The amount of student debt in the US is massive; over a trillion dollars currently.  Americans currently owe more in student loan debt than they do on credit cards.  The Stafford Loan, for instance, allows students to borrow up to $57,500 as an independent (with no parental support).  Students often compound commercial and federal loans into enormous sums of money – often under the assumption that they’ll be able to find work upon graduation.

Now before you suggest that’s the problem, look again.  The Labor Department for September of 2011 shows an unemployment rate of only 4.5% for those with a college degree.  So an inability to find jobs doesn’t seem to be the norm for graduates.

So we have people investing in their education, and rightly finding work after graduation.  Should be no problem, right?

No.  The problem is two-fold.  The average student debt for 2011 graduates is $22,900.  Since many graduates will have less or even no debt, the numbers among those who took loans is likely significantly higher.

The average salary of 2011 graduates entering the workforce is only $36,866.  Payscale.com provides a handy list of the average annual salary by degree.  It shows the salary for history, sociology, anthropology and others typically starting in the mid-30s and topping out ‘mid-career’ around $60,000.  Based on regional differences, in reality, you have students graduating who may have more debt that they can possibly make – even at Payscale’s “mid-career” salary level.

If we’re going to make changes to how that debt is repaid, we should also make changes to how it is accumulated.  The entire practice of student loans should be reformed in two significant ways.

Capping Student Loans

First, student loans should be subject to the same earnings litmus test that applies to other credit, but more strictly.

Credit cards, home loans, and other consumer debt limits are typically predicated on your ability to repay that debt.  Amex doesn’t hand out black cards to college kids with no income for good reason – they have little ability to repay.  Home loans, at least in theory if not in practice, require you to prove income before you can qualify for more home than you can afford.

Student loans have none of that. Student loans rarely take into account the potential future earnings of the student.  As mentioned, students frequently compound loans.  The problem is it becomes very easy to accumulate more debt than your future earnings will accommodate.

Student loans should be capped at no more than the average annual salary for a student with that degree.  If a student is likely to make no more than $32,000 with a degree in social work, they shouldn’t be allowed to accumulate loans of $57,500 or more.  By capping total student loans for that degree at $32,000 (combining both direct federal and commercial) and applying the administration’s 10% annual limit for repayment, most student loans should be paid off in significantly less than the twenty years proposed for forgiveness (low-interest rates being assumed).

It is inexcusable that students are allowed to graduate carrying debt nearly as high as, or higher than, their ‘mid-career’ earnings.

Restrictions on Student Loan Usage

Often students take out more loan than they need for tuition and books in order to cover living expenses and other incidentals.  Any credit expert will tell you that putting meals and perishables on a credit card is a terrible idea as the interest increases the cost of those items many times over by the time it is paid off.  Student loans have no such restrictions, and unless things have changed dramatically, there are no caveats against using loans this way.

Stafford Loans, as just one example, carry restrictions that the money is too be used for tuition, books, room, board, or “other education related expenses.”  So what qualifies, exactly?  It’s hard to say.  A search for “Stafford Loan Eligible Expenses” turns up absolutely nothing from the Department of Education on the subject, and the FAQs many schools host have that vague “other” language.  Apparently a used car is an education related expense, as are sneakers, iPods, or anything else.

Since the schools typically hand you a check or direct deposit the funds, there is really no telling what those expenses might be.

If we want to help students who are looking at debt based on future earnings, the least we should do is bring these restrictions in line with sound financial advice.  Allowing students to rack up debt on things Big Macs and tennis shoes is ridiculous.  The education system should limit the way these funds are expended so they cover actual school expenses.  The school should not be in the business of doling out excess funds to 18 year-olds for discretionary spending.

Just recalling my own college experience, I can tell you the day loan excess was disbursed was like a Roman orgy.  The only thing “school related” about the spending were the excuses for why you couldn’t make it to that 8 a.m. class the next morning.

By making these two simple changes, student loan debt might actually be used in accordance with the goal of getting an education.  It would, at the very least, ensure that degree in social work doesn’t come with a debt you’ll never be able to repay.

For those keeping score of wasteful, inefficient government ideas that refuse to die, back in April of 2009, Team Obama announced an $8 billion push for high speed rail.  I noted at the time the almost complete inability to go north by train.  I also noted the old adage that trains offer all the discomfort and cost of air travel, but in six times the time.

All of that still holds true.  The new plan still foresees a US population only concerned with lateral movement, and one that wants to pay top dollar for low value.

