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Uneven Distribution of Household Debt by Gender, Race, and Education

Published by Anonymous (not verified) on Tue, 04/01/2022 - 7:48am in

Household debt has risen markedly since 2013 and amounts to more than $15 trillion dollars. While the aggregate volume of household debt has been well-documented, literature on the gender, racial and education distribution of debt is lacking, largely because of an absence of adequate data that combine debt, demographic, and education information. In a three-part series beginning with this post, we seek to bridge this gap. In this first post, we focus on differences in debt holding behavior across race and gender. Specifically, we explore gender and racial disparities in different types of household debt and delinquencies—for auto, mortgage, credit card, and student loans—while distinguishing between students pursuing associate’s (AA) and bachelor’s (BA) degrees. In the second post in this series, we investigate gender and racial disparities in delinquencies across these various kinds of consumer debt. We close with a third post where we try to understand some of the mechanisms behind differences in debt and delinquencies across gender and race.

Data

We have linked anonymized educational and demographic data of first-time freshman students enrolled at the City University of New York (CUNY), the largest urban college system in the United States, with the students’ anonymized household debt data from the New York Fed/Equifax Consumer Credit Panel (CCP). This unique data set allows analysis of debt by race and gender of CUNY students born between 1942 and 1988.

Differences in Borrowing Behavior

We use a multivariate regression analysis wherein we separate our analyses by the level of degree the student is pursuing upon entry to the CUNY system. Our regression coefficients of interest capture gender and racial differences of the outcome under consideration. All regressions control for a rich set of background characteristics such as immigration and visa status, type of high school attended, year of entry to CUNY, and whether a student has a disability, is economically disadvantaged, or is an English-language learner. For better comprehensibility, we present regression coefficients as bar charts along with 95 percent confidence interval bands. Each chart below is split into two panels. The upper panel depicts outcomes for students who enter CUNY for an AA degree, while the lower panel depicts results for students who enter for a  BA degree. Within each panel, we show differences in outcomes between women and men, as well as differences between students of each racial minority and white students. It is important to note that we analyze student debt outcomes by age 30, when they may no longer be in school and when part of the student debt they have originated by this age may have been taken for graduate degrees.

Student Debt

First, we consider propensities to take out student debt. Drawing on a match of a random sample of the CCP data with National Student Clearinghouse (NSC) data to establish a data set that captures a representative nationwide sample (CCP-NSC), we find that 52 percent of two-year public college students take out student debt by age 30, while 67 percent of four-year public college students do. In contrast, the borrowing rates for CUNY students are perceptibly lower—our CCP-CUNY linked sample indicates that 36 percent of AA students and 46 percent of BA students took out a student loan by age 30.

Differentiating by gender, we find that AA and BA female students were 10 percentage points and 7 percentage points more likely to hold student loans by age 30, respectively, than their male counterparts. These gender gaps are not small and constitute, respectively, 28 percent and 16 percent of the AA and BA sample averages above. Differentiating by race, we find that AA and BA Black students were 8 percentage points and 14 percentage points, respectively, more likely to hold student debt than white students, with these gaps constituting 21 percent and 30 percent of the sample averages. Hispanic students showed no statistically significant difference from whites. Asian AA and BA students were approximately 13 percentage points and 8 percentage points less likely, respectively, to hold a student loan by age 30, as compared to corresponding white students.

Additionally, in results not shown, we explore gender and racial differences in student debt origination amounts by age 30. Using the nationally representative CCP-NSC sample, we find that two-year and four-year public college students originated an average of $17,283 and $35,704 in debt by age 30, respectively. In contrast, debt origination amounts of CUNY students were considerably lower—AA students in our sample originated $3,152 in student debt and BA students $6,514 by age 30. We find that, compared to men, women pursing both AA and BA degrees originated more in student debt by age 30. Separating by race, we find that Black AA and BA students took out more in student debt than white students by age 30, while Asian and Hispanic students originated less.

Black and Women Students Are More Likely to Hold Student Debt by Age 30, while Asian Students Are Less Likely

Difference in Probability of Holding Student Loans by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Credit Card Debt

Next, we examine credit card balances of CUNY students at age 30. Credit cards are the most common source of debt we analyze: 71 percent of AA students and 85 percent of BA students in our sample took out a credit card by age 30. In the nationally representative CCP-NSC sample, we find that the credit card balance of two-year public college students was $2,013 at age 30, while the balance for four-year students was $2,732.  These numbers are comparable to those of the CUNY students, with the balances being $1,974 for AA students and $2,979 for BA students.

