Category Archives: Public Policy and Governance

French Lessons

France has a growing middle class. The United States has a shrinking middle class.

I realize that Americans are reluctant to learn from other countries (most prominent example: healthcare, where we insist on spending twice as much for much poorer results, because hey! we’re Amurica and we know best about everything…), but we really could learn a lot if we were so inclined.

According to the Washington Spectator (link unavailable), America’s middle class has dropped from 60% of all households in the 1980s to 50% in the mid 2010s. Meanwhile, the French middle class rose from 60% to 68%.

The poverty rate for U.S. children in two-parent families in 2010 was 13.7%; in France, it was 8.2%. (That was for children in two-parent families. For all American children, the child poverty rate is 21%; in France, it is 5.7%. As the Spectator points out, the damaging effects of growing up poor are well-documented and socially undesirable.

Why the difference? What does France do right that we don’t?

Although the article fails to mention it, that health care system I referenced is a huge asset to French families, especially families with children. Just knowing that an unexpected illness won’t wipe you out is a big stress reliever, as is the knowledge that you can take a sick child to the doctor without the visit making you late with the rent.

Although the article doesn’t mention health care, it does focus on three other aspects of French social policy that are very different from ours, and that the author finds particularly important: paid parental leave, affordable child care and the French tax system.

In France, paid family leave replaces 100% of the average wages earned by women in the three months following birth or adoption. Eight weeks of paid leave are mandatory, although many businesses offer more. The U.S., in contrast, is the only developed nation that does not have a national paid leave program; as a result, some 25% of new mothers return to work within ten days of giving birth. (It hurts even to type that statistic; I remember how long it took me to feel up to par after childbirth!)

The French child-care system is even more impressive to someone like me, who struggled to find adequate childcare despite having the financial wherewithal to pay for it. France has creches–childcare centers for infants and toddlers under 3–and part-time centers that operate both before and after school. There are other centers that open on days when school is out, and during summer vacations. And all of them are subsidized by the French government. The cost to a family is approximately $1.25 per hour per child.

In the U.S., the after-tax cost of childcare is equal to 38% of average U.S. wages, one of the things that makes parenting an expensive proposition and is a disincentive to women with children entering the workforce.

Finally, French families with children are taxed at a lower rate than families without children. The disparity in tax rates, the maternal leave policy and the generous subsidies for comprehensive child care are all justified by the French belief that children are an investment in the future of the nation.

Clearly,  American policymakers don’t see it that way.

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The Trouble With Tariffs

I try to read a variety of information sources, but I will be the first to admit that–if it weren’t for my architect husband–Engineering News Record would not be among them. It is a print publication that considers itself “the construction resource,” and focuses on matters like the reason for that Italian bridge collapse and the technology of road paving. These are subjects that fascinate my husband, but usually aren’t among my preoccupations.

However, there is a real virtue to reading such publications for a policy person, because they report on the practical implications of what might otherwise be abstract and ideological policy debates. That is exactly what the most recent issue did in its discussion of Trump’s misbegotten tariffs, in an article titled “Equipment Readies for Tariff Fight.”

As the article reported, “the reality of new surcharges on all sorts of imported materials and finished goods has begun to reverberate through the global supply chain for construction equipment.” And that global supply chain is complicated–something a ham-handed and ill-considered policy can disrupt in unexpected ways and with unanticipated consequences.

The (sobering) points made by the article can be summarized by a quote from a vice-president of the Association of Equipment Manufacturers: “Everyone loses in a global trade war. Tariffs are taxes on American consumers and businesses.”

Major manufacturers have already raised their prices in anticipation of the higher up-front costs of steel and other materials. According to Senator Chuck Grassley, tariffs the administration aimed at imports of automobile components have also hit heavy-duty trucks, buses, construction equipment, agricultural equipment and industrial engines. As those prices increase, they’ll be passed along, so prices paid by consumers will rise. (There has already been a 32% rise in the cost of hot-rolled, coiled steel.)

Some 30% of of the construction equipment manufactured in the U.S. is designated for export, and the imposition of tariffs has “upended” the industry, which had been anticipating a period of strong sales. As a consequence, according to industry spokespersons, manufacturers are likely to shift production to “places like China or Brazil.”

