“Forced Extortion”: Cable Television Is Just A Cartel
Today’s cable television model forces consumers to pay for dozens of channels they don’t want in order to get the handful of channels that they do want. It is ostensibly a cartel, with industry profits built entirely on the consumer’s back. If you don’t like the model, too bad. There is no alternative. What’s worse, this arrangement is “blessed” by government regulations.
If given a choice, most parents would choose not to subsidize the sexually-charged content on MTV. Some people might not want ESPN. Others may only want news or movie channels. Cable choice, where consumers decide for themselves which channels they want to purchase, is a realistic solution for all of us who face sharply higher costs every year without fail.
The Federal Communications Commission just released new data showing that the average monthly price increase for expanded basic cable service continues to far outpace inflation, just as it has done for more than a decade. Choosing video content has become a lot easier, except for cable. One reason for this anomaly is an outdated and arcane federal regulation such as the 1992 Cable Act.
The Cable Act requires cable companies to offer a “basic tier” that consumers must buy before they can purchase other services. Other programming is only provided in bundles of additional networks – a forced-extortion scheme that causes us to pay for more than we need or want. For instance, more than $100 of our annual cable bill goes to the ESPN networks, regardless of whether we are sports fans. Media outlets have reported that the ESPN networks, owned by ABC/Disney and forced onto every cable subscriber, reflects nearly 20 percent of the wholesale cost of cable programming, yet it reflects only 2 percent of viewership.
Such a model clearly lacks a demand curve. And whether you get your video via cable, satellite or Telco-delivered video service, the package and price are about the same.
In a true free market, prices reflect what the marketplace dictates. If consumers knew what they were paying for each cable network in their bundle, they could make an informed decision about which networks they actually wanted to buy. And the cable networks would be forced to compete for the consumers’ business, instead of perpetuating the near-monopoly powers they currently hold.
It’s time for the cable industry either to voluntarily join the free marketplace for its products and services, or it must be forced to do so through the same regulatory means that allow it to operate like a cartel in the first place. In the meantime, consumers will continue to be fleeced by exorbitant cable price increases, mostly for networks they don’t even want.
By: Timothy F. Winter, The Debate Club, U. S. News and World Report, September 17, 2013
“The Evil Bozo Creep Show”: Trump University And Clown School
There’s really nothing all that wrong with defining “success” as making an absolute buffoon of yourself. You get attention that way. You might even make money that way, especially if you convince people that being as much of an embarrassment as you are is, in fact, a good thing – and you can put them on TV so people can watch the spectacle unfold. And in our absurdly celebrity-obsessed culture, there’s enough blurriness to the line between famous and notorious that one can convince oneself they’re moral equivalents.
But they’re not. If you want to make an ass of yourself for fame and money, knock yourself out. But don’t expect to be taken seriously at the same time.
That lesson has escaped walking logo Donald Trump, whom we thought was spending all his time combing his thin hair over his forehead, putting his name on buildings in tacky bright lights and humiliating people on a recession-era TV show about getting a job. But Trump, it seems, was running something called Trump University. Who knew?
These are not, after all, two words that one would put next to each other, logically. But Trump runs some sort of seminar camp in which he charges people up to $35,000 to hear hand-picked speakers talk about how to do the “art” of the Trump real estate deal, according to a complaint by New York Attorney General Eric Schneiderman. It’s not an actual university – that is, it doesn’t award degrees. And even the dangling carrot of the institution – the hope of actually getting to meet The Donald – wasn’t realized by many students (or, “students”) who, Schneiderman said, had to settle for a photo of themselves next to a cardboard cutout of Trump.
To his credit, that’s not a bad metaphor for the whole “university” scheme. But it’s hardly fair to people who shelled out thousands and thousands of dollars, thinking they’d get rich. Said Schneiderman:
Trump University engaged in deception at every stage of consumers’ advancement through costly programs and caused real financial harm. Trump University, with Donald Trump’s knowledge and participation, relied on Trump’s name recognition and celebrity status to take advantage of consumers who believed in the Trump brand.
To be fair, there are other fake schools that collect high tuitions from desperate people who then can’t find jobs or make back the investment they made in their educations. Trump is a meaty target – something he surely knows, since he’s put a lot of effort into making himself one. And it’s entirely possible that Schneiderman, wanting a tiny piece of the media attention Trump courts 24/7, was drawing attention to a serious issue by going after the least serious “school” out there.
But Trump’s level of self-aggrandizement has reached stunning heights, as he now contends that the president of the United States himself is behind the sting. President Obama and Schneiderman met on a Thursday night. Could they have been talking about Democratic politics? A looming government shutdown and what it would mean for the economy? The impact of Obamacare in New York, where insurance premiums are expected to go way down? Nope, Trump insists. It all has to be about him – what else? Said Trump:
They meet on Thursday evening. I get sued by this A.G. Schneiderman, I get sued on Saturday at 1 o’clock. Think of it. What government agency in the history of this country has ever brought a suit on a Saturday? I never heard of such a thing.
Perhaps it will all be academic in the end – which is about as close to academics as his institute comes. But Trump University and Trump himself should cheer up. There’s always clown college.
By: Susan Milligan, U. S. News and World Report, August 27, 2013
Have Banks Been Robo-Signing Credit Card Documents Too?
Several months ago, the nation’s biggest banks became embroiled in the “robo-signing” scandal, when it became clear that they had been approving thousands of foreclosures without verifying the proper documents or guaranteeing borrowers due process. The banks submitted fraudulent documents to courts and were forced to halt their foreclosures processes entirely as they sorted out what happened. “I had no idea what I was signing,” said one Bank of America employee. “We had no knowledge of whether the foreclosure could proceed or couldn’t, but regardless, we signed the documents to get these foreclosures out of the way.”
