Monday, April 23, 2012

Education as a market and the collapse of expectations

This graph (via The Economist) shows how much tuition fees have risen in US universities during the last few decades.The Economist article was published a couple of years ago, and it correctly pointed out that:
For decades, college fees have risen faster than Americans’ ability to pay them. Median household income has grown by a factor of 6.5 in the past 40 years, but the cost of attending a state college has increased by a factor of 15 for in-state students and 24 for out-of-state students. The cost of attending a private college has increased by a factor of more than 13 (a year in the Ivy League will set you back $38,000, excluding bed and board). Academic inflation makes most other kinds look modest by comparison. Students may not be getting a good deal in return.
No shit Sherlock. Back in 2010, Student-Loan Debt Surpassed Credit Card debt for the first time ever (source: WSJ), and Mark Kantrowitz, publisher of and was quoted as saying that:
“The growth in education debt outstanding is like cooking a lobster,” Mr. Kantrowitz says. “The increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you’re already cooked.”
It gets worse: About a month ago, Student-Loan Debt Topped $1 Trillion, and this whole "bubble in education" thing gathered even more attention by the media.

There is of course a similar situation in a lot of western countries (England being the most notable example), but the US situation is far more important and big.

America was the world's superpower, and its economy was the world's most productive economy for a long time after the end of WWII. More and more Americans started attending college, as it was a great way to achieve "upword social mobility" (ie you could get a (good) job easier).

After all, the economy was booming, as we were in the "creative" part of the "creative destruction" process: Capitalism went through a major crisis (Crash of 1929), but after the end of WWII, we needed to rebuild...almost everything (because almost everything had been destroyed during the war).

So, jobs were relatively easy to come by, and if you had a college degree, you were almost guaranteed a good job, a good income, and a "middle-class lifestyle".

Yes, life was good. But as we have explained before, America started falling behind in its competition with the other powers (especially Japan, Germany, and now China). Production is being outsourced to China, and wages and dropping rapidly, in order to compete with the Asian workers. And now that giving away loans as a way to mask this process cannot continue anymore, things are really bad for the younger generations of workers. How are they even gonna repay these loans, if they can't find a job? And even if they can, odds are this job will not pay enough money to cover these loans.

Is it no accident that some capitalists are already calling them "the lost generation", as they have to be "sacrificed", in order for a new generation of workers to be born, a generation of surfs "very competitive workers".

In a New York Times article, published a few years ago, there were a few interesting -and revealing- quotes about this whole situation, citing Ms Munna, a 26-year-old graduate of NY University, who plainly states that “I don’t want to spend the rest of my life slaving away to pay for an education I got for four years and would happily give back, it feels wrong to me.”
Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college, and they maintained a blind faith that the investment would be worth it.
Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle. For much of the time since her 2005 graduation, she’s been enrolled in night school, which allows her to defer loan payments.
[...] Over the course of the next two years, starting when she was still a teenager, she borrowed about $40,000 from Citibank without thinking much about how she would pay it back. How could her mother have let her run up that debt, and why didn’t she try to make her daughter transfer to, say, the best school in the much cheaper state university system in New York? “All I could see was college, and a good college and how proud I was of her,” Cathryn said. “All we needed to do was get this education and get the good job. This is the thing that eats away at me, the naïveté on my part.”

There are a lot of articles about "the education bubble", and education is a topic of huge significance, that we will talk about in future posts. But, if you really want to understand how "the education bubble" was created, all you have to do is think of education like an investment (yes, I know that education should help you develop "critical thinking", "moral values" and all that stuff, but why on earth would the ruling class want you to develop that? They only "moral values" they want you to learn are obedience to your masters, market values, like "everything is for sale" and all that stuff, and of course the necessary technical knowledge to make you more productive in your area of expertise).

Anyway, as I was saying, all you have to do is think of education like an investment: You invest time and money in order to "weaponize" yourself with "marketable skills" and be ready to face the competition when you finally enter the labor market "arena". Capitalism in its purest form forces the workers to compete against each other - and "only the strong survive". In today's global labor market, the Asian workers are simply..."destroying the competition". As for the western workers, only a few are "good enough" - the rest are simply redundant. Their "blind faith that the investment would be worth it", and that "all we needed to do was get this education and get the good job" was misplaced (at best).

