September 29, 2005

Quote of the Day 2: On Skeletons and Closets

Filed under: General,Taxes & Government — Tom @ 5:33 pm

It has nothing to do with Halloween:

“Can’t someone please run against these
idiots? Who me? No thanks. I have too many
skeletons in my closet and some of them are
still trying to move around.

Moderate Mainstream

Hurricane Relief Debit (and Other) Cards Update

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 3:09 pm

Previous Posts:
This Weekend’s Unanswered Questions (091705):
Special Katrina Debit-Card Abuse Edition
Katrina Debit-Card Abuse Update: Some Merchants Refuse Cards

Those offended by how relief debit cards were abused in the aftermath of Katrina will not be pleased by what I found after the first two paragraphs at the subscription-only web site today (excerpts are for fair use and discussion purposes):

The Federal Emergency Management Agency’s entry into prepaid debit to assist victims of hurricane Katrina is widely viewed by industry observers as a failure.

FEMA discontinued issuing MasterCard-branded prepaid debit cards after only a day of distribution on Sept. 9. About 10,000 of the cards, issued by J.P. Morgan Chase & Co., were distributed.

However, a closer look at the aftermath of the Katrina disaster reveals that use of prepaid debit cards is taking center stage in the post-disaster relief and recovery effort. Some industry observers predict that Katrina is a watershed event that will boost the use of prepaid debit cards by government for many years.

So far, at least 580,000 prepaid debit cards have been distributed in connection with the hurricane relief effort, and that number could soon reach a million cards.

The American Red Cross has distributed at least 300,000 MasterCard-branded cards, which carry from $360 to $1,565 in value, according to sources familiar with the cards, which have both PIN-based and signature-based capabilities. The sources tell ATM&Debit News that the Red Cross is ordering 100,000 prepaid debit cards to be produced daily.

Moreover, Louisiana, Mississippi and Alabama all are taking advantage of a new disaster-connected program that uses existing electronic benefits transfer systems to deliver food and cash assistance via EBT (Electronic Benefits Transfer) cards. So far, about 280,000 EBT cards have been issued by Louisiana since the U.S. Department of Agriculture on Sept. 9 began disbursing federal food-stamp benefits for people displaced by Katrina. Those are in addition to the 300,000 EBT cards, which also can be used for disaster assistance, already in circulation among existing food-stamp recipients in Louisiana. The USDA is allowing a 30-day allotment of food assistance using existing EBT programs. The agency estimates that about 977,000 households will be certified to receive EBT cards for disaster assistance.

Chase is Louisiana’s main EBT contractor and EBT card issuer. Tom Mclaughlin, EBT administrator for Chase, says the EBT cards, which all states now use to deliver food stamps, is ideal for delivering food assistance to displaced people. “It did not matter whether that person is in Texas or Florida. They have been able to access their benefits,” says Mclaughlin. He notes that EBT cards are now accepted at most supermarkets in the nation via point-of-sale terminals. Chase provides network gateway connections under EBT interoperability rules.

The rules to qualify for disaster benefits on EBT cards are less stringent than those required to qualify for food stamps. Unlike traditional EBT cards, disaster recipients need not provide income statements to qualify. They only need proof of residence in disaster areas.

Although abuse of the special cards would seem to be in play with less-stringent qualification rules, the disaster-related EBT cards expire after 30 days but can be renewed.

Clarence Carter, deputy administrator for the USDA’s Food and Nutrition Service, says a higher fraud potential is the reason why the 30-day use limit was imposed.

One source tells ADN that the Red Cross also is trying to prevent widespread fraud on its prepaid debit cards by setting time limits and daily withdrawal caps.

Chase appears to be the main commercial beneficiary of the Katrina-connected prepaid products. Chase gets an undisclosed monthly fee for every household issued an EBT card. Typical EBT contracts provide contractors up to $5 a month per EBT household. Chase as an issuer gets interchange revenue when the Red Cross cards are used for purchases.

….. States are increasingly using their existing EBT infrastructure for disaster planning, says Ellen Bollinger, legal counsel for the Washington, D.C.-based Food Research and Action Center. Bollinger’s group has lobbied for federal and state authorities to use the nation’s EBT card infrastructure to deliver emergency food aid.

The group in July produced a white paper, titled “An Advocate’s Guide to the Disaster Food Stamp Program” that urges states to relax food-stamp qualification rules in emergencies.

John Carrier, state EBT administrator, says Louisiana is considering delivering disaster cash assistance via existing cards. Cash value on the cards could be used for ATM withdrawals.

