Making Money on the Lives of the Poor

The subprime mortgage scandal that almost tanked the economy in 2008 gave way to a new one: the New York city taxi medallion scandal of 2019.

“Medallion prices rose above $1 million before crashing in late 2014, wiping out the futures of thousands of immigrant drivers and creating a crisis that has continued to ravage the industry today. Despite years of warning signs, at least seven government agencies did little to stop the collapse, The New York Times found.

Instead, eager to profit off medallions or blinded by the taxi industry’s political connections, the agencies that were supposed to police the industry helped a small group of bankers and brokers to reshape it into their own moneymaking machine, according to internal records and interviews with more than 50 former government employees.

For more than a decade, the agencies reduced oversight of the taxi trade, exempted it from regulations, subsidized its operations and promoted its practices, records and interviews showed.

Their actions turned one of the best-known symbols of New York — its signature yellow cabs — into a financial trap for thousands of immigrant drivers. More than 950 have filed for bankruptcy, according to a Times analysis of court records, and many more struggle to stay afloat.”

https://www.nytimes.com/2019/05/19/nyregion/taxi-medallions.html?action=click&module=Top%20Stories&pgtype=Homepage

Immigrant drivers form the backbone of the short hop driving industry in major cities, not just New York, but here in Seattle as well. Immigrants drive medallion cabs, gypsy cabs, Uber and Lyft. Their labor is typically the entry point into the U.S economy, where limited English and credentials from other countries that often don’t transfer make job opportunities limited.

Someone is making a lot of money from the labor of these largely unprotected workers, but it’s generally not the driver.

When I’m out and about during the day here in Seattle, I generally walk or take the bus. But after dark if I’m downtown, I call an Uber or Lyft to get home. The three blocks I have to walk from the bus stop are safe, I suppose, but very dark and typically deserted — even if it’s not very late. I just don’t feel comfortable doing it.

I often engage the driver, asking how his driving day has gone — drivers for both Uber and Lyft are largely male. A few are chirpy and upbeat and filled with the hope of taking on the world. Most are more sober, and surprisingly honest. The driver who brought me home the other night at around 10:30pm after a movie was particularly down. He said he was very tired, that he worked long hours and it was hard to make enough money to take care of his wife and children. He drives seven days a week, and he doesn’t see them much. We talked a little bit more, as I was mentally calculating his take from my ride. I had a 10% off promotion coupon for the fare. The tab was $6.10 with the coupon, of which he gets maybe half? I gave him a $3 tip, which I hope goes all to him. Out of that he has to pay for his own gas, insurance, and wear and tear on the car. There were bottles of water in the back seat for passengers to take. I didn’t. My ride was about 10 minutes, just up the hill from the movies. He wasn’t guaranteed another pickup until his app pinged him with the location of a prospective passenger.

Someone is making money on his labor, but it’s hard to see how it’s him. I thanked him for a safe ride, and he changed his driving status to “available” and went back to looking for a new ride.

Allocating Health Care Dollars

Tuberculosis kills more people worldwide than malaria and HIV combined, yet the funding for TB treatment and prevention is a fraction of that for the two more high profile diseases.

According to the CDC, we have up to 13M people in the U.S. with latent TB infections. In 2017, we had 27 people per million with active TB, some of those cases drug resistant and very hard to treat.

In one of those terribly difficult conundrums over how to allocate health care dollars, we’re spending a lot of money on very expensive treatments for rare diseases that afflict a vanishingly small number of people — money that could go to preventing and treating diseases that kill millions.

“The Food and Drug Administration is set to approve a second gene treatment for infants with spinal muscular atrophy that will cost $1.5 million to $5 million – it will be the costliest drug on the planet.

It’s only the second drug on the market for the rare disease after a gene treatment was first introduced in 2016, as our Post colleague Christopher Rowland reports. Biogen, the drugmaker behind the initial treatment, had already drawn criticism for the price tag of the drug Spinraza, which costs $750,000 for the first year and $375,000 for each subsequent year.

But the new drug is set to kick off a “new era of debates over cost and value as gene therapies are developed for growing numbers of rare diseases” and it has already set off a clash between the manufacturer of the new drug, Novartis, and Biogen. And the clash has already produced what independent communication experts describe as a coordinated effort featuring “op-ed columns by former Cabinet secretaries warning about the safety of the Novartis therapy.”

Clearly if you have a family member with a rare disease, no amount of money is too much in the attempt to save your loved one’s life.

Clearly if you’re a funder, or a health care policy maker, or a responsible government leader, you have the health of the total population in mind.

Are they mutually exclusive, increasing funding for common and longstanding diseases like TB v. finding new gene therapies for orphan diseases? We’re doing both now, without adequately funding either. I think they are, to a degree, mutually exclusive — simply because health care resources are limited.