The one thing that changed is the price tag.  Now the government wants to spend $53 billion taxpayer dollars (a 6.5 fold increase in the cost) to subsidize a mode of travel that has never been profitable in the US.

That’s change we can believe in, and what counts as a commitment to responsible spending by the administration these days.

First, let me say that in the 10 years I have been in DC I have never seen a crowd like that trying to get access to their elected representatives. The lines to get into the House office buildings literally wrapped around the buildings like a nightclub rope line. Several of the buildings stopped letting people in, so people familiar with the HOB system were telling those turned away to go to another building, then enter the basement tunnel system to get to their representatives.

On some level it appalled me that the US Capitol was telling people they were not allowed to go inside and see their members, but the sheer volume made me understand it simply from a security perspective. I would say, however, that I did not get the sense from anyone that they would have turned violent. In fact, everyone I saw or talked to had a very sunny disposition. Given their agitation that was remarkable to me. There was no “mob rule” that escalated the anger at all.

I would not, however, say that there was no anger. There was, in fact, plenty. What really struck me about the anger, however, was its direction.

This was not a Republican crowd. This was an American crowd. The people I talked to were just as angry with the right as they were at the left. They were just as happy to disrupt the normal cycle of business in Congress for both sides. When men and women in well tailored suits walked past the crowd of people in jeans, dockers, polo shirts, and jackets, they were subject to mocking and derision without regard to what party they may belong to.

The suits, for their part, looked none to pleased. They were scowling at the crowds as they walked by, and seemed disdainful of the effort by the crowd to make their voice heard. That seemed true universally among what were clearly the DC class.

It became very clear to me that this crowd wasn’t anti-Democrat, anti-Obama, or in any way pro-Republican. It was simply anti-Washington. It was a crowd incensed at what it perceived to be the arrogance of DC. I heard time and again as people passed by, or chattered in line, the refrain that these were people happy to come remind Washington that the rest of the country is watching and demanding respect.

When I returned to my office, I saw a reference to Ramseh Ponnuru’s column in Time magazine titled “The Rebirth of the Republican Middle“. In it, Ponnuru argues that the results on Tuesday were less about party than they were about people clamoring for ideas and results. Deeds in VA clearly had no ideas. Corzine in NJ clearly had not delivered results. Hoffman in NY seemed ill-prepared for the local issues. Ponnuru argues that the lesson for Republicans is to run campaigns based on a message of specific achievable fixes for what ails us.

I assume that the upper case “R” in the title is due to a style requirement at Time magazine. I assume that because Ponnuru’s column specifically goes on to state the question of whether the GOP is too conservative or not conservative enough is really secondary. Ponnuru’s focus on ideas and solutions has no partisan stripe.

However, based on what I saw yesterday, I do believe that there is a republican wave in the sense that people feel government has gotten too big, and ignores them freely. Democrats didn’t get elected because people felt Washington was too small. They got elected because people felt that Washington, under the GOP, was unresponsive to “we the people”. The Democrats have proven that they’re no better. Now is the time for candidates to run on making government work, not simply adjusting its size.

There is plenty of evidence that Kessler’s whole premise is wrong. For instance, Google Voice runs on Blackberries on the AT&T network. Apple allows other VoIP applications like Skype to run on the iPhone. There are reports that Apple is developing a product that would compete with Google Voice.

Even if you discount all of that, however, Kessler’s column is full of inaccuracies, faulty assumptions and outright misconceptions of the state of competition in the telecommunications space. These errors fall into four main areas:

• Misunderstanding and misapplication of technology concepts
• Business competition on features versus price
• Network investment and sunk costs
• Cable deregulation

We’ll break these down one by one.

Technology
Kessler’s suggestion for reform of wireless telecommunications is simple – “any device should work on any network.”

While that truly does sound like technology nirvana, unless we agree to one universal standard for every technology, it’s not likely to happen. Why? It’s due to the very thing Kessler claims to want – competition. As Victor Godinez points out in the Dallas Morning News:

Kessler’s insistence that “any device should work on any network” suggests that he doesn’t understand even the basics of cellphone technologies. T-Mobile’s and AT&T’s GSM networks are simply incompatible with Verizon’s and Sprint’s CDMA systems, no matter how much Kessler might think they are. That’s why, even when you unlock an iPhone, you can’t make it run on Verizon’s network.