In addition to EBT cards, which cannot be used for non-food retail purchases, Louisiana also has begun issuing Visa-branded, prepaid debit cards to deliver unemployment compensation instead of sending evacuees paper checks. Hundreds of thousands of Louisiana residents are expected to apply for unemployment compensation in the coming weeks.

Tim Sloane, director of Mercator Advisory Group’s debit advisory service, says he thinks the use of prepaid debit cards in Katrina’s aftermath will spark other public uses for the cards. Sloane, for example, says he sees no reason why Social Security benefits cannot be loaded onto the disaster-related EBT cards to replace paper checks and offer benefit access for those who cannot use direct deposits into bank accounts.

Carter says federal and state officials are discussing the use of EBT cards to deliver a host of badly needed benefits to hurricane victims. “There is no reason why those (EBT) cards cannot provide multiple benefits,” Carter says.

So, it appears that although the FEMA debit card program ended, cards were still passed out freely after the public was told the practice had stopped.

I have no problem with some of the ideas for employing cards, and some may have the potential for reducing administrative costs. But I see a pervasive disregard for making sure that controls are in place to ensure that money placed on debit cards or EBTs will be spent in the manner intended, or whether more money than is really necessary is being distributed (and no, I am not impressed with the 30-day card expirations as a control mechanism). Doesn’t anyone see that the ability to use some of the cards discussed to get money at ATM machines totally compromises whatever accountability potential may have existed?

It seems there are plenty of incentives to be careless, and few if any to be careful. The more spending, the higher the banks’ interchange fees, the higher the contributions the Red Cross requests from a pliant public, and the more voters get potentially bought with the free goodies. Who is representing the donors or the taxpayers here?

Internet Control Stays in the US (I should think so)

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 12:07 pm

Surely The UN jests (bold is mine, and is commented on below):

U.S. Insists on Keeping Control of Web

GENEVA (AP) – The United States refuses to relinquish its role as the Internet’s principal traffic policeman, rejecting calls in a United Nations meeting for a U.N. body to take over, a top U.S. official said Thursday.

“We will not agree to the U.N. taking over the management of the Internet,” said Ambassador David Gross, the U.S. coordinator for international communications and information policy at the State Department. “Some countries want that. We think that’s unacceptable.”

Speaking on the sidelines of the last preparatory meeting before November’s World Summit on the Information Society in Tunisia, Gross said that progress was being made on a number of issues, but not on the question of Internet governance.

The stalemate over who should serve as the principal traffic cops for Internet routing and addressing could derail the summit – which aims to ensure a fair sharing of the Internet for the benefit of the whole world.

Internet governance has historically been the role of the United States, because it created the original system and funded much of the its early development.

While this arrangement satisfies some, developing countries have been frustrated that Western countries that got on the Internet first gobbled up most of the available addresses required for computers to connect, leaving developing nations to share a limited supply.

One proposal that countries have been discussing would wrest control of domain names from the U.S.-based Internet Corporation for Assigned Names and Numbers, or ICANN, and place it with an intergovernmental group, possibly under the United Nations.

“We think that that’s inappropriate,” Gross told reporters at U.N. offices in Geneva. “The genius of the Internet is that it has been flexible (and) private sector led.”

It is my belief that the bolded paragraph above is patently untrue, and that developing countries have no externally-imposed limitations on Internet access. The universe of unused IP addresses is still very, very large. I have traced the origins of spam e-mails, and found that the in-reality unused IP addresses that the spammers have pretended to own fall within huge blocks of unused IPs in countries all over the world.

If anyone could further enlighten me on the truth or falsity of this item, e-mail me.

BizzyBlog Flashback:US Retains Control of Internet Directory: AP Has Hissy Fit”

Money paragraph at Flashback post (with slight modifications; links that no longer work were removed):

(A UN-controlled Internet) will have:


UPDATE, Oct. 1: The “address-gobbling” issue is answered at this new post.

Income Inequality + Economic Mobility = Long-Term Prosperity

From Dan Seligman in Forbes, on the decades-long misconceptions about and continued harping on income inequality (bolds are mine):

…. Given the editorialists’ recurring objections to George Bush’s tax cuts, their implication here was clear: The Bush Administration has been especially awful in creating inequality. That implication is wrong. The reality is that measured inequality has been rising steadily for close to 30 years and hit successive new highs in the Carter, Reagan, elder Bush and Clinton administrations before doing the exact same thing under the younger Bush.