Capitalism is based on faith and speculation - these students and their families speculated that getting a college degree was a good investment, because for many years now, it had been the key to securing a good job. So, it was OK to get a student loan, because they speculated that they would be able to repay it + live a comfortable life in the future.

But the returns on their investment were not as great as they thought. There are other competitors, especially in Asia, that can (generally) do the same things as them, maybe even more, and they are also willing to worker longer hours for less money. Not to mention the fact that some western education systems are crappy (we shall discuss this in greater detail  the future). So, not a lot of western students will be able to get a job and repay their debts. Of course, the western businessmen are quite happy to go along with this, because they get to increase their profits, due to the lower labor costs. But the workers will suffer - debt slavery, unemployment and poverty is their future, and on top of it all, they were caught completely off-guard and are not ready to fight back, as most of them were under the illusion that "all we needed to do was get this education and get the good job"...

 Oh, and by the way, here's an interesting piece of news, in case you were thinking of defaulting on your student loans:
Unable to find a job as a music teacher in the current economic crisis, he eventually went into default on his loans, which included Stafford, Perkins and private bank loans. Then this year, he decided to go on to earn a PhD, which would make it possible for him to get hired in his field. He applied to a top-rated university in the Northeast, but when it was time to send his school transcripts, Temple froze him out. “They said as long as I was in default on my loans, they would not issue a transcript!” says Rodriguez.

A spokesman from Temple confirms that it is school policy to withhold official transcripts from graduates who are in default on their student loans.

+ A few interesting articles that weren't mentioned in the post, but are worth a read:
  • New graduates will have to work until 71 before qualifying for state pension (guardian)
  • Fifth of new graduates unemployed (Independent), but what about the others? Well, A third of graduates take low skilled jobs, according to the Telegraph.
  • If America Spends More Than Most Countries Per Student, Then Why Are Its Schools So Bad? (BusinessInsider)
  • Chinese Applicants Flood U.S. Graduate Schools (WSJ)
  • What Should You Know About the Quebec Student Strikes and Occupations? (nextnewdeal)
  • The US schools with their own police (guardian)
  • MUST READ: The Astounding Failure of the US Educational System - John Taylor Gatto (ZeroHedge)
Read more »
Read more »

Saturday, April 21, 2012

Work harder, buy more things, otherwise the economy will collapse

 MUST-READ from Orion Magazine:

[...] Just ten years later things looked very different. Cars dominated the streets and most urban homes had electric lights, electric flat irons, and vacuum cleaners. In upper-middle-class houses, washing machines, refrigerators, toasters, curling irons, percolators, heating pads, and popcorn poppers were becoming commonplace. And although the first commercial radio station didn’t begin broadcasting until 1920, the American public, with an adult population of about 122 million people, bought 4,438,000 radios in the year 1929 alone.

But despite the apparent tidal wave of new consumer goods and what appeared to be a healthy appetite for their consumption among the well-to-do, industrialists were worried. They feared that the frugal habits maintained by most American families would be difficult to break. Perhaps even more threatening was the fact that the industrial capacity for turning out goods seemed to be increasing at a pace greater than people’s sense that they needed them.
It was this latter concern that led Charles Kettering, director of General Motors Research, to write a 1929 magazine article called “Keep the Consumer Dissatisfied.” He wasn’t suggesting that manufacturers produce shoddy products. Along with many of his corporate cohorts, he was defining a strategic shift for American industry—from fulfilling basic human needs to creating new ones.

