren's Fox News Channel Web page documents how she keeps turning the big wheel even after the masses stop taking the ride.)

Ace in the Hole thrills and mortifies journalists because it shows how essential Tatumism is to their business. The drama of human interest. The showmanship of clever headlines. The pathos of artful photographs. When Tatum turns in his Sun-Bulletin resignation to take a better job, his ethically decent boss doesn't want to accept it. Even though he says Tatum trades in "phony, below the belt journalism," he knows that reporters who go too far—way too far—are often worth the bother. That he's kept Tatum on his payroll for a year speaks to his own embarrassing compromises.
Video file

Journalists don't want the laity to know, but some of the best reporting is fueled by the ambition that grows inside venal reporters like Charles Tatum. Now there's a thought to scatter all the monsters sleeping under your bed.

US longevity Slips from 11th to 42nd Place
Gary Ater
August 13, 2007

One of the key areas to determine whether a country has good health care programs is the on-going results of the public’s life expectancy. Unfortunately, due mainly to the lack of a comprehensive universal health care program, US longevity has slipped from 11th to 42nd over the past two decades. Citizens in forty one countries now live longer than Americans starting from the longest average at 83.5 years in Andorra, a small European country to 77.9 years in the United States. And there are forty other countries, mostly in Europe, Japan and S.E. Asia that have longevity beyond that of the US.

This new lower US position is presented by both the Census Bureau and from the National Center for Health Statistics. Even though not all of the negative results are totally due to the lack of a health care program, this lack is the number one explanation. This is confirmed by the fact that virtually all of the 41 countries ahead of the US have a health care program for their citizens. And all of these programs have a preventative health care component as well as overall general health care for all, regardless of the person’s financial status. To make matters worse, the latest US statistics also show that Black American males only have a life expectancy of 69.8 years, slightly longer than the average for Iran and Syria and slightly shorter than in Nicaragua and Morocco.

For the wealthiest nation on the globe, one would think that this would be an embarrassing statistic for the current administration.

However, you will notice that the current president has never had a vision for a US health care program, nor have any of the current Republican presidential candidates. Not one of them has given any real attention for supporting a comprehensive health care initiative for the 2008 election. On the other hand, all of the Democratic candidates have a health care proposal, some of which are already well defined and detailed.

Life expectancy is only one of the criteria for all the countries rankings. The other key component is the percentage of babies that die before their first birthday. Forty countries, including Cuba, Taiwan and most of Europe had lower infant mortality rates than the US. The US average rate is 6.8 deaths per 1,000 live births, and is 13.7 deaths per 1,000 black American births (same as Saudi Arabia).

Most health care specialists agree that the key component to these other countries with better rankings are the preventative side of their universal health care systems. Being able to catch diabetes early, controlling blood pressure and cholesterol, having regular checkups to catch cancers, lung disease and heart problems is the best way to lower the US ratings back down to single digits. However, with the increasing costs of health care, Americans just don’t spend money on doctor’s visits until they become sick. Prevention is only for those with no cost or low cost medical coverage and 47 million US citizens are currently without any coverage.

It’s time for the wealthiest country in the world to join the other industrialized countries that take care of their citizens.

Paul Krugman: Where’s My Trickle?
September 09, 2007

Four years ago the Bush administration, exploiting the political bounce it got from the illusion of success in Iraq, pushed a cut in capital-gains and dividend taxes through Congress. It was an extremely elitist tax cut even by Bush-era standards: the nonpartisan Tax Policy Center says that more than half of the tax breaks went to Americans with incomes of more than $1 million a year.

Needless to say, administration economists produced various misleading statistics designed to convey the opposite impression, that the tax cut mainly went to ordinary, middle-class Americans. But they also insisted that the benefits of the tax cut would trickle down — that lower tax rates on the rich would do great things for the economy, helping everyone.

Well, Friday’s dismal jobs report showed that the Bush boom, such as it was, has run its course. And working Americans have a right to ask, “Where’s my trickle?”

It’s true, as the Bushies never tire of reminding us, that the U.S. economy has added eight million jobs since that 2003 tax cut. That sounds impressive, unless you happen to know that a good part of that gain was simply a recovery from large job losses earlier in the administration’s tenure — and that the United States added no fewer than 21 million jobs after Bill Clinton raised taxes on the rich, a move that had conservative pundits predicting economic disaster.

What’s really remarkable, however, is that four years of economic growth have produced essentially no gains for ordinary American workers.