Robo-signing people into foreclosure is bad enough. But as it turns out, the practice may not have been limited to residential mortgages. American Banker, in fact, notes that JP Morgan Chase may also have been robo-signing credit card deals:
JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments…It is unclear whether Chase has stopped pursuing collection on many claims nationwide, or if intends to pursue the debts in some other fashion. The bank has not explained its apparent moratorium and declined comment.
Chase’s halt does, however, follow scattered defeats in state courts and a whistle-blower’s allegation that it falsely overstated the balances of thousands of delinquent accounts it sold to a third party. Former Chase employees and debt collection experts insist that the bank would not have abruptly retreated from its collections efforts in the absence of trouble. […]
Robo-signing, or the high-volume production of signed legal documents, has been a key element of the governmental and media foreclosure reviews. Chase’s current pullback raises at least the possibility that at least some banks may have documentation problems in other business lines…”If sloppy record keeping and problems with false affidavits is a problem with mortgages, it’s 100 times bigger in credit card accounts,” says Michelle Weinberg of the Legal Assistance Foundation of Metropolitan Chicago.
As one finance blogger put it, “When a bank leaves money on the table for no obvious reason, you know that something’s not quite right.” It seems that JP Morgan, and who knows how many other banks, were attempting to collect on debts without being certain that the amount they were asking for was accurate. One whistle blower looked at $200 million in JP Morgan customer accounts and claims to have found that “half the accounts lacked adequate documentation of judgment and one-sixth listed the wrong amounts owed.”
Banks have been robo-signing documents since as least 1998, as an Associated Press investigation found, and its not all that surprising that a practice that worked so well for so long (at least in the eyes of the banks) would have migrated to other areas.
By: Pat Garofalo, Think Progress, January 17, 2012
Soaring Inequality: “It’s Time To Take The Crony Out Of Capitalism”
Whenever I write about Occupy Wall Street, some readers ask me if the protesters really are half-naked Communists aiming to bring down the American economic system when they’re not doing drugs or having sex in public.
The answer is no. That alarmist view of the movement is a credit to the (prurient) imagination of its critics, and voyeurs of Occupy Wall Street will be disappointed. More important, while alarmists seem to think that the movement is a “mob” trying to overthrow capitalism, one can make a case that, on the contrary, it highlights the need to restore basic capitalist principles like accountability.
To put it another way, this is a chance to save capitalism from crony capitalists.
I’m as passionate a believer in capitalism as anyone. My Krzysztofowicz cousins (who didn’t shorten the family name) lived in Poland, and their experience with Communism taught me that the way to raise living standards is capitalism.
But, in recent years, some financiers have chosen to live in a government-backed featherbed. Their platform seems to be socialism for tycoons and capitalism for the rest of us. They’re not evil at all. But when the system allows you more than your fair share, it’s human to grab. That’s what explains featherbedding by both unions and tycoons, and both are impediments to a well-functioning market economy.
When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.
The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.
Something similar is true today of the United States.
So I’d like to invite the finance ministers of Thailand, South Korea and Indonesia — whom I and other Americans deemed emblems of crony capitalism in the 1990s — to stand up and denounce American crony capitalism today.
Capitalism is so successful an economic system partly because of an internal discipline that allows for loss and even bankruptcy. It’s the possibility of failure that creates the opportunity for triumph. Yet many of America’s major banks are too big to fail, so they can privatize profits while socializing risk.
The upshot is that financial institutions boost leverage in search of supersize profits and bonuses. Banks pretend that risk is eliminated because it’s securitized. Rating agencies accept money to issue an imprimatur that turns out to be meaningless. The system teeters, and then the taxpayer rushes in to bail bankers out. Where’s the accountability?
It’s not just rabble-rousers at Occupy Wall Street who are seeking to put America’s capitalists on a more capitalist footing. “Structural change is necessary,” Paul Volcker, the former chairman of the Federal Reserve, said in an important speech last month that discussed many of these themes. He called for more curbs on big banks, possibly including trimming their size, and he warned that otherwise we’re on a path of “increasingly frequent, complex and dangerous financial breakdowns.”
Likewise, Mohamed El-Erian, another pillar of the financial world who is the chief executive of Pimco, one of the world’s largest money managers, is sympathetic to aspects of the Occupy movement. He told me that the economic system needs to move toward “inclusive capitalism” and embrace broad-based job creation while curbing excessive inequality.
“You cannot be a good house in a rapidly deteriorating neighborhood,” he told me. “The credibility and the fair functioning of the neighborhood matter a great deal. Without that, the integrity of the capitalist system will weaken further.”
Lawrence Katz, a Harvard economist, adds that some inequality is necessary to create incentives in a capitalist economy but that “too much inequality can harm the efficient operation of the economy.” In particular, he says, excessive inequality can have two perverse consequences: first, the very wealthy lobby for favors, contracts and bailouts that distort markets; and, second, growing inequality undermines the ability of the poorest to invest in their own education.
“These factors mean that high inequality can generate further high inequality and eventually poor economic growth,” Professor Katz said.
Does that ring a bell?
So, yes, we face a threat to our capitalist system. But it’s not coming from half-naked anarchists manning the barricades at Occupy Wall Street protests. Rather, it comes from pinstriped apologists for a financial system that glides along without enough of the discipline of failure and that produces soaring inequality, socialist bank bailouts and unaccountable executives.
It’s time to take the crony out of capitalism, right here at home.
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, October 26, 2011
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