In a 1927 interview with the magazine Nation’s Business, Secretary of Labor James J. Davis provided some numbers to illustrate a problem that the New York Times called “need saturation.” Davis noted that “the textile mills of this country can produce all the cloth needed in six months’ operation each year” and that 14 percent of the American shoe factories could produce a year’s supply of footwear. The magazine went on to suggest, “It may be that the world’s needs ultimately will be produced by three days’ work a week.”
Businessmen were not happy about this prospect -> Read the rest of the story here:

Read more »
Read more »

How many remember this? April 20, 1914: The Ludlow Massacre

This blog hasn't been updated in approximately two months (which feels like a lifetime in our "fast-changing" world). But hopefully I will have more time from now on - and for my first post after such a long while, the choice was easy: On April 20, 1914, a great event happened in USA, an event that is even known to an foreigner like me. And yet, it has been forgotten by (almost) everyone there, judging by what the media are (not) talking about today, on this historic anniversary of the Ludlow Massacre. And you know what they say about those who forget about their past - they are bound to repeat it.

So what was this "Ludlow Massacre"? It was one of the greatest battles in the history of class war in USA. And since it was named "massacre", you've probably guessed that it was much more brutal than teargassing the OccupyWallStreet protestors - it was more in the "Game Of Thrones" category of hurting your opponent. And this is probably why the big media don't like talking about it: It is much easier to "manufacture consent" when you omit some little details, like the killing annihilation of "a few workers" who dared to go on strike.

Here are the details, from wikipedia:

The Ludlow Massacre was an attack by the Colorado National Guard on a tent colony of 1200 striking coal miners and their families at Ludlow, Colorado on April 20, 1914.

The massacre resulted in the violent deaths of between 19 and 25 people; sources vary but all sources include two women and eleven children, asphyxiated and burned to death under a single tent. The deaths occurred after a day-long fight between strikers and striking workers. Ludlow was the deadliest single incident in the southern Colorado Coal Strike, lasting from September 1913 through December 1914. The strike was organized by the United Mine Workers of America (UMWA) against coal mining companies in Colorado. The three largest companies involved were the Rockefeller family-owned Colorado Fuel & Iron Company (CF&I), the Rocky Mountain Fuel Company (RMF), and the Victor-American Fuel Company (VAF).

Red cross workers on the strikers' camp after the attack

In retaliation for Ludlow, the miners armed themselves and attacked dozens of mines over the next ten days, destroying property and engaging in several skirmishes with the Colorado National Guard along a 40-mile front from Trinidad to Walsenburg. The entire strike would cost between 69 and 199 lives, described as the "deadliest strike in the history of the United States".

The Ludlow Massacre was a watershed moment in American labor relations.
Historian Howard Zinn has described the Ludlow Massacre as "the culminating act of perhaps the most violent struggle between corporate power and laboring men in American history". Congress responded to public outcry by directing the House Committee on Mines and Mining to investigate the incident. Its report, published in 1915, was influential in promoting child labor laws and an eight-hour work day.

The Ludlow site, 12 miles (19 km) northwest of Trinidad, Colorado, is now a ghost town. The massacre site is owned by the UMWA, which erected a granite monument in memory of the miners and their families who died that day.[5] The Ludlow Tent Colony Site was designated a National Historic Landmark on January 16, 2009, and dedicated on June 28, 2009. Modern archeological investigation largely supports the strikers' reports of the event.