Kessler makes a similar error when he suggests that ‚”voice is data.” As The Social Telco blog points out:

While there’s a sense in which that’s true – all communication is ultimately ‘data’ – it’s only true in the technical sense if it’s carried that way. Which it isn’t, on today’s cellular networks and most public telephone networks.

Other than where voice over IP is used, voice is circuit-switched, which means it ties up an entire (virtual) circuit from end to end for the duration of a call, making it unavailable for other purposes. Data, on the other hand, is typically packet-switched, meaning that a data ‘connection’ in fact only uses up network bandwidth when packets are actually being sent back and forth, otherwise freeing up that bandwidth for the use of others. As such, voice networks and voice calls use network capacity in a very different way from data, with different equipment required and different economics associated with them.

Wireless networks today are moving toward a new standard called LTE which will do two things. First, it will make Kessler’s assertion that ‘voice is data’ more or less accurate as it does rely on IP for voice traffic. Second, it breaks down the barrier between CDMA and GSM networks. Verizon has suggested they’ll be using LTE by next year. These advances are being brought about by the very competition Kessler claims is thwarting them.

Kessler also suggests that connection speeds to our homes and phones should double every year, and suggests they have not. Here again, Kessler gets it wrong.

We explored exactly this topic on Cable’s blog after Robb Topolski made a similar assertion about broadband speeds and Moore’s Law. The fact is, since the inception of the 300 baud modem in 1978, broadband speed to the home has more than doubled every two years. We have not done a similar comparison for cellular technology since people have used wireless for data for a very short period of time.

Competing on Price or Features
While Kessler spends most of his space clamoring for competition in price, he ignores robust competition on features. It is a glaring omission given the economics of telecommunications.

Telecommunications is an expensive game. Cable companies have spent billions, as have the telephone companies, building out their networks. We have seen estimates that the per-home connection and acquisition cost for one FiOS customer is between $3,000 and $5,000. The same holds true for wireless when you factor in spectrum costs, towers, etc. It will take those companies a very long time to recuperate the sunk costs.

So, how do you compete to get that back if you focus only on competition on price? The answer is that you don’t. You compete on price, if at all, only to gain market share. Once you have a healthy share of the market, you stop competing on price and compete on features.

That competition on features is exactly what the iPhone represents. Ringtones, app stores, and other features are the core of competition when costs are roughly equivalent. Working in cable, we often hear arguments about price. They typically go like this:

Complaint: My cable (and/or broadband) bill is too high.

Reply: Well, then switch to Satelite/DSL

Customer: But they don’t offer (VOD, speed like cable, etc)

Reply: So what you’re really saying is you want all the features that cable offers, but you don’t want to pay for them?

In other words, the choice of which offering to choose comes down to features. There are, people will acknowledge, cheaper options. However, people don’t make decisions solely on price. They make them on perceived value and that includes features. I can get a phone that makes calls, and plays MP3s, and does other things, for less than I’d pay for an iPhone. But I want the perceived value of the iPhone. That’s the value of exclusivity. Do I have to use your network to get the phone I want, yes you do.

If you argue competition solely on price, though, Kessler suggests that AT&T Wireless margins are an ‘embarrassingly high’ 25%. Does that point to a flaw in my argument? Not really. As Hance Haney at Tech Liberation Front points out:

Before we get to that, Kessler complains that margins in AT&T’s cellphone unit are an ‘embarrassingly’ high 25%. He doesn’t point out that AT&T’s combined profit margin – taking into account all products and services – is only 9.66%.

AT&T is actually earning less now than it was legally entitled to earn when fully regulated – 9.66% versus 11.75%.

Haney also points out that those margins are required by government mandate, to subsidize landline service.

In a normal business, an unprofitable product or service would disappear. But telecom providers are still required by law to provide plain old telephone service to anyone who requests it. It’s called the ‘carrier of last resort’ obligation. Believe it or not, providers are still required to provide copper-based, circuit switched phone service in many places, even though they could cut costs by deploying fixed wireless and VoIP to deliver basic phone service.

This service obligation imposes a tax on those of us who have canceled our landline service in favor of our cellphones in the form of artificially high prices for wireless service.

Network Investment and Sunk Costs
Let us pretend for a moment that Kessler’s notions of reform made any kind of sense. He suggests the root evil lies in ‚’own[ing] a pipe between you and your customers,’ and thus we should take pipe ownership away. Except, those pipes are already built and paid for.

