Thursday, December 19, 2013

NY Times uses anecdotal thinking to create feeling food stamp fraud is rampant in article saying it’s minor

By Marc Jampole

News features often use examples or anecdotes to highlight a trend that is the subject of the story. Sometimes all the writer has as proof of his or her thesis are the examples, so the article strings together a couple of anecdotes to demonstrate that a new trend is unfolding; such as people eating strange foods in expensive restaurants or craving limited edition cosmetics.  Quite often, though, the anecdote depicts the reality of a real trend; for example, more families in homeless shelters or the problems signing up for health insurance on an exchange 

In the case of either a real or false trend or idea, it is common that the article starts with an anecdote that shows us the trend or idea at work. Instead of saying, “people are eating ants,” we get a description of a dish or a pleased gourmand crunching away. Beginning inside an anecdote brings the story alive and makes the reader react emotionally before the mind engages with the facts of the matter. An early advocate of starting inside a case history instead of with a statement of thesis was the Roman poet Horace, when he suggested in Ars Poetica about two thousand years ago that the writer “begin in the middle” (in media res). Horace, like most great writers, understood that showing something was much more powerful than merely telling people about it.

How strange, then, that the New York Times would publish an article that reports a fact, but only provides case histories that go counter to that fact. Moreover, the article begins with a case history counter to the facts under report, which means that by the time most readers get to the facts, the anecdote has convinced them of the very opposite of what the facts prove.

What isn’t surprising is that the article disproves a long-held right-wing belief and that the anecdotes in the article support the disproved belief.

The issue is food stamp fraud, people illegally using food stamps to buy liquor, gasoline or other forbidden items. In “Food Stamp Fraud, Rare but Troubling,”  Kim Severson correctly reports that food stamp fraud is practically non-existent, a mere 1.3% of the total of food stamp aid given, down from more than 4% in the 1990s before debit cards replaced paper food stamps. Compare this paltry 1.3% to 10%, the current figure for Medicare and Medicaid fraud (typically by physicians, as the Severson’s article does not mention). Or compare the $3 billion lost to food stamp fraud, overpayments and government audits combined to the estimated $100 billion a year that insurance fraud costs insurers and their customers.

I’m not denying that the anecdotes occurred. Certainly, a relatively small number of people try to defraud the government by misusing food stamps, but the statistics suggest that the problem is practically non-existent and not worth mentioning or worrying about.  The demagogues stating that food stamp fraud is an enormous problem are trying to promote antipathy toward recipients of social benefits, the so-called “welfare queens” accusation.  The facts of the article demolish this view as it concerns food stamps.

We can only speculate on how this story developed: Did the editor assign the writer an article that would support the right-wing view that food stamp fraud is rampant, a reason they want to cut the program (and let hundreds of thousands face food insecurity) and did the facts turn the article a different way, leaving the writer with nothing but anecdotes to support the editor’s goal? Or was it the opposite: a conservative reporter trying to put a right-wing face on the facts through anecdotes that go counter to those facts?

Or did the writer pit anecdotes against facts as a way to present a “fair and balanced” story? If so, the writer forgot that anecdotes are as much like facts as apples are like oranges.

Unless of course, the writer has read Daniel Kahneman’s Thinking Fast and Slow, in which the eminent social scientist uses numerous controlled experiments to prove that people will believe a single anecdote that conforms to their ideas over multiple facts that disprove them.  In other words, the writer could have cleverly constructed a story to influence the reader to believe the very thing that the article disproves through providing random anecdotes that go counter to the underlying facts.  The facts say, “No food stamp fraud,” but the richly detailed case histories may convince us otherwise.

“Food Stamp Fraud, Rare but Troubling” is thus a masterpiece in deniable deception. The article claims to prove one thing—and it does, except for those internal heart strings plucked so expertly by the anecdotes that sing to right-wingers that they were right all along.

Wednesday, December 18, 2013

Detroit’s bankruptcy latest attempt of wealthy to steal from poor

By Marc Jampole

Kudos to Ross Eisenbrey of the Economic Policy Institute for rejecting the notion that overly generous pensions led to Detroit’s bankruptcy. 

Instead of pensions, Eisenbrey cites several reasons for Detroit’s financial problems:
  • A depleted revenue stream as wealthy people moved to nearby municipalities, taking advantage of the city as an economic driver while destroying the city’s tax base.
  • Bad financial deals with banks, including interest rate swaps, which are contracts in which two parties agree to exchange interest rate cash flows, based on a specified amount from a fixed rate to a floating rate, from a floating to a fixed, or from one floating rate to another floating rate. Each side is betting that a certain set of economic conditions will prevail, so that they come out ahead on the swap. As Eisenbrey details, these swaps were profitable for Wall Street banks and exposed Detroit to financial risks that ended up costing the city $600 million in additional interest.
  • Corporate subsidies and tax loopholes for businesses that did not create enough jobs to justify these gifts to private sector companies.

Unmentioned by Eisenbrey is the fact that all three of these forces represent the same theme: rich folk squeezing a city dry of its wealth and then leaving it to flounder. Wealthy suburbanites benefited from living near Detroit without paying taxes to the city. Wealthy banks essentially benefited from selling Detroit’s politicians a bill of goods. Wealthy company owners lowered their operating costs without giving back enough in new jobs.

As Eisenbrey advocates, the burden of solving Detroit’s financial problems should not fall on the Motor City’s middle class and working class people who have worked long years for pensions that they negotiated and upon which they depend to survive. Funny isn’t it: while it’s not okay to break the financing contract with the banks, politicians think nothing of breaking the contracts they signed years ago with the city's workers. Eisenbrey wants Detroit to say “enough is enough” to the banks and walk away from the onerous interest rate swaps and other financing gimmicks. The banks have made enough money on the Motor City already.

Eisenbrey also wants to end the loopholes and special deals to corporations and have the state of Michigan chip in more money to pay Detroit’s bills. I would add a special regional tax based on income (or as in France, on wealth) that the state would collect for the city from Bloomfield Hills, Grosse Point, Birmingham, Franklin and the other nearby and distant Detroit suburbs.

In his very perceptive article, Eisenbrey also suggests that Detroit’s emergency manager Kevyn Orr, Michigan Governor Rick Snyder and other civic leaders are mischaracterizing Detroit’s problems by focusing on the $18 billion in long-term debt the city owes. It’s another example of right-wing politicians defining the issue in terms that benefit their constituencies. Let’s set aside the possibility that $18 billion may be a grossly overstated estimate. Eisenbrey correctly reasons that municipalities cannot liquidate the way private companies can, so the size of the debt is not the issue. All that matters is the cash flow—how much money Detroit needs to pay its bills each month. Right now Detroit faces a $198 million cash flow shortage.

Cash flow is easy for municipalities to deal with, at least in theory—raise taxes or lower costs. The city has already cut costs not only to the bone, but to the marrow. Now it’s time to raise taxes, but on a regional level.  Too long wealthy suburbanites have sucked Detroit dry. It’s now time for them to give something back.

But that’s not going to happen. More likely is that Detroit will become a model for the latest way for the rich to continue their 30+ year war on the rest of us: declare a city in financial trouble and use that excuse to gut pensions and worker’s salaries, thus putting even more downward pressure on the wages of private sector workers and insuring the continuation of the low-tax regime that has a financial chokehold on most families.