Wages, adjusted for inflation, have stagnated: the real hourly earnings of nonsupervisory workers, the most widely used measure of how typical workers are faring, were no higher in July 2007 than they were in July 2003.

Meanwhile, benefits have deteriorated: the percentage of Americans receiving health insurance through employers, which plunged along with employment during the early years of the Bush administration, continued to decline even as the economy finally began creating some jobs.

And one of the few seeming bright spots of the Bush-era economy, rising homeownership, is now revealed as the result of a bubble inflated in part by financial flim-flam, which deceived both borrowers and investors.

Now you know why 66 percent of Americans rate economic conditions in this country as only fair or poor, and why Americans disapprove of President Bush’s handling of the economy almost as strongly as they disapprove of the job he is doing in general.

Yet the overall economy has grown at a reasonable pace over the past four years. Where did the economic growth go? The answer is that it went to the same economic elite that received the lion’s share of those tax cuts. Corporate profits rose 72 percent from the second quarter of 2003 to the second quarter of 2007. The real income of the richest 0.1 percent of Americans surged by 51 percent between 2003 and 2005, and although we don’t yet have the data for 2006, everything we know suggests that the income of the rich took another upward leap.

The absence of any gains for workers in the years since the 2003 tax cut is a pretty convincing refutation of trickle-down theory. So is the fact that the economy had a much more convincing boom after Bill Clinton raised taxes on top brackets. It turns out that when you cut taxes on the rich, the rich pay less taxes; when you raise taxes on the rich, they pay more taxes — end of story.

But it’s not just trickle-down that has been refuted: the whole idea that a rising tide raises all boats, that growth in the economy necessarily translates into gains for the great majority of Americans, is belied by the Bush-era experience.

As far as I can tell, America has never before experienced a disconnect between overall economic performance and the fortunes of workers as complete as that of the last four years.

America was a highly unequal society during the Gilded Age, but workers’ living standards nonetheless improved as the economy grew. Inequality rose rapidly during the Reagan years, but “Morning in America” was nonetheless bright enough to make most people cheerful, at least temporarily. Inequality continued to increase during the Clinton years, but wages rose, as did the availability of health insurance — and the great majority of Americans felt prosperous.

What we’ve had since 2003, however, is an economic expansion that looks good if not great by the usual measures, but which has passed most Americans by.

Guaranteed health insurance, which all of the leading Democratic contenders (but none of the Republicans) are promising, would eliminate one of the reasons for this disconnect. But it should be only the start of a broader range of policies — a new New Deal — designed to turn economic growth into something more than a spectator sport.

posted by jurassicpork @ 9/09/2007 10:12:00 PM 9 comments links to this post
9 Comments:

At 10:54 AM, the teach said...

Ah I dream of a "new" New Deal, jurassicpork. Will our Democrats do it for us. I don't know. Let's see what they do or say after Petraeus reports on Iraq...

At 11:22 AM, Anonymous said...

Where did all the money go? The idea of "trickle down" is that the rich will spend the money on business investment, thereby increasing the activity of those businesses which require more workers. Buth that doesn't seem to be happening. So what are the rich folks doing with all their money? Where are they investing it?

At 11:35 AM, Anonymous said...

..in exclusive things like yachts and foreign-made expensive technologies and electronics? just a guess.

At 12:57 PM, hyskerjo said...

Great Caetoon. I pictures exactly my view of the "Pee on the Peons" piloaophy originated by the second worst president ever.

At 1:10 PM, oldswede said...

Don't forget the huge increase in hedge funds. I would expect that much of the current financial instability can be traced to some of the very rich having so much spare cash that they got deeply into these high-risk greed games.
The trickle-down is more like a deluge of disaster for most Americans.

At 2:02 PM, Anonymous said...

I'm an ordinary middle class person, and my little property investments have doubled in value in the last three or four years. I've got my trickle. I think that a lot of people have.

At 2:19 PM, Anonymous said...

"I'm an ordinary middle class person, and my little property investments have doubled in value in the last three or four years. I've got my trickle. I think that a lot of people have."

LOL. You might want to check the "value" of those properties again. I suspect your "trickle" will "peter out" along with the U.S. economy in the coming months. SELL SELL SELL!!! Let me guess... you thought invading Iraq was a good idea too, huh?

More peeople should listen when truly brilliant people like Paul Krugman speak.

At 2:36 PM, Anonymous said...

Q: What did they do with the money?
A: Bought real estate.

Housing cost inflation was caused by massive infusion of speculative investment by the very wealthiest trying to find a place to put all that tax break cash.

