Archive for the ‘Capitalism & Corporations’ Category

What we need vs. what we’ll get

Friday, April 3rd, 2009

– The current G-20 meeting has stirred a lot of commentary and hope.   The world has a lot of problems and there’s always the possibility and the hope, when a significant number of world leaders come together to talk about those problems, that they’ll make decisions that will improve things.The Browns and the Obamas

– Below, is an analysis by George Friedman of STRATFOR of the G-20 meeting and what’s likly to come out of it along with a look at a follow-on NATO meeting and an Obama-EU summit.  There’s even discussion of President Obama’s upcoming visit to Turkey, which will be his last stop on his current international trip.

– Other commentators might go through these same subjects; G-20, NATO, EU and Turkey and come to somewhat different conclusions about their meanings and prospects but I seriously doubt that anyone could seriously avoid my final conclusion – that what the world needs is not what the world is going to get out of all these meetings and pontifications.

– In the near-term, we need unified global strategies to pull the world out of the current economic melt-down.

– And, following immediately on the heels of such economic repairs, we need a deep recognition that mankind’s current dominate economic system, Capitalism, even when working well,  cannot continue as it is currently configured.   Its fundamental requirements of continuing growth and consumption to fuel itself, are axiomatically inconsistent with the fact that we live on a planet with finite resources.

– And, once we’ve rethought our basic economic systems and globally began to reorient them into something that focuses on sustainability rather than growth, then we need to move onto how we, globally, are going to defuse all the ecological and climatic destruction we’ve set in motion which is threatening to reset our climate and to initiate another major ecological die-off like the one that took out the dinosaurs 65 million years ago.

– That’s all.  It’s not much to ask, right?   Surely,the best and the brightest of our national leaders can see that these are the paths forward?

– Well, I wish I thought so, but I don’t.  Friedman’s analysis makes clear that in spite of the fact that we need radical new thinking, these meetings will end up driven by narrow national interests as nation jockeys against nation to see who’s going to do the work and pay the bills.

There’s your future, folks.– It’s as if we’re all sitting in a lifeboat at sea and we’re having meeting after meeting about how to best arrange the seating in the boat to determine who has to row and who gets to just sit and benefit. And all the time, the boat is slowing but inexorably sinking but no one can be bothered to talk about that because… because?     Damned if I know.

– Here’s George Freidman’s analysis.   See what you think:

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Three major meetings will take place in Europe over the next nine days: a meeting of the G-20, a NATO summit and a meeting of the European Union with U.S. President Barack Obama. The week will define the relationship between the United States and Europe and reveal some intra-European relationships. If not a defining moment, the week will certainly be a critical moment in dealing with economic, political and military questions. To be more precise, the meeting will be about U.S.-German relations. Not only is Germany the engine of continental Europe, its policies diverge the most sharply from those of the United States. In some ways, U.S.-German relations have been the core of the U.S.-European relationship, so this marathon of summits will focus on the United States and Germany.

Although the meetings deal with a range of issues — the economy and Afghanistan chief among them — the core question on the table will be the relationship between Europe and the United States following the departure of George W. Bush and the arrival of Barack Obama. This is not a trivial question. The European Union and the United States together account for more than half of global gross domestic product. How the two interact and cooperate is thus a matter of global significance. Of particular importance will be the U.S. relationship with Germany, since the German economy drives the Continental dynamic. This will be the first significant opportunity to measure the state of that relationship along the entire range of issues requiring cooperation.

Relations under Bush between the United States and the two major European countries, Germany and France, were unpleasant to say the least. There was tremendous enthusiasm throughout most of Europe surrounding Obama’s election. Obama ran a campaign partly based on the assertion that one of Bush’s greatest mistakes was his failure to align the United States more closely with its European allies, and he said he would change the dynamic of that relationship.

There is no question that Obama and the major European powers want to have a closer relationship. But there is a serious question about expectations. From the European point of view, the problem with Bush was that he did not consult them enough and demanded too much from them. They are looking forward to a relationship with Obama that contains more consultation and fewer demands. But while Obama wants more consultation with the Europeans, this does not mean he will demand less. In fact, one of his campaign themes was that with greater consultation with Europe, the Europeans would be prepared to provide more assistance to the United States. Europe and Obama loved each other, but for very different reasons. The Europeans thought that the United States under Obama would ask less, while Obama thought the Europeans would give more.