The mobile carriers already paid handsomely for the spectrum they use. If the government were to take ownership, then those companies would have to be compensated for the billions they spent. You may recall the ‘open access’ argument from a decade ago that proposed that it would be bad to let companies own their pipes because they could have exclusivity over the data that flows through them. Since the cable industry has invested more than $145 billion over the past 13 years, how should they be compensated? What of AT&T and Verizon’s investment in their networks because they want to compete with cable? Should that all be taken away with no compensation? And if it’s taken away, who can do a better job?

Companies are investing in networks to compete with each other. Is the competition and investment happening fast enough? Arguably not. But it is happening, and that competition is being spurred by exactly the concerns Kessler raises – demand for services, demand for speed, and demand for features.

Cable Deregulation
As we said, most of Kessler’s piece concerns itself with wireless. We have our issues with his facts and arguments there. However, given our employment with the cable industry, where we truly take umbrage at his comments is Kessler’s claim that one of the key elements of a new national data policy would be to “End municipal exclusivity deals for cable companies.”

Fortunately for Kessler, his work has already been done, since this was covered in the 1992 Communications Act. To quote from the section on “Franchising and Regulation”:

“a franchising authority may not grant an exclusive franchise and may not unreasonably refuse to grant an additional competitive franchise.”

Over the last few years, many states have taken that federal mandate a step further and passed laws that took franchise authority away from the cities and placed it at the state level. The FCC went a step further and made sweeping changes to section 621 of the Cable Act and granted a federal franchise authority to further streamline the process.

Conclusion
There’s plenty of irony in Kessler’s piece. He argues for competition, which already exists. He argues against exclusivity and pipe ownership and in favor of “new, feature-rich and productive applications.” But if you can’t own the pipe, who will pay for upgrades? If you can’t have an exclusive offering of a product or service, why invest the money to develop such offerings? How will we get the “faster and faster data connections” that Kessler wants? If you can take away the ownership of infrastructure that is already built, why should investors have any faith in supporting a business affected by such radically sweeping changes?

Focusing on a strong broadband infrastructure is a good thing. Focusing on a national data plan, especially as voice actually does become data, makes sense. However, Kessler’s arguments, based as they are on faulty technical, policy, and business assumptions simply don’t add up to much.

[I]f the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining — meaning taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do — then I think private insurers should be able to compete. They do it all the time. I mean, if you think about — if you think about it, UPS and FedEx are doing just fine, right? No, they are. It’s the Post Office that’s always having problems. (emphasis mine)

This argument really breaks down on a number of levels, and it’s worth a look at all of them.

First, let’s start with the fact that Obama’s comparing the most advanced medical care system in the world with the job of moving a package from Point A to Point B. Any schmuck can take a package – which has your name and address right on it – and get it from here to there. If I gave anyone reading this post an addressed package, you could jump in your car and drive it to the destination with minimal failure (allowing for flat tires, the recipient having moved and left no address, random explosion of the house, whatever).

The fact is, shipping isn’t a teribly complicated business. Yet even Obama admits that the Government option is the one that gets it wrong. He points out that FedEx and UPS are doing it right, but the USPS isn’t.

So that raises the next point of failure in his argument. It’s not like FedEx and UPS were doing it first, and the government created a new mail delivery vehicle to force FedEx and UPS to lower their costs. FedEx and UPS, to the contrary, sprung up in response to a near complete failure of the government option. They arose from the ashes of countless lost packages, and inefficient government bungling. They recognized a market for reliable package delivery.

Let us imagine, however, that we treat package delivery the way we treat medical care. In the package delivery business, you must a) declare the value of your package, and b) acknowledge that should it be lost or damaged, you will be entitled to only that amount.

In May of 1996, a man cut off his own hand believing it to be evil. He refused to let doctors reattach the hand, then sued them for not doing so. He claimed they should have known he was nuts and forced him to accept the reattachment of the hand. While this is an extreme example, this sort of frivolous suit is filed every day. Malpractice suits and insurance contribute a staggering amount to the costs of health care. The total amount can be debated, but a Congressional Budget Office Brief looking at malpractice insurance premiums paid by doctors rose twice as fast as medical spending between 2000 and 2002 – roughly 15%. For general surgeons the hike was even greater running at 33%.

In package delivery, the cost of package breakage doesn’t rise dramatically year over year. If it did, the companies would look at ways to reduce breakage and loss. Yet our government has ignored the skyrocketing costs of malpractice and malpractice insurance as a part of the reform debate.