Bubble. Pop. But the smart wealthy sold years ago, and created private equity firms that will buy up all those discounted foreclosed properties. They will enrich themselves even more on the bust they themselves fueled.

At 11:05 PM, Wink said...

Fuel and utility hikes have eaten up any raises I've had over the last 6-7 years. My company pays it's CEO $20+ million a year but has to increase my portion of the healthcare costs. My company has made more profit than ever but finds it neccessary to syphon off my pension plan to pay executives off with contracts that give them 5 years towards their pensions for every year they work for the company. There's been no trickle down except for what the cartoon depicts. I wish I had the extra money for property investments but I haven't been able to catch up with the cost of living. And neither have most anybody I've come across.
Now that the housing bubble has burst, maybe folks will realize that this great economy, Bush keeps bragging about, ain't nothing. And tax breaks for the rich don't help out the middle class.

City of a Thousand Foreclosures
BY SCOTT JOHNSON
March 8-9, 2008

For most of 2007, Stockton, Calif., -- once known as “Fat City” -- topped all lists of the American cities worst hit by the housing crisis.
As of last summer, one out of every 27 homes in Stockton was in foreclosure--an increase of 256 percent over the previous year. The fact that Detroit -- a rust-belt city well known for its long-term economic collapse -- took the lead in foreclosures late last year only goes to show the depth of the crisis in Stockton.

But the foreclosure crisis in Stockton didn't come out of nowhere. It's only the latest chapter in the roller-coaster ride that the city has been through over the past decade.

I grew up in Stockton and lived there through the mid-1990s. When I left, the city was still struggling to revive after the early '90s recession, and was best known for its incredibly high crime rate. That hasn't changed--in 2005, Stockton had the highest violent crime rate in California, putting it ahead of Oakland, Los Angeles and San Francisco.

What did change, however, was a sense that the city was getting back on its feet and In the late 1990s, the shopping malls often seemed desolate, with surprisingly few shoppers and storefronts closing faster than they were opening. More recently, though, business and development thrived with the arrival of more big box retailers, as well as a $500 million downtown revitalization project that included the construction of a new arena for live performances and a new stadium for the minor league baseball team.
Downtown Stockton went from being notorious as a center of crime and poverty to a place where families went for weekend entertainment.

But as it turns out, much of this resurgence was built on qucksand. Stockton's growth was based on the booming housing market, which was spurred large part by relocating Bay Area residents looking for a home they could afford.

With Stockton within a 90-minute drive of San Francisco -- although it takes up to an hour longer during rush hour and bad weather -- the city's relatively low cost of living, combined with the relatively high wages for Bay Area employees, made it seem ideal for relocation.

During the dot-com boom of the late 1990s, people from around the country flocked to the Bay Area to cash in on the new gold rush. But after the bubble burst, the early 2000s saw cities like San Francisco and Oakland shrink in size. Meanwhile, Stockton's population grew by 17 percent, from 243,000 to 285,000.

Considering that the median home price in San Francisco in 2000 was $566,000, but only $133,000 in San Joaquin County, where Stockton is located, the attraction was clear. According to Stockton's main newspaper, the Record, "By 2001, Stockton real-estate agents reported that eight out of 10 home buyers were coming from the Bay Area."

These Bay Area emigrants were people who mostly couldn't afford a half-million-dollar mortgage in San Francisco.
For a generation of parents who don't expect to see their children to earn more than they do, home ownership means at least having something to pass on -- so for many Bay Area workers, the hot summers of the Central Valley and the exhausting commute were worth it.

An increase in demand for housing due to an influx of higher-income homebuyers, along with an aggressive development plan aimed at attracting new buyers, caused a speculative bubble. By the end of 2006, the median home price in the county had nearly tripled since the beginning of the decade to $385,000.

According to a study from November of last year, the average family in San Joaquin County couldn't afford 95 percent of the homes on the market in the county. Home ownership became virtually unattainable for them.

Once prices maxed out and the bubble burst, there was a surge in defaults, and mortgage holders couldn't sell the homes they foreclosed on. Many homebuyers and developers are now thinking twice before getting into this mess, which puts Stockton's future growth plans in jeopardy.

But this is only part of the story. It wasn't only an influx of outsiders that created the housing bubble. The root of the problem in Stockton is the same as everywhere else -- people were convinced to buy homes at inflated prices, reassured by a whole cast of unscrupulous characters that everything would work out.
The realtors, lenders and banks--and the corporate boards that oversaw the whole process and orchestrated hefty profit margins out of it -- are responsible for this debacle.

