2012 - %3, March

Mass Appeal to Governors: Don't Privatize Prisons

| Fri Mar. 2, 2012 7:00 AM EST

The private prison giant Corrections Corporation of America has made states an offer they can—and should—refuse. That's the message that went out to state governors on Thursday in letters signed by 60 policy and religious groups. The letters urged the governors of all 50 states not to take up a blanket deal CCA has put forth to buy and privatize their state prisons in return for a promise to keep those prisons filled. 

Two weeks ago, the Huffington Post revealed that CCA was reaching out to states, offering to buy their prisons as a way to deal with their "challenging corrections budgets." The company is proposing that it receive, in exchange for the cash, a 20-year management contract that would require the states to keep their prisons at least 90 percent full for the duration.

This power play by the private prison firm may indicate some anxiety in what has historically been a growth industry. (See charts below.) Beginning in 2009, for the first time in nearly 40 years, the overall US prison population declined slightly. And in several states, plans to privatize prisons have been scaled back, stalled, or rejected.  

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Barnes & Noble, National Geographic's Illegal Logging Ties

| Fri Mar. 2, 2012 7:00 AM EST
A cleared Indonesian rainforest.

Here's something to consider before you reach for your next book at Barnes & Noble: Its pages may come from Asia Pulp and Paper—a leading Indonesian company that's come under scrutiny for its dodgy environmental practices. APP claims that illegal logs are not part of its wood supply. That's not true, according to a yearlong investigation of the company by Greenpeace, the results of which were published yesterday.

APP, it turns out, has been violating Indonesian and international laws protecting the country's rainforests, in particular the ramin tree species. Ramin trees exist primarily in the country's Sumatra region, and are key to the survival of the endangered Sumatran tiger. The trees are protected under the United Nations CITES treaty (Convention of International Trade in Endangered Species).

In the past, APP's questionable sourcing practices have led companies from Mont Blanc to Mattel to cut off ties with the supplier. But the Greenpeace investigation found that APP's paper still ends up in products you'll find on shelves at Barnes & Noble bookstores, in Xerox products, and—more surprisingly—in the pages of National Geographic. (The magazine has since issued a statement to Greenpeace pledging to stop doing business with APP). You can browse through other companies using APP products here (PDF).

Q&A: What's Going on With Gasoline Prices?

| Fri Mar. 2, 2012 7:00 AM EST

Gasoline prices are on the rise! How come? And what does it mean? Let's do a Q&A.

Q: How much has the price of gasoline increased recently?

A: Since the beginning of the year, the average price of gasoline has increased by 42 cents, from $3.36 to $3.78 per gallon. That's from the US Energy Information Administration, and it's an average of all grades, all formulations, across all regions of the country. The price has gone up more in some regions (like California) and less in others (like the Rocky Mountain states). You can see the regional variations here.

Q: How come it's gone up so much?

A: Gasoline prices are linked very tightly to crude oil prices. Stuart Staniford has the wonky graph here and the wonky explanation: "Technically, 97% of the variance of the price of gas is explained by the price of oil."

Q: So what's the relationship?

A: UC San Diego's James Hamilton, your go-to guy for the effect of oil prices on the economy, says his rule of thumb is that a $1 increase in the price of crude produces a 2½-cent increase in the price of gasoline. Lately, gasoline prices have been linked most closely to the price of Brent crude, and since the beginning of the year Brent has gone up from $107 to $123, a $16 increase. By Hamilton's rule, this should have produced an increase of 40 cents in the price of gasoline.

Q: Hey, that's almost exactly right! So there's nothing more to it than oil prices?

A: Pretty much. There are a few miscellaneous other factors, like refinery shutdowns and the change from winter to summer formulations, but they don't amount to much.

Q: Fine. But why have oil prices gone up?

A: In the long run, the answer is just supply and demand. Oil production has plateaued over the past few years because everyone in the world is pumping full out, and there's very little spare production capacity left. Meanwhile, because the global economy is recovering, demand has increased. Americans may be using less oil these days, but that doesn't make up for rising consumption in Asia, particularly China and India. So the basic reason for climbing oil prices is Econ 101: When global supply is stagnant and global demand goes up, prices increase.