Costs are a huge problem. We get that. But that raises another key difference between the healthcare debate and the President’s chosen analogy of package delivery. Research into package delivery technology isn’t a dramatic portion of the package delivery costs. Do they buy equipment? Yes. Do they invest in dfferent ways to scan barcodes and create shipping labels? Of course. Are they handwritten package slips a huge pain in the ass versus the barcoded, Internet-generated slips? I imagine they are. But unlike, for instance, pharmaceutical companies, the amount they spend on R&D is fairly constrained. They don’t spend a decade or longer trying to figure out a way to move ONE particular size and shape of package.

As a result, comparing the amount of money invested in drug research and clinical trials to the box moving industry is probably a silly thing to do. Yet their was POTUS, telling us that the two are somehow equivalent.

Looking at his argument, the one part of the example the President got right was when he said, “It’s the [Government] that’s always having problems.” If you think the same people that brought you Katrina, the US Postal Service, the missing $400 million dollar Mars Global Surveyor, the $600 hammer and the $900 toilet seat, and countless other blunders will do a better job with health of every American, look no further than the countless stories of Medicare and Medicaid fraud and abuse.

The fact is, Obama’s example probably gives us more to think about as an example of why we shouldn’t let government manhandle our health care system. As Obama points out, and as the famed economist Milton Friedman said, “The government solution to a problem is usually as bad as the problem.”

In response, I got the standard pushback that the costs for such things are reasonable because of the security details that travel with elected officials. I was specifically asked if CEOs travel with security.

I had similar discussions in the spring when the issue was $12 billion for new helicopters in the Marine One fleet. The President, to his credit, was at least smart enough to say, “I’ll make do with the old ones.” Congress has had no such thought. Instead, the Congressional plan to buy eight planes actually DOUBLES the costs and number of aircraft the Department of Defense had requested.

This strikes me as odd on three levels.

First, there is a size issue. The request included four 737s. These are not small planes. So we have to ask exactly how big these security details are. Do we really need planes that big to ferry them?

Second, I am guessing that many CEOs do travel with security, but I am guessing that most do not. As a stockholder, I’m of two minds on that. I would like to think that the CEO of a company I have invested in is protected from threats of kidnapping or assassination. I may count on that company to provide income in the form of dividends or retirement planning. It would be nice if that were safeguarded.

On the other hand, however, I appreciate that most CEOs understand that they are expendable. If something happened to them, there are a lot of people who could be brought in to fill that role.

This brings me to the last point. Most Members of Congress don’t share that understanding of their relative importance. And we as a people seem to condone their inflated sense of their place in the world. We make excuses for their excess because “they have to be protected”. Yet we must ask ourselves whether that’s really true.

Their jobs, by nature, are such that they can be replaced on a whim by us in regular intervals. A Representative, specifically, serves only two years at a time and can be fired by the public every 750 days. Yet they believe (and we allow them to believe) that they are critical to the function of our government. That they even have security details is absurd. You can argue that only certain Members in leadership have such protection, but their term of service is still at our pleasure. We, and the Constitution clearly feel we could do without them.

We coddle our elected officials. More specifically, we allow them to coddle themselves. Then we make excuses for their behavior because its easier than looking in the mirror and asking ourselves why we don’t throw them out when they get out of control.

We’re left with Congress deciding, contrary to the wishes of the Department of Defense, how many planes are appropriate and how much private access to aircraft they need.

Perhaps we need to rethink things and send a clear message by throwing out every Member who votes for these planes. They clearly believe they mean more to us than we think they do.

If we took away some of their perks, forced them to live like the common citizens they’re supposed to be, and specifically did away with security details designed to protect them from us, maybe they’d behave less like protected overlords and more like our representatives.

The old and new rail system

The old joke is that trains give you all the discomfort of airline travel, but in six times the time. The rail plan calls for trains to travel 100 miles per hour, so the joke should be revised to four times.

The fact is, trains are a great idea in a country the size of Japan, France or Britain, that you can backpack across in a day. They suck, just a little bit, for travel across a country 3000 miles wide. Why take a high-speed train that gets you from LA to NY in two days when you can fly and be there in 5 hours?

High-speed trains would be a better idea for high traffic commuter corridors. As an example, look closely at the map and you’ll notice you still can’t travel North. There is no connector between Oklahoma and Kansas City, or anywhere in Georgia up through Kentucky, Tennessee and into Indiana.