Mining was dangerous and difficult work. Colliers in Colorado were at constant risk for explosion, suffocation, and collapsing mine walls. In 1912, the death rate in Colorado's mines was 7.055 per 1,000 employees, compared to a national rate of 3.15...Miners were generally paid according to tonnage of coal produced, while so-called "dead work", such as shoring up unstable roofs, was often unpaid. According to historian Thomas G. Andrews, the tonnage system drove many poor and ambitious colliers to gamble with their lives by neglecting precautions and taking on risk, with consequences that were often fatal.
Colliers had little opportunity to air their grievances. Many colliers resided in company towns, in which all land, real estate, and amenities were owned by the mine operator, and which were expressly designed to inculcate loyalty and squelch dissent. Welfare Capitalists believed that anger and unrest among the workers could be placated by raising colliers' standard of living, while subsuming it under company management. Company towns indeed brought tangible improvements to the lives of many colliers and their families, including larger houses, better medical care, and broader access to education. However, ownership of the towns provided companies considerable control over all aspects of workers' lives, and this power was not always used to augment public welfare. Historian Philip S. Foner has described company towns as "feudal domain[s], with the company acting as lord and master. ... The 'law' consisted of the company rules. Curfews were imposed. Company guards - brutal thugs armed with machine guns and rifles loaded with soft-point bullets - would not admit any 'suspicious' stranger into the camp and would not permit any miner to leave." Furthermore, miners who raised the ire of the company were liable to find themselves and their families summarily evicted from their homes.
Frustrated by working conditions which they felt were unsafe and unjust, colliers increasingly turned to unionism. Nationwide, organized mines boasted 40 percent fewer fatalities than nonunion mines. Colorado miners had repeatedly attempted to unionize since the state's first strike in 1883. The Western Federation of Miners organized primarily hard rock miners in the gold and silver camps during the 1890s. Beginning in 1900, the UMWA began organizing coal miners in the western states, including southern Colorado. The UMWA decided to focus on the CF&I because of the company's harsh management tactics under the conservative and distant Rockefellers and other investors. To break or prevent strikes, the coal companies hired strike breakers, mainly from Mexico and southern and eastern Europe. CF&I's management mixed immigrants of different nationalities in the mines, a practice which discouraged communication that might lead to organization.

The strike was organized by the United Mine Workers of America (UMWA) against coal mining companies in Colorado. The three biggest mining companies were the Rockefeller family-owned Colorado Fuel & Iron Company (CF&I), the Rocky Mountain Fuel Company (RMF), and the Victor-American Fuel Company (VAF). Ludlow, located 12 miles (19 km) northwest of Trinidad, Colorado, is now a ghost town. The massacre site is owned by the UMWA, which erected a granite monument, in memory of the striking miners and their families who died that day.
Despite attempts to suppress union activity, secret organizing continued by the UMWA in the years leading up to 1913. Once everything had been laid out according to their plan, the UMWA presented, on behalf of coal miners, a list of seven demands:

-Recognition of the union as bargaining agent
-An increase in tonnage rates (equivalent to a 10% wage increase)
-Enforcement of the eight-hour work day law
-Payment for "dead work" (laying track, timbering, handling impurities, etc.)
-Weight-checkmen elected by the workers (to keep company weightmen honest)
-The right to use any store, and choose their boarding houses and doctors
-Strict enforcement of Colorado's laws (such as mine safety rules, abolition of scrip), and an end to the dreaded company guard system

The major coal companies rejected the demands and in September 1913, the UMWA called a strike. Those who went on strike were promptly evicted from their company homes, and they moved to tent villages prepared by the UMWA, with tents built on wood platforms and furnished with cast iron stoves on land leased by the union in preparation for a strike.

Confrontations between striking miners and replacement workers, referred to as "scabs" by the union, often got out of control, resulting in deaths. The company hired the Baldwin-Felts Detective Agency to help break the strike by protecting the replacement workers and otherwise making life difficult for the strikers.

Baldwin-Felts had a reputation for aggressive strike breaking. Agents shone searchlights on the tenvillages at night and randomly fired into the tents, occasionally killing and maiming people. They used an improvised armored car, mounted with a M1895 Colt-Browning machine gun that the union called the "Death Special," to patrol the camp's perimeters. The steel-covered car was built in the CF&I plant in Pueblo from the chassis of a large touring sedan. Because of frequent sniping on the tent colonies, miners dug protective pits beneath the tents where they and their families could seek shelter.
As strike-related violence mounted, Colorado governor Elias M. Ammons called in the Colorado National Guard on October 28. At first, the Guard's appearance calmed the situation, but the sympathies of Guard leaders lay with company management. Guard Adjutant-General John Chase, who had served during the violent Cripple Creek strike 10 years earlier, imposed a harsh regime. On March 10, 1914, the body of a replacement worker was found on the railroad tracks near Forbes, Colorado. The National Guard said that the man had been murdered by the strikers. In retaliation, Chase ordered the Forbes tent colony destroyed. The attack was launched while the inhabitants were attending a funeral of infants who had died a few days earlier. The attack was witnessed by photographer Lou Dold, whose images of the destruction appear often in accounts of the strike.