In addition, there are other theories about why prices have specifically gone up just in the past couple of months. Bernie Sanders thinks it's because of oil speculators on Wall Street. Sanctions on Iran may be hurting their ability to ship crude. Additionally, some analysts think that some of the price increase is driven by fear that Iran might cut off oil shipments entirely, or else slow or close the Strait of Hormuz. In other words, some of it might be driven by panic.

But here's the main takeaway: Demand for oil is pushing up against supply limits, and that's a permanent condition. From now on, demand is always going to be bumping up against supply limits because even if supply rises a bit in the future, demand is rising even faster. And when supply and demand are that tightly constrained, every small bump in demand or disruption in supply causes a big swing in prices. Last year it was the war in Libya that caused a price spike. This year it's Iran. But it's always going to be something. It doesn't take much anymore to produce a $30 swing in oil prices.

Q: Is this bad news for President Obama? Aren't presidential elections heavily influenced by gasoline prices?

A: Nate Silver crunched the numbers on this and concluded that the effect was actually pretty small. High prices at the pump probably have a negative effect on an incumbent president, but not much of one.

Q: Whew!

A: Not so fast. You also need to factor in the fact that higher oil prices are likely to slow down the economy. Jared Bernstein provides the nickel summary: "In terms of the overall economy, what you worry about here is a) oil is an important production input to everything we do, and b) higher gas prices mean less disposable incomes for people. Those are the dynamics behind the rules of thumb—the ones that say a $10 increase in a barrel of oil translates into about a quarter more per gallon at the pump, and, if it sticks, could shave 0.2% off of GDP growth. Not good, and why oil is #2 on my list of threats to the recovery (right after fiscal drag and before Europe)."

James Hamilton has done a lot of academic work on the effect of oil prices on the economy, and the effect is very real. If prices stay high, it could put a damper on economic performance later this year, and that in turn could hurt Obama's reelection chances.

Q: Do you have any good news to share?

A: Not really. New shale oil finds in North Dakota might increase global supplies a bit, but probably not enough to make up for increasing demand from China and other emerging economies. Basically, prices are going to stay high for the foreseeable future; even small supply disruptions are likely to cause big price gyrations; and big supply disruptions are likely to cause full-blown recessions. Like it or not, this is our future. I recommend you buy a motorcycle.

Sometimes In-Kind Aid Really is Better Than Cash

| Thu Mar. 1, 2012 10:50 PM EST

Ed Glaeser is unhappy that we provide so much in-kind aid to the poor instead of simply giving them cash. The following is a mouthful, but bear with me:

Over the past 40 years, in-kind programs have grown steadily more important than cash transfers. In 1968, the last year of Lyndon Johnson’s presidency, the federal government spent $1.61 billion ($10.5 billion in 2012 dollars) on Aid to Families with Dependent Children (the predecessor of Temporary Aid to Needy Families); it spent $1.81 billion ($11.8 billion in 2012 dollars) on Medicaid and $505 million ($3.3 billion in 2012 dollars) for food and nutrition assistance. There was no Earned Income Tax Credit or housing vouchers, so the ratio of in-kind aid to cash transfer was 3 to 2.

The 2013 budget contains $293 billion for Medicaid, $112 billion for food and nutrition service (food stamps) and $28 billion for tenant- and project-based rental assistance, which includes housing vouchers. That is a total of $433 billion of in-kind transfers from these three primary programs.

By contrast, the budget includes only $17 billion for the Administration for Children and Families (which administers Temporary Aid to Needy Families). The Earned Income Tax Credit paid out $59.5 billion in 2010, and Obama’s proposal would eventually increase its generosity by about $1.5 billion a year. Considering just these programs, the ratio of in-kind assistance to cash aid is now to 5.6 to 1. In 1968, the in-kind share of assistance was 60 percent; now it is 85 percent.

Glaeser goes through the various justifications for relying so much on in-kind aid and dismisses each of them, but he forgets one big one: the increase here is driven mostly by Medicaid. If Medicaid had stayed at the same level as in 1968, the percentage of in-kind aid would have changed from 60% to 66%. That's still up, but it's not up that much.1

And Medicaid, of course, is the one program that really can be justified as in-kind aid. It's insurance that pays out at unpredictable intervals and in unpredictable amounts, so it can't really be replaced by a simple monthly check. That's why healthcare insurance is the usual way of paying for medical services in the first place. If insurance companies were required by law to sell insurance to all comers at a price set by the government, then a monthly check might work OK. But that's not the case right now.