With a dysfunctional government in Washington, we’re not even having a serious conversation about health care priorities, or making decisions that reflect a consensus of “we the people”.

I don’t know how I’d work my way through the decision of how to allocate funding, although I lean toward eradicating large scale diseases like TB rather than pushing costly drugs to treat terrible illnesses that affect only a few people. But maybe that’s because right now neither I nor  my loved ones are so afflicted.

The Coming Debt Crisis

The U.S. is hurtling toward a debt crisis. Congress seems entirely unfocused on doing anything about it.

As lawmakers trade fire over contempt votes and impeachment, there’s been no progress toward reaching a budget agreement or extending the federal government’s ability to borrow before September, when the money runs out. That’s raising the ugly prospect of more than $100 billion in mandatory cuts as well as an unprecedented default on US debt — a situation that could trigger a worldwide economic catastrophe.
It’s a mess everyone knows is coming, and yet no one seems to have a plan — at least at the moment — for averting disaster.”

https://www.cnn.com/2019/05/11/politics/congress-debt-ceiling/index.html

Defaulting on the U.S. debt would have been unthinkable in any other presidency. But Trump has made a career of defaulting on debt. He’d buy a building or a casino or an airline, load it up with debt, run the thing into the ground financially — because he’s a terrible business man — refuse to pay his creditors, and they’d cut him slack because at the end of the day they didn’t really want to re-possess the asset. Trump thinks that’s how the world works, not just commercial New York real estate.

I think Trump would default on the U.S. debt in a heartbeat, and be proud of himself for doing it.

Who would get hurt? Anyone who holds debt obligations of the U. S. Treasury in our retirement assets, either individually or in a pension plan. Beyond that, defaulting on the debt would be a crisis for the global economy.

When are Trump voters going to wake up to the fact that they’ve elected not only a grifter and a con man, but a moron?

Our Military Spending

According to FP Security Brief, U.S. military spending reached $649 billion dollars in 2018.

“The U.S.-China angle. U.S. military spending reached $649 billion in 2018, and it spends more on the military than the next eight countries combined, SIPRI research shows. China, by comparison, spent $250 billion–the 24th consecutive year it has increased its military spending.”

This is ridiculous overkill, and there are a lot better things we could be spending money on. We should be ashamed.

Rochester in the News

My late husband Jerry and I moved to Rochester, NY, shortly after we were married in 1971 and right after he got out of the U.S. Army. He got a job there, and I planned to look for one once we arrived. Rochester was the Klainer family home town until 2010, when I moved to Seattle to live nearer to both adult kids.

I continue to follow Rochester news online, usually in local publications like the Rochester Beacon or Rochester Business Journal. But Rochester in recent days made the big leagues, the New York Times. Rochester is the home of a legal drug distribution operation, the Rochester Drug Cooperative, that is under investigation by the SDNY for its role in the opioid epidemic.

There are the Sacklers, the family that controls Purdue Pharma, the maker of OxyContin. There are the doctors who ran pill mills, and the rogue pharmacists who churned out opioid orders by the thousands.

But the daunting financial muscle that has driven the spread of prescription opioids in the United States comes from the distributors — companies that act as middlemen, trucking medications of all kinds from vast warehouses to hospitals, clinics and drugstores.

….

Now, in what could be a test case, the United States attorney’s office for the Southern District of New York and the D.E.A. are wrapping up an investigation that appears likely to result in the first criminal case involving a major opioid distributor, Rochester Drug Cooperative, one of the 10 largest, people familiar with the matter said. The investigation began with an examination of possible crimes including wire and mail fraud and various drug violations, according to three people with knowledge of a federal grand jury subpoena served on Rochester in 2017, but it remains unclear what charges might be brought.”

https://www.nytimes.com/2019/04/22/health/opioids-lawsuits-distributors.html?wpisrc=nl_daily202&wpmm=1

Rochester makes sense to me as a location for a major drug distribution company. You wouldn’t locate one in midtown Manhattan. Rochester is a little out of the way, on the quiet side. Land and warehouse space are cheap. There’s a skilled and educated work force — all those people who used to work for Kodak and Xerox. The city would have welcomed the jobs. Airport access isn’t great. You have to go through a larger airport, like Cleveland or Chicago or New York, to get most places. When I lived there we had no direct flight to Boston. I wonder about that, how Rochester Drug Cooperative got all these gazillions of opioid pills out to the retail vendors — by truck, maybe.

I looked up the address of the Rochester Drug Cooperative, and I can envision just where it is — south of the city, in Henrietta, where there are a lot of low-slung warehouse buildings with office fronts. You could drive by and literally never notice the place, which is just what you’d want for a warehouse filled to the rafters with oxy.