You can’t get from Albuquerque to Denver, Denver to Phoenix, Phoenix or Albuquerque to Salt Lake City, or any of those cities to anywhere in Texas.

If you are a salesman in the southwest, you can get to Chicago faster than you could run there, that’s true. Chances are most of your travel will still be by air, and flying short distances within your region, though.

It looks to me like someone went to Amtrak and said, “If you could go to all the same places using the same shitty routes, but do it marginally faster, what would that look like?”

Congrats, guys. You batted their answer out of the park.

In the interview, he also ruled out raising the gas tax, the primary source of transportation funding…

Revenue from gas taxes is becoming problematic as cash-strapped Americans drive less and buy more fuel-efficient cars, leaving the government with a growing hole in funds to pay for the nation’s aging highway system.

Until recently, the 18.4-cent-a-gallon federal gas tax had been a steady and growing pot of revenue. Over the past half-century, it has paid for the interstate highway system, which has crisscrossed the nation with asphalt, and since 1982, it has been kicking in for transit needs…

The current system also assumes that Americans will drive more every year. And for many years that was true, with miles traveled increasing about 3 percent a year, Basso said. But when gasoline prices hit $4 a gallon last year, people began driving less. According to AAA, Americans drove 107.9 billion fewer miles in 2008 than in 2007.

Apparently, that combined with advances in fuel efficiency have led to declining revenue for transportation projects – an unintended consequence of greening our automobiles.

In what may be the shortest flight ever of a trial balloon, the government immediately shot down the idea of the mileage tax. However, there have already been pilot projects to test the idea.

As an Oregon DOT spokesman said, “[G]as-powered vehicles are going away. When that point comes, how do you collect money for your transportation system if your revenues are based on gasoline?”

Only in the final two paragraphs do they even raise the privacy concerns about this – namely the government tracking the movement of its citizens.

I suspect that the police – now aware of the lengthy record of your travels – would demand access to the data to track the movement of suspects (or “people of interest” or… well, you get it.

It is frightening to think of the implications. But it is interesting to see that while the previous administration wanted to violate our freedom for the purpose of homeland security, this one may do it just for the tax revenue.

Well, let’s look at this analytically beginning with an accepted definition of Socialism. For sake of a common source, I’ll use Wikipedia. I’m not a big fan of it for discussions like this, but since the people have collectively “spoken” and regard it is sound, it’s common ground, I guess. It’s definition of socialism includes this:

Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital and creates an unequal society. All socialists advocate the creation of an egalitarian society, in which wealth and power are distributed more evenly, although there is considerable disagreement among socialists over how, and to what extent this could be achieved.^[1]

Socialism is not a discrete philosophy of fixed doctrine and program; its branches advocate a degree of social interventionism and economic rationalization, sometimes opposing each other. Another dividing feature of the socialist movement is the split on how a socialist economy should be established between the reformists and the revolutionaries. Some socialists advocate complete nationalization of the means of production, distribution, and exchange; while others advocate state control of capital within the framework of a market economy.

Many people equate socialism with communism and Marxism, but those are really false analogies. Communism is predicated on a classless society with no government. To that extent, what we call communist nations are not actually communist at all. There have been countries that attempted to create a communist state, but most ended up totalitarian regimes. Even China, one of the stalwart adherents to communism, has realized they need to open the door to capitalism more and more.

So what’s the difference between communist/Marxist, and socialist societies? Well, the answer to that is long enough to earn you an advanced degree in most colleges, but let’s define it as a question of two things – revolution and control.

Under Marxist theory, a revolution would be necessary to wrest control of the means of production from the hands of the upper class. That would be followed by a period of control by a type of revolutionary council, and then eventually the abolition of government in favor of the collective. This latter period is where most Marxist states have gone wrong. They get caught up in the fervor of being in power, and end up inviting a revolution.

Socialism, by comparison, doesn’t necessarily require revolution. In fact, many argue that despite the fear of an Obama administration, the US is already well on the road to socialism thanks to the collapse of Wall Street and the intervention of the Bush economic team.

All socialism requires, per the definition above, is either “complete nationalization of the means of production, distribution, and exchange or state control of capital within the framework of a market economy.”

It is in the latter framework that we need to address the question of “Obama’s socialism”. Obama’s team has reiterated, ad nauseum, their claims that Obama is committed to the free market. In response to the 2001 radio interview, his team had this to say.