The standard measure of inequality is the Gini coefficient, signifying the extent to which a society deviates from absolute equality. If everybody has the same income, the coefficient is 0; if the entire GDP belongs to one person, the coefficient is 1. In the U.S. the latest reported coefficient is 0.466. In case you are wondering, it rose more under Clinton–from 0.433 to 0.462–than under any of those other chaps. It rose by only 0.004 during George W. Bush’s first four years. In case you are also wondering how many times Times editorialists complained about Clinton’s inequality record, the answer is zero. The Washington Post has been equally tendentious, and at one point (Sept. 25, 1998) it ran a front-page story on the 1997 income report in which it stated firmly that the census data showed “income inequality did not increase,” even though the data clearly pointed to a substantial one-year increase of 0.004. There was no correction.

…. Recent figures for Japan have been 0.249, for Germany 0.283, for France 0.327. But those countries have paid heavy prices for their relative income equality. Just about all of them have had lower growth rates than the U.S., and most of them (an exception is Japan) have far higher unemployment rates. The reality is that in democratic free-market societies, more inequality tends to mean more growth.

….. And in periods of boundless technological innovation, like the present, brains and talent are suddenly worth a lot more. The demand for mental skills has exploded. The total U.S. labor force has grown by a little more than one-third in the past two decades, but managerial and professional jobs have roughly doubled, from 24 million to more than 48 million.

Ah, but aren’t the people at the bottom stuck there? Mostly not, according to a Heritage Foundation “study of studies” based on government data (footnote references to supporting publications were removed but are available at the link; bolds are mine):

Many academic studies have found remarkably consistent results that suggest there is substantial income mobility in the United States. For example:

  • A 1992 Treasury Department study showed that between 1979 and 1988, 86 percent of those in the bottom income quintile moved to a higher quintile, and 35 percent in the top income quintile moved to a lower quintile.
  • A 1995 Federal Reserve Bank of Dallas report showed that almost three-fourths of those in the bottom quintile in 1975 were in a higher quintile by 1991, and almost 40 percent in the top quintile moved down to a lower quintile over the same period.
  • A 1996 Urban Institute study showed that large numbers of Americans move into a new income quintile, with estimates ranging from 25 percent to 40 percent in a single year. The same study found even higher mobility rates over longer periods: about 45 percent over five years and 60 percent over 9-year and 17-year periods.
  • In 1998, the Census Bureau reported that, on average, over 41 percent of Americans increased their inflation-adjusted income by 5 percent or more per year from 1984 to 1994. The primary reasons for changes in income from year to year were changes in marital status, changes in the number of workers in the household, and moving into or out of full-time, year-round employment.
  • A 2000 Economic Policy Institute study showed that almost 60 percent of Americans in the lowest income quintile in 1969 were in a higher quintile in 1996, and over 61 percent in the highest income quintile had moved down into a lower income quintile during the same period.

The Heritage link displays this stunning graph demonstrating how impressive the economic mobility in the US really is:


So in essence, being on the low end of the income totem pole is very often a temporary condition. People move up and down for a variety of reasons, most of which have nothing to do with a supposedly “unfair system.” I daresay that similar studies in the “social democratic” countries seen as more “fair” by the likes of The New York Times would show less economic mobility, not more.

BizzyBlog’s Take

Income inequality is not necessarily a bad thing, as long as it is:
– Primarily the result of economic efforts.
– There is a safety net for people in unfortunate low-income circumstances.
– There is (as is generally true in the US) real opportunity for people to move up the economic ladder through education, hard work, and creativity, with as few as possible barriers to success.

The fact that low-income children have lacked the same educational opportunity as upper-income children is probably the biggest barrier to sustaining future economic mobility, which is why initiatives like No Child Left Behind, charter schools, school vouchers, and the like are so important. Conservatives tend to favor these initiatives; liberals, especially teachers’ organizations, usually oppose them.

Attempts to reduce income inequality through higher taxes on higher earners have not only failed to reduce income inequality, but have held back economic growth from what it could have been (see: Western Europe). It also should be noted that the standard of living enjoyed by most US citizens in the bottom income quintile is significantly higher than that of most of the rest of the industrialized world.

Remember all of this the next time you hear whining about how “unfair” income inequality is. The very people who bemoan income inequality ignore the remarkable economic mobility in this country, and are the same ones who oppose the educational reforms that would make even more upward mobility possible.

Positivity: Cyber Report Cards

Filed under: General — Tom @ 6:05 am

Part of “Positivity” is reporting on neat developments that make everyday life a bit easier. Here’s one, and how it helps a soldier stay in touch:


Quote of the Day: On Germany’s Malaise

Filed under: Economy,Quotes, Etc. of the Day,Taxes & Government — Tom @ 6:00 am

Olaf Gersamann, in The American Enterprise (HT Betsy’s Page), on Germany’s resistance to meaningful economic reforms that would shake it out of its malaise:

Germans, in other words, are behaving like people on the sinking Titanic who insist their drinks be shaken, not stirred.