A recently retired escrow manager at a title company in Stockton related to me how the industry set up new homebuyers for failure. "Almost every single day, I would see a young couple in their late 20s or early 30s who were buying their first home and were in way over their head," she says. "When I went over their contract with them, I would invariably find something they hadn't agreed to, like a variable interest rate or hidden fees that hadn't been explained."

In fact, it wasn't uncommon for a homebuyer to have to unexpectedly come up with thousands of dollars in fees in order to close the deal -- even when they had been told that no down payment was required for the mortgage.

Some of these were "garbage fees"--which included, for example, the lender charging hundreds of dollars for printing out the paperwork for the contract. But this was trivial compared to the unexpected rise in mortgage payments built into the contracts on variable rate loans.

The former escrow manager told me that when realtors or lenders were called on to explain the full implications of the contracts, they always found a way of convincing buyers that it would work out in their best interest. As she explained, "They would say, 'Interest rates are going down, the price on your home is going up, your salary is going to increase, so this will all work out. You can trust me.'"
Of course, none of these things about interest rates or rising salaries were actually going to happen. But for a lot of people, they were facing the final obstacle to getting their dream home and were therefore willing to believe the lenders -- and in any case, they were already committed to buying and couldn't see how they could back out.

"The problem," the former escrow manager told me, "was always that it was a Tuesday or a Wednesday, and they had to be out of their apartment on Saturday or Sunday. So they were basically pressured into making a decision at the last minute that they weren't prepared for."

Once the variable interest rates started climbing, homebuyers could no longer pay their mortgages and defaults ensued.
Capitalist crises don't merely create wreckage in their immediate path. They also indirectly affect all sorts of people who never saw them coming.

So while the worst hit are people who are losing everything because they are stuck with a skyrocketing monthly mortgage payment, renters are also facing new difficulties. Increased demand is driving up the cost of renting, making it increasingly difficult, even for those with access to vouchers for low-income families, to find an affordable apartment.

There have also been stories about renters being evicted from foreclosed properties. With no power to stop the eviction, they face demands that they move within days, and may struggle to get a refund for paid rent and security deposits.

Beyond this, the growing number of mortgage defaults in places like Stockton are causing an even deeper financial crisis, which is having an effect on the world economy. The mortgage crisis will, thus, cause the coming recession to be that much worse -- and the layoffs and wage cuts that are a product of the economic downturn will lead to further declines in home prices and put a strain on even more households struggling to pay off mortgages.
It is a vicious circle--and the culprit is the capitalist free-market system.

Scott Johnson writes for Socialist Worker http://www.socialistworker.org/ where this article originally appeared.

On the other hand, Stockton (and more notably, Modesto, Fresno, and Bakerfield) are now booming centers of the narcotics trade and methamphetamine production.

Cash-strapped homeowners lose millions in mortgage scam
March 24, 2008

Nineteen people, most from Southern California, were indicted for mortgage fraud-related offenses that generated about $12.6 million, according to federal officials Monday.

Charles Head, 33, of Los Angeles is accused of being the leader of the reported fraud, including mail fraud and money laundering. For more than two years, Head apparently led a group that contacted desperate homeowners facing foreclosure and offering an "investor" to help them make the monthly mortgage, netting proceeds of $6.7 million. The so-called investors -- often a relative of those indicted -- would change the name on the property title and receive the equity in the home when it sold.

Head is accused of conducting another scheme -- basically "equity stripping" $5.9 million from 68 financially strapped homeowners who faced mounting debt and the loss of their homes. Then, Head would take about 97 percent of the equity in the homes, with the remaining 3 percent directed to fellow defendants, U.S. Attorney McGregor Scott said in a news release.

FBI and Internal Revenue Service officials conducted the investigation.

Inmate Count in U.S. Dwarfs Other Nations’
By ADAM LIPTAK
April 23, 2008

The United States has less than 5 percent of the world’s population. But it has almost a quarter of the world’s prisoners.

Indeed, the United States leads the world in producing prisoners, a reflection of a relatively recent and now entirely distinctive American approach to crime and punishment. Americans are locked up for crimes — from writing bad checks to using drugs — that would rarely produce prison sentences in other countries. And in particular they are kept incarcerated far longer than prisoners in other nations.

Criminologists and legal scholars in other industrialized nations say they are mystified and appalled by the number and length of American prison sentences.

The United States has, for instance, 2.3 million criminals behind bars, more than any other nation, according to data maintained by the International Center for Prison Studies at King’s College London.