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– research thanks to Michael M.

The Quiet Coup

Wednesday, April 1st, 2009

– This article just out in the September, 2009 Atlantic Magazine is well worth a read.   It’s the best thing I’ve seen about the financial crisis since the piece about The End of Wall Street a month or two ago.

– The lead-in from the article:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

– This is well worth a read – don’t skip it!

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One thing you learn rather quickly when working at the International Monetary Fund is that no one is ever very happy to see you. Typically, your “clients” come in only after private capital has abandoned them, after regional trading-bloc partners have been unable to throw a strong enough lifeline, after last-ditch attempts to borrow from powerful friends like China or the European Union have fallen through. You’re never at the top of anyone’s dance card.

The reason, of course, is that the IMF specializes in telling its clients what they don’t want to hear. I should know; I pressed painful changes on many foreign officials during my time there as chief economist in 2007 and 2008. And I felt the effects of IMF pressure, at least indirectly, when I worked with governments in Eastern Europe as they struggled after 1989, and with the private sector in Asia and Latin America during the crises of the late 1990s and early 2000s. Over that time, from every vantage point, I saw firsthand the steady flow of officials—from Ukraine, Russia, Thailand, Indonesia, South Korea, and elsewhere—trudging to the fund when circumstances were dire and all else had failed.The future?

Every crisis is different, of course. Ukraine faced hyperinflation in 1994; Russia desperately needed help when its short-term-debt rollover scheme exploded in the summer of 1998; the Indonesian rupiah plunged in 1997, nearly leveling the corporate economy; that same year, South Korea’s 30-year economic miracle ground to a halt when foreign banks suddenly refused to extend new credit.

But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess—exports must be increased, and imports cut—and the goal is to do this without the most horrible of recessions. Naturally, the fund’s economists spend time figuring out the policies—budget, money supply, and the like—that make sense in this context. Yet the economic solution is seldom very hard to work out.

No, the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis.

Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them overreached in good times and took too many risks. Emerging-market governments and their private-sector allies commonly form a tight-knit—and, most of the time, genteel—oligarchy, running the country rather like a profit-seeking company in which they are the controlling shareholders. When a country like Indonesia or South Korea or Russia grows, so do the ambitions of its captains of industry. As masters of their mini-universe, these people make some investments that clearly benefit the broader economy, but they also start making bigger and riskier bets. They reckon—correctly, in most cases—that their political connections will allow them to push onto the government any substantial problems that arise.

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– Research thanks to Alan T.

Biofuels Boom Could Fuel Rainforest Destruction, Researcher Warns

Sunday, March 15th, 2009

Farmers across the tropics might raze forests to plant biofuel crops, according to new research by Holly Gibbs, a postdoctoral researcher at Stanford’s Woods Institute for the Environment.

“If we run our cars on biofuels produced in the tropics, chances will be good that we are effectively burning rainforests in our gas tanks,” she warned.

Policies favoring biofuel crop production may inadvertently contribute to, not slow, the process of climate change, Gibbs said. Such an environmental disaster could be “just around the corner without more thoughtful energy policies that consider potential ripple effects on tropical forests,” she added.

Gibbs’ predictions are based on her new study, in which she analyzed detailed satellite images collected between 1980 and 2000. The study is the first to do such a detailed characterization of the pathways of agricultural expansion throughout the entire tropical region. Gibbs hopes that this new knowledge will contribute to making prudent decisions about future biofuel policies and subsidies.

Gibbs presented her findings in Chicago on Feb. 14, during a symposium at the annual meeting of the American Association for the Advancement of Science. The symposium was titled “Biofuels, Tropical Deforestation, and Climate Policy: Key Challenges and Opportunities.”

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The Proceeds of Crime

Sunday, March 8th, 2009

– I regret to say that this sad story hasn’t run its course yet.    You’d think with all the ugly stories coming out about what happens when prisons are turned into profit making operations, that folks would realize that this definitely is not the way to go,

– But I read that my adopted country, New Zealand, apparently hasn’t been reading the reports.    Their new conservative government, like conservative governments everywhere, thinks that Capitalistic entrepreneurs can solve every problem correctly and efficiently.   it’s a great theory – but it has been shown to be resoundingly wrong in this case and yet, here they are about to embark on the same folly.