The College Admissions Scandal, Redux

The latest in the college admissions scandal, other than parents either pleading guilty or being hit with further charges, is the ludicrous protestation that the young people who benefited from the scam “didn’t know.”

Olivia Jade Giannulli seems to be the exemplar of a rich entitled spoiled brat who brags on YouTube about her indifference to the college experience other than to attend tailgate parties. She is reported by CNN to be “devastated” and as having lost most of her friends in the wake of the revelations. She’s the daughter of Lori Loughlin and Massimo Giannulli, who got OJ into USC based on rowing prowess. Both daughter and parents swear the daughter never knew about the false claims.

Ahem. How exactly do you apply and interview for college based on a sport you’ve never played and not know something outside the lines is going on?

In terms of losing friends, someone needs to tell Olivia Jade that her Instagram and YouTube followers, who buzzed around her and are now apparently buzzing around someone more trendy, are not her friends. They are/were her followers, which is very different.

This young woman’s parents would do her a favor if they collectively acknowledged the cheating and stopped trying to shield their daughter from reality — at least the reality of what happens when you get caught. One assumes Olivia Jade wouldn’t have gotten into USC without the bribes. Had she been qualified based on her actual high school performance, the big bucks wouldn’t have been necessary. Now, the Giannullis are trying to protect Olivia Jade from the consequences of the scam revealed.

I suppose that in the age of Trump and his weirdly Trumpian offspring, the message is that anything goes if you’re brazen enough. This gaggle of celebrity cheaters either needs to be better at it, or at least fake some shame and express remorse at their comeuppance. Hard to feel any sympathy for Olivia Jade, or anyone else caught up in this mess.

 

Follow Up to the Admissions Cheating Scandal

What do we think happens to the privileged but unqualified students who gain admission to elite schools only because their parents manipulate the system?

Not surprisingly, the students don’t change. They are still unqualified, so need to channel their energy — and that of their parents — into getting grades they haven’t earned. Their presence in classrooms is typically a net drain on the academic community.

Here’s a professor at an elite U.S. institution, writing anonymously:

Students who can’t get into elite schools through the front door based on academic merit don’t change once they’re in class. They can’t do the work, and are generally uninterested in gaining the skills they need in order to do well. Exhibit A from the recent admissions corruption scandal is “social media celebrity” Olivia Jade Gianulli, whose parents bought her a place at the University of Southern California, and who announced last August to her huge YouTube following that “I don’t know how much of school I’m going to attend. But I do want the experience of, like, game days, partying … I don’t really care about school.”

Every unqualified student admitted to an elite university ends up devouring hugely disproportionate amounts of faculty time and resources that rightfully belong to all the students in class. By monopolizing faculty time to help compensate for their lack of necessary academic skills, unqualified students can also derail faculty research that could benefit everyone, outside the university as well as within it. To save themselves and their careers, many of my colleagues have decided that it is no longer worth it to uphold high expectations in the classroom. “Lower your standards,” they advise new colleagues. “The fight isn’t worth it, and the administration won’t back you up if you try.”

In comparing stories, we have also found that such students strive to “work the system”, using university procedures to get the grades they desire, rather than those they have earned, and if necessary to punish faculty who refuse to accede to those demands. It is perhaps unsurprising that students whose parents circumvent the rules to get them into elite universities are often the ones who become adept at manipulating the university system in a corrupt way.”

https://www.theguardian.com/us-news/2019/mar/25/what-happens-after-rich-kids-bribe-their-way-into-college-i-teach-them

Poster boys for unqualified students cheating their way through school and benefitting from academic credentials they didn’t earn are Trump and his son-in-law, Jared Kushner.

Hard to tell this anonymous professor that his assessment is wrong, and that he should take a stand in the interests of academic integrity.

Would You Like to Hear “You’re Dying” from a Robot?

Telemedicine is a wonderful thing, extending the care available at top flight hospitals to people too far away to access that care in person. The applications of telemedicine are many: my UW health system offers a video chat with a physician if I’m not able to get in the car and drive to a neighborhood clinic or urgent care.

But is it a suitable way to tell an old man that he is dying?

Granddaughter Annalisia Wilharm, 33, was alone with Quintana when a nurse popped in to say a doctor would be making his rounds. A robot rolled in and a doctor appeared on the video screen. Wilharm figured the visit was routine. She was astonished by what the doctor started saying.

“This guy cannot breathe, and he’s got this robot trying to talk to him,” she said. “Meanwhile, this guy is telling him, ‘So we’ve got your results back, and there’s no lung left. There’s no lung to work with.”’

Wilharm said she had to repeat what the doctor said to her grandfather, because he was hard of hearing in his left ear and the machine couldn’t get to the other side of the bed.