In the interview, Obama went into extensive detail to explain why the courts should not get into that business of ‘redistributing’ wealth. Obama’s point — and what he called a tragedy — was that legal victories in the civil rights led too many people to rely on the courts to change society for the better.

Actually, that’s not what he said. If you listen to the interview, he said that he could easily develop an argument that the court’s could carry out the task of ordering redistributive policies, but that the administrative overhead would be too great for the courts so such change must come through Congress.

He also, quite specifically, never said he opposed redistributive policies, only that they must originate in legislation, not court doctrine.

So where is Congress on this? Even Nancy Pelosi, a devout liberal, is on the free market bandwagon, right?

We are all believers in the free market — it’s part of our democracy. We know that the free markets create jobs, create capital, and create wealth — that’s very important. But recently, left unregulated and undisciplined and unsupervised, they create chaos.

Well, frankly we don’t know if that’s true because we don’t have a free market. We have a regulated market. “Free markets” by definition, are free of outside influence. All transactions are between buyer and seller. When you introduce even basic constraints – say fraud protection, lemon laws, etc. – you no longer have a free market. Pelosi’s comments seem to indicate that she’s in favor of a regulated market.

So which does Obama favor? A free market or a regulated market? From his statement about the plan for government taking ownership stakes in banks, it appears to be the latter:

[T]he plan appears to extend a broader set of guarantees to banks without requiring any additional regulation, which represents more of the same failed philosophy that got us into this mess.

Ok. So Obama wants government regulation. So what’s wrong with that?

Well, let’s look back at that “widely accepted” definition of Socialism.

[O]thers advocate state control of capital within the framework of a market economy.

We now have government with a sizable ownership interest in banks, insurance, and securities. We’re also heavily involved in an automotive bailout. You can argue the current wave of nationalization started under Bush – which is true – but it’s not like Obama has opposed it.

Further, I suspect we’ll start to see justifications for expanding that reach into energy and telecommunications. The government is encroaching more and more on the people.

While it is not yet the complete nationalization of the means of production, it’s getting a lot closer.

Obama is in support of the government role in banks, wants more regulation (read: control) of the market. His cheerleaders in Congress want the same. He has talked openly of using government power to “spread the wealth” around. He has made coherent arguments that redistributive policies must come from government. (That alone leads me to believe he has spent a good deal of time thinking about it.)

With all that, I ask you, is there honestly anyone alive who can make that claim that the term “socialist” doesn’t apply here?

The Washington Times reports on the fuzzy numbers behind Obama’s tax “cut”. WashTimes looks at the rather questionable assertion that you can give a tax cut to people who already pay no taxes. To achieve their goal of “cutting” taxes for 95% of America, it seems Team Obama will simply take $500 or $1000 from some people, and give it to somebody else – no questions asked.

That idea caught the attention of AFP’s Phil Kerpen (a very bright guy):

It’s got to raise alarm bells when you claim you are going to cut taxes for 95 percent of working families when more than 40 percent of them pay no income taxes.

Obama’s folks are justifying this wealth redistribution scheme by suggesting that Social Security taxes paid are now “refundable” through income tax rebates even if no income taxes were paid.

Unlike conservatives who have consistently pointed to the cumulative amount of taxes, the Democrats have suddenly discovered the “total tax burden”. They will use income taxes paid by some to rebate back Social Security taxes paid by others.

How exactly will that work, given that the Social Security trust is broke and about to start paying out far more that it takes in? Well, I suspect we’ll soon see another “soak the rich” campaign removing the social security cap so “the rich” will see dramatic increases in Social Security taxes to make up for the gap created by Obama’s rebates.

If you doubt that, you should read the quote from Obama’s campaign advisor. It may be the scariest thing you’ll ever see in print.

“Senator Obama believes that the tens of millions of families working hard and paying payroll taxes do not think that tax cuts are a form of ‘welfare’ or ‘redistribution’ – they think it is only fair to reward work,” said Jason Furman, the Obama campaign’s chief economic adviser.

You heard that right. Work that results in someone not getting ahead is to be rewarded with money taken from those whose work results in them actually making money (which is apparently work that needs to be punished).

An Obama administration will first absolve a huge segment of taxpayers from any tax responsibility at all, and then shift that obligation to those who create jobs and get ahead. The wealth redistribution schemes the Obama team wants to put in place should scare the bejeezus out of anybody with one ounce of grey matter in their brain case.