– Check out these stories as well: , , and

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By George Monbiot. Published in the Guardian, 3rd March 2009

It’s a staggering case; more staggering still that it has scarcely been mentioned on this side of the ocean. Last week two judges in Pennsylvania were convicted of jailing some 2000 children in exchange for bribes from private prison companies.

Mark Ciavarella and Michael Conahan sent children to jail for offences so trivial that some of them weren’t even crimes. A 15 year-old called Hillary Transue got three months for creating a spoof web page ridiculing her school’s assistant principal. Mr Ciavarella sent Shane Bly, then 13, to boot camp for trespassing in a vacant building. He gave a 14 year-old, Jamie Quinn, 11 months in prison for slapping a friend during an argument, after the friend slapped her. The judges were paid $2.6 million by companies belonging to the Mid Atlantic Youth Services Corp for helping to fill its jails(1,2,3). This is what happens when public services are run for profit.

It’s an extreme example, but it hints at the wider consequences of the trade in human lives created by private prisons. In the US and the UK they have a powerful incentive to ensure that the number of prisoners keeps rising.

The United States is more corrupt than the UK, but it is also more transparent. There the lobbyists demanding and receiving changes to judicial policy might be exposed, and corrupt officials identified and prosecuted. The UK, with a strong tradition of official secrecy and a weak tradition of scrutiny and investigative journalism, has no such safeguards.

The corrupt judges were paid by the private prisons not only to increase the number of child convicts but also to shut down a competing prison run by the public sector. Taking bribes to bang up kids might be novel; shutting public facilities to help private companies happens – on both sides of the water – all the time.

The Wall Street Journal has shown how, as a result of lobbying by the operators, private jails in Mississippi and California are being paid for non-existent prisoners(4,5). The prison corporations have been guaranteed a certain number of inmates. If the courts fail to produce enough convicts, they get their money anyway. This outrages taxpayers in both states, which have cut essential public services to raise these funds. But there is a simple means of resolving this problem: you replace ghost inmates with real ones. As the Journal, seldom associated with raging anti-capitalism, observes, “prison expansion [has] spawned a new set of vested interests with stakes in keeping prisons full and in building more. … The result has been a financial and political bazaar, with convicts in stripes as the prize.”(6)

Even as crime declines, law-makers are pressed by their sponsors to increase the rate of imprisonment. The US has, by a very long way, the world’s highest proportion of people behind bars: 756 prisoners per 100,000 people(7), or just over 1% of the adult population(8). Similarly wealthy countries have around one-tenth of this rate of imprisonment.

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Health Sector Has Donated Millions to Lawmakers

Sunday, March 8th, 2009

– Need more reasons why serious health care reform won’t becoming to the U.S., in spite of what President Obama’s implied?    Don’t get me wrong.  I am a big Obama fan.   But, the cards are too deeply stacked against real health care reform here.   It’s just a political reality on the ground.

– See also here and here and here.

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Health insurers and drug makers have showered members of the 111th Congress with millions in campaign contributions over the last four years, with a special focus on leaders who will play major roles in shaping health-care legislation, according to a study to be released tomorrow.

Health insurers and their employees contributed $2.2 million to the top 10 recipients in the House and Senate since 2005, while drug makers and their employees gave more than $3.3 million to top lawmakers during that period, according to an analysis of federal elections data by Consumer Watchdog, a California-based advocacy group.

The biggest beneficiaries in the Senate included  John McCain (R-Ariz.), with $546,000;  Minority Leader Mitch McConnell (R-Ky.), with $425,000; and  Max Baucus (D-Mont.), with $413,000, who as head of the Finance Committee will play a leading role in the debate over health-care reform.

In the House, the two groups gave $257,000 to  Minority Leader John A. Boehner (R-Ohio) and $249,000 to Minority Whip  Eric Cantor (R-Va.). On the Democratic side,  Rep. Earl Pomeroy (N.D.) received contributions from the insurance sector ($104,000), while  Rep. John D. Dingell (Mich.) took in $180,000 from drug companies.

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Screwing the Poor

Friday, March 6th, 2009

– I wrote, with some passion, the other day about universal health care – and why it won’t be coming to the U.S.

– Here’s another piece by Kevin Drum of Mother Jones that speaks succinctly to this point.