The strikers persevered until the spring of 1914. By then, the state had run out of money to maintain the Guard, and was forced to recall them. The governor and the mining companies, fearing a breakdown in order, left two Guard units in southern Colorado and allowed the coal companies to finance a residual militia consisting largely of CF&I camp guards in National Guard uniforms.

On the morning of April 20, the day after Easter was celebrated by the many Greek immigrants at Ludlow, three Guardsmen appeared at the camp ordering the release of a man they claimed was being held against his will. This request prompted the camp leader, Louis Tikas, to meet with a local militia commander at the train station in Ludlow village, a half mile (0.8 km) from the colony. While this meeting was progressing, two companies of militia installed a machine gun on a ridge near the camp and took a position along a rail route about half a mile south of Ludlow. Anticipating trouble, Tikas ran back to the camp. The miners, fearing for the safety of their families, set out to flank the militia positions. A firefight soon broke out.

Coffins are marched through Trinidad, Colorado, at the funeral for victims of the Ludlow massacre

The fighting raged for the entire day. The militia was reinforced by non-uniformed mine guards later in the afternoon. At dusk, a passing freight train stopped on the tracks in front of the Guards' machine gun placements, allowing many of the miners and their families to escape to an outcrop of hills to the east called the "Black Hills." By 7:00 p.m., the camp was in flames, and the militia descended on it and began to search and loot the camp. Louis Tikas had remained in the camp the entire day and was still there when the fire started. Tikas and two other men were captured by the militia. Tikas and Lt. Karl Linderfelt, commander of one of two Guard companies, had confronted each other several times in the previous months. While two militiamen held Tikas, Linderfelt broke a rifle butt over his head. Tikas and the other two captured miners were later found shot dead. Tikas had been shot in the back. Their bodies lay along the Colorado and Southern Railway tracks for three days in full view of passing trains. The militia officers refused to allow them to be moved until a local of a railway union demanded the bodies be taken away for burial.

During the battle, four women and eleven children had been hiding in a pit beneath one tent, where they were trapped when the tent above them was set on fire. Two of the women and all of the children suffocated. These deaths became a rallying cry for the UMWA, who called the incident the "Ludlow Massacre."

In addition to the fire victims, Louis Tikas and the other men who were shot to death, three company guards and one militiaman were killed in the day's fighting.

Although the UMWA failed to win recognition by the company, the strike had a lasting impact both on conditions at the Colorado mines and on labor relations nationally. John D. Rockefeller, Jr. engaged labor relations experts, and future Canadian Prime Minister, W. L. Mackenzie King to help him develop reforms for the mines and towns, which included paved roads and recreational facilities, as well as worker representation on committees dealing with working conditions, safety, health, and recreation. There was to be no discrimination of workers who had belonged to unions, and the establishment of a company union. The Rockefeller plan was accepted by the miners in a vote. (this sort of compromise only dooms the workers to re-live over and over again the same kind of oppression  - my note)

Ludlow monument, erected by the United Mine Workers of America

Here are a few excerpts from Rockefeller's testimony, before the Congress:

CHAIRMAN: And you are willing to go on and let these killings take place . . . rather than go out there and see if you might do something to settle those conditions?

ROCKEFELLER: There is just one thing . . . which can be done, as things are at present, to settle this strike, and that is to unionize the camps; and our interest in labor is so profound . . . that interest demands that the camps shall be open [nonunion] camps that we expect to stand by the [Colorado Fuel and Iron Company] officers at any cost. . . .

CHAIRMAN: And you will do that if it costs all your property and kills all your employees?

ROCKEFELLER: It is a great principle.

Rockefeller's version of the events - June 10, 1914

"There was no Ludlow massacre. The engagement started as a desperate fight for life by two small squads of militia against the entire tent colony … There were no women or children shot by the authorities of the State or representatives of the operators … While this loss of life is profoundly to be regretted, it is unjust in the extreme to lay it at the door of the defenders of law and property, who were in no slightest way responsible for it."

Read more »
Read more »