Medicaid aside, there are some good arguments for getting rid of the rest of our crazy quilt system of in-kind aid and simply mailing checks to poor people. It would sure be a lot more efficient. Unlike Glaeser, though, I think some of the arguments for keeping in-kind aid also make sense. All in all, though, his column is worth a read as long as you keep in mind that once you account for Medicaid, the increase in in-kind aid over the past 40 years isn't quite as dramatic as he suggests.

1It's also worth keeping in mind that the 2013 numbers Glaeser cites for in-kind aid are artificially high compared to 1968 because of the current economic downturn. They'll go down once the economy recovers.

Diet Soda: Silent, But Maybe Not so Lethal

| Thu Mar. 1, 2012 9:58 PM EST

My colleague Tom Philpott reports on a study suggesting that diet soda is bad for you:

Known as the Northern Manhattan Study and housed at Columbia University, the project enrolled thousands of people from the community and subjected them to medical testing while recording their food consumption habits.

Among its results, a surprising one has emerged []: People who drink at least one diet soda a day are 43 percent more likely to experience a "vascular event"—i.e., strokes and heart attacks—than people who drink none....Crucially, this study accounted for factors like weight, diabetes, high blood pressure, and intake of calories, cholesterol, and sodium, study author and University of Miami epidemiologist Hannah Gardener told me in a phone conversation. In other words, nonoverweight diet soda drinkers showed significantly more risk of heart attack than nonoverweight people who don't drink diet soda.

I ran across this study a while ago, and I'd urge caution for a couple for reasons. First, the sample size was pretty small: only 116 participants drank diet soda daily. Second, there was no dose-response finding. If you drink six diet sodas per week, you're fine. If you drink seven or more, you need to get measured for a coffin. This suggests fairly strongly that something else might be going on. For example, the results might be driven by a small number of very heavy diet soda drinkers, or it might be that people who drink diet soda daily are making up for other parts of their diet that are the actual root of the problem. Even Gardener is wary of drawing any firm conclusions:

Gardener acknowledged some limitations of the diet soda study, including the use of self-reported dietary data at a single time point, and concluded that the findings are "too preliminary to suggest any dietary advice."

"If and only if the results are confirmed can we suggest that diet soda may not be an optimal substitute for sugar-sweetened beverages, which have been shown to have various health consequences," she said.

In any case, I drink three or four diet sodas a week, so I guess I'm good. Aside from that, I find that water is a pretty good hydration tool. Cheap, too.

Gasoline Does Not Cost $5 per Gallon

| Thu Mar. 1, 2012 7:14 PM EST

Larry Kudlow tweets a promo for tonight's show: 

I'll have more to say about this tomorrow morning, but for now I just want to make one point: gasoline isn't shooting up to $5 per gallon. If you look at the most expensive grade, in the most expensive formulation, in the most expensive state, at the most expensive gas station, then a gallon of gas comes close to $5. But the EIA publishes the average price of gasoline on a weekly basis, and as of this week it's.....

$3.78.

Not five bucks. The price of gas is indeed up, and that's bad news, but it's not up that much, and it's not at record-breaking highs either. As recently as last April, it was even higher. So everybody take a deep breath, OK?

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Corn on "PoliticsNation": Why Isn't Romney the GOP Front-Runner Yet?

Thu Mar. 1, 2012 6:38 PM EST

David Corn and Democratic strategist Tad Devine joined Al Sharpton on MSNBC's PoliticsNation to discuss what Mitt Romney's narrow victories in Michigan and Arizona say about his chances on Super Tuesday. The strain of the campaign seemed to show in Romney's victory speech: "We didn't win by a lot, but we won by enough, and that's all that counts," he said before urging supporters to donate to his campaign. As the GOP primary drags on, will Romney ever be able to gain a definitive edge over the other candidates?

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

Student Protests Seek to Breathe New Life Into Occupy

| Thu Mar. 1, 2012 5:49 PM EST

march1strikeucsc.orgmarch1strikeucsc.orgIn the past three years, California has slashed funding for public education by $20 billion and laid off 40,000 teachers. Once known for its stellar public school system, the state now has the lowest staff-to-student ratio in the country. Even its crown jewel, the University of California, is losing luster. Tuition has gone up by 300 percent since 2000. Other states' public and university systems are in similarly dire straits.