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Karen Tumulty writes in Time this week about her brother, Pat, who was diagnosed with kidney failure and then learned that the private insurance he’d been paying for for years wouldn’t cover him.  That’s bad enough, but then there’s this:

A paradox of medical costs is that people who can least afford them — the uninsured — end up being charged the most. Insurance companies, with large numbers of customers, have the financial muscle to negotiate low rates from health-care providers; individuals do not. Whereas insured patients would have been charged about $900 by the hospital that performed Pat’s biopsy (and pay only a small fraction of that out of their own pocket), Pat’s bill was $7,756. For lab work — and there was a lot of it — he was being charged as much as six times the price an insurance company would pay.

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Healthcare for the Middle Class

Thursday, March 5th, 2009

– There’s been a lot of talk over the years about health care reform.  Hillary Clinton tried to implement deep health care reform and was rebuffed soundly.   Now, Obama’s said he’s going to try it.

– So, what’s going to happen?   No much is what, very likely.   Kevin Drum of Mother Jones wrote an article (the beginning of which is below) which discusses the whys and wherefores of what’s likely to happen.

– Folks like me have decried for years the fact that of all the major western democracies, the U.S. is the ONLY one without socialized medicine.  The richest country in the world and 48 million of our 300 million people do not have a health care safety net.

– Well, the corporate interests which basically own the U.S.’s health care system will resist changes tooth and nail – because profits are involved.   You can be sure that the idea that governments should exist to look after the interests of their people won’t get on the table.

– And, have you heard how very bad socialized medicine is?   No service, bad work, long lines?   Well, I’ve spent a lot of time in a country with such a system and, yes, it has some problems – but nothing like what all this disinformation and propaganda would have you believe.

– Here in the U.S., my wife and I pay $885 a month for health care insurance and each of us has a $2500 deductible on top of that.Â

– In New Zealand, which has a socialized medical system, all accidents are covered automatically by the government.  And, if it is not an accident, a doctor’s visit costs you $55 NZD maximum (about $27 US at the moment),  And no prescription costs you more than $15 NZD (or about $7-$8 US at the moment). Â

– Now, that’s what I call a government looking out for the interests of its people.

– This article makes it sound like the push-back will be coming from the 250 million of us who have health care coverage.    I don’t think so.   The 250 million will, however, be the targets for the fear-mongering campaign (by the profit oriented medical/corporate interests which have deep vested interests in the outcome) that will ensue.  That will be the real story here.  Just wait and see the ‘public spirited’ advertisements which will be out soon from the medical industry / corporate types as they compassionately share with us what’s wrong with health care reform.

– Read Kevin’s story and you’ll see why health care for everyone as a right won’t be coming here to the U.S. anytime soon.

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David Corn just got back from a breakfast meeting hosted by Nancy Pelosi, who outlined the Democratic messaging strategy on healthcare reform:

The “appeal” of this push, she said, will not be that 48 million people don’t have health care insurance. “What is important to the bigger population,” she explained, “is their own health care.”

….The bottom line: the battle cry will not be, “Health care for all!” Instead, it will be “Better health care for you — and also the rest of us.” Given how the Hillary Clinton-led crusade for health care reform flamed out terribly in the 1990s, this sort of tactical shift may be warranted. It may even be wise.

I’d go further than that.  Even as far back as 1993, Bill Clinton understood that fear of change among the already insured was the key issue in building public support for national healthcare.  Unfortunately, even though he got this, he still didn’t emphasize it enough, and that’s one of the reasons his plan failed.

Since then, however, this has become conventional wisdom.  Like it or not, universal healthcare will never get passed on the grounds that it will help the 48 million Americans who are currently uninsured.  It will only pass if the other 250 million Americans are assured over and over and over again that the new plan will be at least as good for them as what they have now.

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Drinking bottled water is drinking oil

Sunday, March 1st, 2009

– Do you drink bottled water?   Well, if you do and you also consider yourself a green health oriented person, it is probably long past time for you to sit up and take notice of articles like this.   And believe me, if you want more information – don’t go to the companies who are selling you this 21st century snake-oil – they flat-out have no interest in telling you the sad truth on this one.

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ScienceNOW reports a new paper by Peter Gleick and Heather Cooley in Environmental Research Letters that compares the energy use of bottled and tapwater:

… From start to finish, bottled water consumes between 1100 and 2000 times more energy on average than does tap water.