These tariffs and retaliatory tariffs will put U.S. manufacturing at a disadvantage, because dozens of OEM’s have facilities around the world. It will tip the balance and they’ll just move out of the U.S. to make the equipment somewhere else.

The decision whether to shift the locus of manufacturing is only one of the consequences that has yet to be felt; as the article quoted one construction industry representative,

The point about tariffs is the effect doesn’t come the day after, it comes the year after. The economic impact, the loss of jobs, the loss of business in the community–that is a very long-term effect.

There is a reason that opposition to tariffs bridges ideological divides. Both conservatives and liberals recognize the negative effects of these sorts of interventions into complex and interrelated markets. Unfortunately, we have a President whose policies (if they can be dignified by the term) do not rest on any theoretical or philosophical framework. Instead, he acts out of bile and petulance, complicated by utter ignorance of the matters he is disrupting.

The Engineering News Record says these tariffs pose a significant threat to the construction equipment industry’s prosperity. But the damage isn’t limited to the construction equipment industry. Tariffs pose a significant threat to job creation, consumption and general American prosperity–a threat that could have been avoided had we elected someone competent, or even someone who had–and heeded– competent advisors.

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“I Quit”

Principled people who can do so are fleeing the Trump Administration. Those who cannot afford to take the moral high ground–the government workers with mortgages to pay and children to educate–are valiantly trying to hold their agencies accountable to the rule of law.

Talking Points Memo, among others, has reported on the departure of one who just left: the top watchdog overseeing student loans.

The Consumer Financial Protection Bureau’s “Student Loan Ombudsman,” responsible for guarding student borrowers against predatory lenders and scammers, has resigned in a scathing letter aimed at acting CFPB director Mick Mulvaney.

“Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting,” Seth Frotman’s resignation letter, obtained by NPR, read. “Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America.”

Not exactly surprising, in an administration where up is down, failure is success, accurate reporting is “fake news,” and corrupt practices are touted as “good business.”

Frotman’s job was to monitor and review of thousands of complaints from student borrowers. The Obama administration had introduced a number of regulations intended to protect those student borrowers against fraudulent practices; according to Frotman, Mulvaney and Betsy DeVos have worked “diligently” to eliminate those protections.

Frotman’s letter pointed to specific wrongdoing by Mulvaney, NPR reported, including the alleged suppression of a report from his office revealing that big banks were “saddling [students] with legally dubious account fees.”

In May, NPR noted, Mulvaney called for Frotman’s office to be incorporated into the Office of Financial Education, effectively proposing to remove Frotman’s office from direct enforcement actions and shifting it to an educational role.

Regarding another change — the Department of Education’s announcement last year that it would no longer share federal student loan oversight data with the CFPB — Frotman wrote: “The Bureau’s current leadership folded to political pressure… and failed borrowers who depend on independent oversight to halt bad practices.”

NPR has posted a copy of Frotman’s letter here.

My husband often reminds me that–while Americans are distracted by our demented President’s tweets, rages and sundry other embarrassing and destructive behaviors–his administration is busily dismantling the structures of accountable and legitimate governance–stacking the federal courts with right-wing ideologues, eliminating regulations protecting air and water quality, bleeding public schools of the resources needed to educate the country’s children, empowering theocrats, and weakening the rules that restrain the rich and powerful.

Even if November brings the hoped-for “blue wave,” and installs a Congress that takes its oversight responsibilities seriously, it will take years to restore both the rule of law and the American people’s ability to trust that their government is operating on their behalf.

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File Under “We Told You So”

The Guardian,among other publications, recently reported that Verizon “throttled” the presumably unlimited data of California firefighters while they were battling the blazes that were–and still are–engulfing communities in that state.

California firefighters’ ability to battle a huge wildfire was impeded by Verizon Wireless throttling their internet connection, in a moment advocates say demonstrates the high stakes of the battle over net neutrality.

Santa Clara county fire department had paid for what Verizon described as an “unlimited” data plan for various internet-connected devices, but the data flow was throttled to about 1/200th of the typical speed – unusably slow for any meaningful data transfer.