In the era of offshoring, digitization, and corporate downsizing, public education remains one of the few hopes for sustaining the middle class. While a generation ago, high-school graduates (or even dropouts) could reasonably expect to earn enough working a factory floor to buy a house and put their kids through college, those jobs have mostly been replaced by an "innovation economy" that demands even factory workers to have years of specialized training. As Adam Davidson ably explores in "Making It In America," his article in the current Atlantic, we live in a world in which "the opportunities for being skilled grow and the opportunities for unskilled Americans diminish."

Nobody understands the importance of reinvesting in education better than the students who now depend on it for their futures. As tuitions skyrocket, some of them are being priced out of a college education. Others are entering an uncertain job market saddled with mountains of student debt, which now totals more than a trillion dollars nationally.

Today, many students are joining protests organized by Occupy Education, a coalition of 80 occupy, labor, and community groups, to launch a week of action around the idea that "education is a human right." Rallies using the Twitter hashtags #OccupyEducation and #M1 are taking place in seven cities. Students will stage walkouts in Boston and Philadelphia. In Oakland, organizers will embark on a 99-mile march from Frank Ogawa/Oscar Grant Plaza (the old home of Occupy Oakland) to Sacramento, where they plan to occupy the state capitol on Monday. Their demands: Killing a proposed 24 percent tuition increase at UC Berkeley and getting the university to support a tax on millionaires that would raise $6 billion annually for public education.

"I think this is the beginning of an uprising of the 99 percent on campuses this spring," says Charlie Eaton, a UC Berkeley PhD student in sociology. He believes "the stakes are huge" but the students' demands aren't: All they want is to "get an education without taking on a huge amount of debt and have an opportunity to get a job when we finish."

Chart of the Day: Gun Ownership is on a 30-Year Decline

| Thu Mar. 1, 2012 3:46 PM EST

Paul Waldman, in the final installment of his epic series about guns and the NRA (nickel summary: the gun lobby isn't as influential as you think), provides us with a surprising chart. For the last 30 years, it turns out, gun ownership has dropped steadily. Today, only about 30% of households own a gun. Most of this is due to demographics. Apparently there was a big spurt in gun ownership in the generation born between 1920 and 1960, and then the spurt went away. Cohorts born in later years all own guns at substantially lower levels.

It's hard to square this up with gun sales because (a) nobody seems to reliably track overall gun sales, and (b) the vast majority of new gun sales are made to a smallish number of big customers, such as police forces and militaries. Still, unit gun sales seem to have gone up pretty explosively between 2005-10, doubling from around 5 million per year to 10 million per year. FBI background checks, a proxy for gun sales to individuals, have gone up too.

So I'm not sure what's going on. Gun sales to individuals seem like they've increased a fair amount over the past decade, but the number of households reporting gun ownership has decreased a bit. Does this mean that fewer households own guns, but the ones that do own guns have more and more of them? More data please!

See the Racist Email About Obama Sent by a Federal Judge

| Thu Mar. 1, 2012 3:08 PM EST

The Great Falls Tribune reported Wednesday that Richard Cebull, a George W. Bush-appointed federal judge in Montana, sent a racist joke about President Barack Obama from his official email account. Even as far as racist jokes go, the dig is mightily unclever—the punchline contains an implied comparison between black people and dogs. 

Josh Glasstetter at Right Wing Watch has obtained an image of the email, which he writes has been going around the Internet around for months. It resembles a cheesy greeting card:

The joke also implies that instead of being married to Barack Obama Sr., Obama's mother Ann Dunham merely got pregnant at a party at which she was drunk, because how else could a white woman end up sleeping with a black man? So it manages to be profoundly racist and sexist at the same time.

Judge Cebull apologized and said he understood the joke was racist. What's interesting was his explanation for sending it around anyway:

"The only reason I can explain it to you is I am not a fan of our president, but this goes beyond not being a fan," Cebull said. "I didn't send it as racist, although that's what it is. I sent it out because it's anti-Obama."

Cebull doesn't seem to understand there's no way to deploy racism exclusively against President Obama. Racist animus cannot be focused on a single person. It is, by definition, a collective judgement on an entire people.

Perhaps Cebull's cognitive dissonance explains the appeal of certain racialist explanations for Obama's behavior—"Kenyan anti-colonialism" and so forth—and why some conservatives don't seem to understand why so many black people react to such language as though they're being personally targeted. They are, even if those doing the targeting don't seem to realize it.