Bottled water consumption has skyrocketed over the past several years. In 2007, some 200 billion liters of bottled water were sold worldwide, and Americans took the biggest gulp: 33 billion liters a year, an average of 110 liters per person. That amount has grown 70% since 2001, and bottled water has now surpassed milk and beer in sales. Many environmental groups have been concerned with this surge because they suspected that making and delivering a bottle of water used much more energy than did getting water from the tap. But until now, no one really knew bottled water’s energy price tag.

Environmental scientist Peter Gleick of the Pacific Institute, a nonprofit research organization in Oakland, California, and his colleague Heather Cooley have added up the energy used in each stage of bottled-water production and consumption. Their tally includes how much energy goes into making a plastic bottle; processing the water; labeling, filling, and sealing a bottle; transporting it for sale; and cooling the water prior to consumption.

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Many drug trials never see publication

Friday, February 13th, 2009

Why am I not surprised, when corporations and their unrelenting drive for profits above all else are behind so many medical decisions made in the U.S.A?

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Results of most drug trials are unreported, inaccessible to clinicians and patients, a new study confirms

 Patients asking their doctors if a new drug is right for them would do well to also ask for supporting evidence. Conclusions about drug safety and effectiveness in reports submitted to the FDA are sometimes changed to favor the drug in the medical literature, a new analysis finds. And nearly a quarter of submitted drug trials were never published at all, researchers report in the Nov. 25 PLoS Medicine.

Information published in journals is the most accessible to health care professionals and also drives marketing of new drugs. The new study suggests that this information is incomplete and biased, says health policy expert Lisa Bero of the University of California, San Francisco, who led the study.

An-Wen Chan, who wrote an accompanying commentary but was not involved with the work, says he does not think health care providers will be surprised to learn of suppression and inaccurate reporting of new drug information.

“These new findings confirm our previous suspicions that this is happening on a much broader systemic level. It shows that information is unavailable to those who really need it the most — the clinicians and the researchers,” says Chan, of the Mayo Clinic in Rochester, Minn. “If we take the view that research on humans is ethical, is allowed based on an assumption of public good, then all clinical trial information should be publicly available.”

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The End – of Wall Streets Boom

Tuesday, January 27th, 2009

– I’ve written before on how blessed I feel to have the friends I have.   Good intelligent sincere people.   And we are each blessed as we, for a moment, are allowed to see the world through each other’s eyes.   We share and we listen and we are each enriched by our exchanges.     I feel especially fortunate to have the friends I do because they enrich me immensely.

– One of my friends sent me a link to the following story which I read this morning.   He has a degree from Oxford in Economics and after a good deal of thought about the state of our world, he and his family have moved from Europe to rural New Zealand.

– Read the story and I think you’ll see why a lot of us are thinking there’s little hope for humanity’s current attempt at building a global civilization.

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The era that defined Wall Street is finally, officially over. Michael Lewis, who chronicled its excess in Liar’s Poker, returns to his old haunt to figure out what went wrong.

To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital—to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue.

I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.

When I sat down to write my account of the experience in 1989—Liar’s Poker, it was called—it was in the spirit of a young man who thought he was getting out while the getting was good. I was merely scribbling down a message on my way out and stuffing it into a bottle for those who would pass through these parts in the far distant future.

Unless some insider got all of this down on paper, I figured, no future human would believe that it happened.

I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. I expected readers of the future to be outraged that back in 1986, the C.E.O. of Salomon Brothers, John Gutfreund, was paid $3.1 million; I expected them to gape in horror when I reported that one of our traders, Howie Rubin, had moved to Merrill Lynch, where he lost $250 million; I assumed they’d be shocked to learn that a Wall Street C.E.O. had only the vaguest idea of the risks his traders were running. What I didn’t expect was that any future reader would look on my experience and say, “How quaint.”

I had no great agenda, apart from telling what I took to be a remarkable tale, but if you got a few drinks in me and then asked what effect I thought my book would have on the world, I might have said something like, “I hope that college students trying to figure out what to do with their lives will read it and decide that it’s silly to phony it up and abandon their passions to become financiers.” I hoped that some bright kid at, say, Ohio State University who really wanted to be an oceanographer would read my book, spurn the offer from Morgan Stanley, and set out to sea.

Somehow that message failed to come across. Six months after Liar’s Poker was published, I was knee-deep in letters from students at Ohio State who wanted to know if I had any other secrets to share about Wall Street. They’d read my book as a how-to manual.

In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces?

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– Research thanks to Robin S.