This restriction created problems for a command and control communications vehicle called OES 5262 as firefighters battled the Mendocino Complex fire, the largest wildfire in California’s history, in late July. The vehicle – essentially a fire engine that is fitted with computers and communications equipment – gets internet access via a device that uses a Verizon sim card. It is used as a hub to “track, organize and prioritize routing of resources around the state and country to the sites where they are needed the most”, according to the Santa Clara county fire chief, Anthony Bowden, in a lawsuit over net neutrality protections, first reported by Ars Technica.

Net Neutrality rules put in place under the Obama Administration would have protected the firefighters (or at least provided them with recourse), but those rules were repealed by Ajit Pai, Trump’s appointee to the FCC.  Pai was a former executive at Verizon, and Verizon has been one of the “big telecom” companies lobbying for the repeal.  Pai argued that the net neutrality rules would stifle innovation, and that they had been established on “hypothetical harms and hysterical prophecies of doom”.

With Pai at the helm, the FCC simply ignored massive numbers of emails arguing against repeal, and ignored as well a number of surveys that found more than 80% of Americans supporting Net Neutrality.

The July incident wasn’t the first time Verizon had throttled the firefighters’ data connection.

They had previously contacted Verizon in June when they were dealing with the Pawnee fire and December 2017 when they were battling a grass fire near Prado regional park.

According to emails included in court filings, in June 2018, the fire captain Justin Stockman contacted Verizon requesting that the data connection for a critical piece of communications equipment was unthrottled. A Verizon account manager responded by trying to upsell the fire department from a $37.99 plan to a $39.99 plan.

The Santa Clara fire department is part of a larger lawsuit against the Federal Communications Commission; the lawsuit seeks to overturn the repeal of net neutrality rules that prevent internet service providers from blocking, throttling and prioritizing customers on the basis of pay. The suit represents plaintiffs in twelve separate lawsuits that were consolidated into a single suit. Those lawsuits were filed by more than three dozen entities, including state attorneys general, consumer advocacy groups, and tech companies.

Probably the best explanation of Net Neutrality–and the consequences of its repeal–can be found by watching comedian John Oliver who has devoted two of his shows to the topic.

I guess it takes a comedian to explain why the loss of Net Neutrality is no laughing matter.

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Banking On The Postal Service

The Roosevelt Institute–named for FDR–has a project it calls “the next New Deal.” One of its recommendations takes a hard look at a proposal that has been floating around for a while–allowing the Post Office to offer banking services.

Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities, leaving marginalized Americans underserved and left behind in today’s economy. Without access to basic banking services, such as checking and savings accounts or small loans, consumers are vulnerable
to a host of financial abuses. To foster a more inclusive and accessible economy and society for all communities in the U.S., the public provision of banking goods and services by the government is an important— and bold—option to consider. In a new report co-published with the Samuel DuBois Cook Center on Social Equity at Duke University, Thomas Herndon and Mark Paul argue for the public provision of household financial services.

Among the referenced “host of abuses” are payday lenders and other predatory operations, offering money to people who are desperate for cash to meet a pressing and/or unexpected need at obscene rates of interest.

Allowing the Post Office to offer banking services would make those services available in locations that bank branches no longer serve, and would allow people with very limited means to access  basic financial tools that most of us take for granted: checking and savings accounts, check cashing services, and the ability to have direct deposit for Social Security and payroll checks.  The Post Office would also lend money–at reasonable rates–via small loans, auto loans, and mortgages.

As I noted, adding banking to the services the Post Office currently provides has been proposed before.  I always thought it was a good idea (although for some reason, the banks disagreed….)The Roosevelt proposal, however, adds an interesting argument to the case for Postal banking, one I had not previously encountered.

Roosevelt’s proposal for banking through the Postal Service argues that in addition to serving a growing public need, having a public bank would allow the federal government to monitor and manage the country’s online financial services marketplace.

This second component would serve as a powerful regulatory tool by allowing the government to condition sellers’ access to the marketplace based on certain consumer safety standards. Consumers could also rate and review sellers, fostering easier detection 
of consumer abuses. A public banking option structured with these two components would create the financial infrastructure required for universal service, while also preventing consumer financial protection abuses through public-private competition.

If we had an administration and Congress that was operating in the public interest, this proposal would at the very least get serious consideration. But of course, we don’t have a functioning government right now, let alone people in public office to whom we might affix the label “statesmen.”

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