“So he’s saying that maybe your next step is going to hospice at home,” Wilharm is heard saying in a video she recorded of the visit. “Right?”

“You know, I don’t know if he’s going to get home,” the doctor says.”

https://www.theguardian.com/us-news/2019/mar/09/california-robot-tells-grandfather-dying

Well, that feels terse.

Apparently the elderly man, who subsequently died, did receive his initial diagnosis from a live physician in the room with him. But this news, that nothing more could be done, came from a robot.

I think it’s tacky, and dehumanizing. You?

The People Who Worked in Retail

I’ve had a couple of posts and comments in recent days about changing retail habits — regular reader and Amy’s Aunt Joyce, like me, prefers to go into the store to see what’s on offer — so this article in the London Guardian caught my eye. Rather than being about empty/changing retail spaces, it’s about the impact on retail workers when their jobs are lost. We hear a lot about the decline of manufacturing jobs, but less about what happens to people who worked in places like Woolworth’s and were part of the walk-in shopping community in many small towns. Their stories are worth reading.

https://www.theguardian.com/business/2019/mar/06/death-of-the-high-street-how-it-feels-to-lose-your-job-when-a-big-chain-closes

Oddly enough the stories made me think not of a chain store, but of The Sampler in Ocean Grove, New Jersey. Before Ocean Grove became trendy and expensive, it was — still is — a Methodist camp community where the genteel threadbare could find inexpensive lodging and cheap, homestyle food at a cafeteria a few blocks from the beach. The Sampler was literally a cafeteria, a place where you pushed your tray along while you looked at the vast array of steam table food and asked for what you wanted. The servers who plated your requests had worked there forever. The food was nothing fancy — ham with raisin sauce, turkey with stuffing and gravy, mashed potatoes — but it was inexpensive and for steam table food, good. People ate at long tables, and of course there were regulars. My family rented a $35 a week bungalow in Bradley Beach, just over the town line, so we went to The Sampler on the rare occasions when we ate out. My sister Linda like the stewed tomatoes. I mean, who eats stewed tomatoes any more? The place was packed at 5pm, because the genteel elderly ate early.  But at The Sampler, they ate at a long table with others, and they didn’t eat alone.

https://derelictbuildingsdotnet.wordpress.com/the-sampler-inn-story/

The Sampler’s owners declared bankruptcy in 2006, and the place was torn down in 2009. I remember going one last time, probably in the early 1980’s. My mother, who died in 2007, loved the place. Ahead of me was an elderly lady who had a bowl of soup, a glass of iced tea, and a slice of white bread with two pats of butter. The butter, as I recall, was 5 cents a pat. When her food was rung up, the lady was ten cents short, and she went to put the butter back. I asked if I could give her the dime — I still carried coins at that point — and she nodded without speaking, eyes averted. She took her tray and went off to her favorite seat by the big front windows.

I doubt people like her can afford to live in Ocean Grove today. There are lots of trendy restaurants where people sit at their own tables and order interesting, made to order food. Even taking into account inflation, absolutely nothing can be had for the current equivalent of a dime.

Do You Use Cash?

Do you carry any amount of cash on a daily basis? Do you use cash routinely for a particular kind of purchase?

The UK is struggling with the decline in people using ATM’s to withdraw cash, or going to bank branches for the same purpose. And although many of us are comfortable paying for most things with a credit or debit card, there is still a segment of the population — in the UK but here too — without access to those cards. The UK cash system, according to the London Guardian, is on the verge of collapse. The cost of filling ATM’s with cash has to be covered, and then some, by people using those machines. If not, they will cease to be found in any but a few popular locations. Ditto for bank branch locations where you can walk in and cash a paycheck without the large fees charged by payday lending firms.

https://www.theguardian.com/money/2019/mar/06/uk-cash-system-on-the-verge-of-collapse-report-finds

I do carry a modest amount of cash. I used to use it for payments at places like the drug store that were under $10, feeling it hardly worthwhile to pull out a credit card for a $4.79 payment. But I don’t really like getting coins in change — because I wind up never using them. So now I use credit cards for small purchases too.

I also use cash with my grandkids, at places like the farmer’s market when they can offer a $20 bill for a couple of cartons of berries and get change. I want them to understand how money works. But, I suppose that’s a pipe dream. By the time they are paying for things themselves, they’ll likely go right to credit/debit cards — no weekly allowance handed over in cash.

I do use cash in Panama — even for our initial grocery shopping, which often runs to between $400 and $500 — because hacking of credit/debit card numbers is a huge problem. I only use my cards at an ATM in an actual bank, where the security is better, or at the hotel complex, where global Marriott security standards are in place.

But I now use cards for most of my daily transactions. All of us who do are sending a clear signal to the banking industry re where to put their focus in terms of future profitability.