China, which is four times more populous than the United States, is a distant second, with 1.6 million people in prison. (That number excludes hundreds of thousands of people held in administrative detention, most of them in China’s extrajudicial system of re-education through labor, which often singles out political activists who have not committed crimes.)

San Marino, with a population of about 30,000, is at the end of the long list of 218 countries compiled by the center. It has a single prisoner.

The United States comes in first, too, on a more meaningful list from the prison studies center, the one ranked in order of the incarceration rates. It has 751 people in prison or jail for every 100,000 in population. (If you count only adults, one in 100 Americans is locked up.)

The only other major industrialized nation that even comes close is Russia, with 627 prisoners for every 100,000 people. The others have much lower rates. England’s rate is 151; Germany’s is 88; and Japan’s is 63.

The median among all nations is about 125, roughly a sixth of the American rate.

There is little question that the high incarceration rate here has helped drive down crime, though there is debate about how much.

Criminologists and legal experts here and abroad point to a tangle of factors to explain America’s extraordinary incarceration rate: higher levels of violent crime, harsher sentencing laws, a legacy of racial turmoil, a special fervor in combating illegal drugs, the American temperament, and the lack of a social safety net. Even democracy plays a role, as judges — many of whom are elected, another American anomaly — yield to populist demands for tough justice.

Whatever the reason, the gap between American justice and that of the rest of the world is enormous and growing.

It used to be that Europeans came to the United States to study its prison systems. They came away impressed.

“In no country is criminal justice administered with more mildness than in the United States,” Alexis de Tocqueville, who toured American penitentiaries in 1831, wrote in “Democracy in America.”

No more.

“Far from serving as a model for the world, contemporary America is viewed with horror,” James Q. Whitman, a specialist in comparative law at Yale, wrote last year in Social Research. “Certainly there are no European governments sending delegations to learn from us about how to manage prisons.”

Prison sentences here have become “vastly harsher than in any other country to which the United States would ordinarily be compared,” Michael H. Tonry, a leading authority on crime policy, wrote in “The Handbook of Crime and Punishment.”

Indeed, said Vivien Stern, a research fellow at the prison studies center in London, the American incarceration rate has made the United States “a rogue state, a country that has made a decision not to follow what is a normal Western approach.”

The spike in American incarceration rates is quite recent. From 1925 to 1975, the rate remained stable, around 110 people in prison per 100,000 people. It shot up with the movement to get tough on crime in the late 1970s. (These numbers exclude people held in jails, as comprehensive information on prisoners held in state and local jails was not collected until relatively recently.)

The nation’s relatively high violent crime rate, partly driven by the much easier availability of guns here, helps explain the number of people in American prisons.

“The assault rate in New York and London is not that much different,” said Marc Mauer, the executive director of the Sentencing Project, a research and advocacy group. “But if you look at the murder rate, particularly with firearms, it’s much higher.”


Prison Population Around the Globe

Despite the recent decline in the murder rate in the United States, it is still about four times that of many nations in Western Europe.

But that is only a partial explanation. The United States, in fact, has relatively low rates of nonviolent crime. It has lower burglary and robbery rates than Australia, Canada and England.

People who commit nonviolent crimes in the rest of the world are less likely to receive prison time and certainly less likely to receive long sentences. The United States is, for instance, the only advanced country that incarcerates people for minor property crimes like passing bad checks, Mr. Whitman wrote.

Efforts to combat illegal drugs play a major role in explaining long prison sentences in the United States as well. In 1980, there were about 40,000 people in American jails and prisons for drug crimes. These days, there are almost 500,000.

Those figures have drawn contempt from European critics. “The U.S. pursues the war on drugs with an ignorant fanaticism,” said Ms. Stern of King’s College.

Many American prosecutors, on the other hand, say that locking up people involved in the drug trade is imperative, as it helps thwart demand for illegal drugs and drives down other kinds of crime. Attorney General Michael B. Mukasey, for instance, has fought hard to prevent the early release of people in federal prison on crack cocaine offenses, saying that many of them “are among the most serious and violent offenders.”

Still, it is the length of sentences that truly distinguishes American prison policy. Indeed, the mere number of sentences imposed here would not place the United States at the top of the incarceration lists. If lists were compiled based on annual admissions to prison per capita, several European countries would outpace the United States. But American prison stays are much longer, so the total incarceration rate is higher.

Burglars in the United States serve an average of 16 months in prison, according to Mr. Mauer, compared with 5 months in Canada and 7 months in Engl