Looking at gender and racial differences in the chart below, we find that in all cases, minorities had lower credit card balances than whites, though the Hispanic-white difference for BA students was not statistically different from zero. The gender gaps for AA and BA students were respectively $267 and $712, constituting 14 percent and 24 percent of the sample averages. The Black-white gaps for AA and BA students were $1,053 and $570 respectively, constituting a sizable 53 percent of the AA and 19 percent of the BA sample averages. The Hispanic-white gap for the AA students was $462, constituting 23 percent of the sample average. The Asian-white gaps were respectively $448 and $467 for AA and BA students, constituting 23 percent and 16 percent of the sample averages. While a credit card balance is a measure of consumer spending, it can reflect both spending/consumption and unpaid balances and accrual of interest on such unpaid balances. As a result, it is difficult to say with certainty if lower balances reflect lower consumption. Our analysis suggests that at age 30, minority students and their households were consuming less than their corresponding white counterparts, if the balances mostly reflect spending. This difference is especially prominent for Black AA students.

Women and Racial Minority Students Have Lower Credit Card Balances at Age 30

Difference in Average Credit Card Balance at Age 30


Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Auto Debt

In our sample, we see that a smaller share of individuals held auto loan debt than credit card debt: only 29 percent of students who entered an AA degree and 35 percent of those who entered a BA degree took out an auto loan by age 30. These percentages are markedly lower than the averages from the nationally representative NSC-CCP sample: 69 percent of public college two-year and four-year students had auto debt by age 30. One reason for this difference is that New York City residents rely much more on public transportation than do residents of most other parts of the country. All minority groups in this analysis were less likely to have taken out an auto loan by age 30 than their white counterparts, as shown in the chart below. It is noteworthy that the difference in this likelihood (-10 percentage points) is by far the largest for Asian versus white BA students, with the gap amounting to 28 percent of the sample average for BA students. Looking at origination amounts by age 30 (in results not reported here), we find the borrowing lower for women than men and generally lower for minority students than white students. Since auto debt origination captures the propensity to buy cars as long as they are financed by auto debt (85 percent of new car purchases and 53 percent of used car purchases were financed by auto debt in 2017), lower probability of auto debt for female and minority students may indicate that they are less likely to buy a vehicle in comparison to male and white students, respectively.

Women and All Racial Minority Groups Are Less Likely to Hold an Auto Loan by Age 30

Difference in Probability of Holding an Auto Loan by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Mortgage Debt

The last outcome we consider is mortgage debt. Only 8 percent of AA students and 14 percent of BA students in our sample had mortgage debt by age 30. These shares are considerably smaller than those in the nationally representative NSC-CCP sample, in which 30 percent of two-year public college students and 37 percent of four-year public college students held mortgage debt by age 30. The differences compared to the nationally representative sample may reflect the fact that New York City residents are much more likely to rent than own compared to residents of other parts of the country. In the chart below, we find that women pursuing AA degrees were 1.3 percentage points less likely to hold mortgage debt by age 30 than their male counterparts, while there was no statistically significant gender difference for BA students. For both types of degrees, Black and Hispanic students were less likely to have a mortgage by age 30 than white students.

Turning to mortgage origination amounts, we find that origination amounts for AA and BA students were on average $30,202 and $51,074, respectively, by age 30, while these numbers were $25,085 and $34,148 in the nationally representative sample. Given the substantially lower probability of holding mortgage debt in the CUNY sample, the conditional (on having originated a mortgage) averages in the CUNY sample are even higher than the corresponding numbers in the national average. The higher origination amounts may reflect higher house prices in New York City. For both AA and BA students, we find that Black and Hispanic students had lower origination amounts than white students and female students had lower origination amounts than male. The AA Black-white and Hispanic-white gaps constitute 65 percent and 54 percent of the sample averages, respectively, while the BA Black-white and Hispanic-white gaps constitute a respective 48 percent and 45 percent of the corresponding sample averages. Asian students, on the other hand, were more likely to take out a mortgage, and had higher average origination balances, than white students. Since mortgage debt captures homeownership, the large gender, Black-white, and Hispanic-white gaps, given the degree pursued, imply lower homeownership for women and these minority students. The lower origination amounts for these groups may reflect differences in the quality, size, and location of the home. For Black students, higher relative likelihood of student debt and higher relative student debt origination amounts may also serve to discourage homeownership (See also Bleemer et al. [2020]).

Black and Hispanic Students Are Less Likely to Hold a Mortgage by Age 30

Difference in Probability of Holding a Mortgage by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Conclusion

This post uncovers gender and racial differences in borrowing behavior for various types of household debt. We find that Black and Hispanic students were less likely than white students to own a home or a car purchased with debt (cash purchases are not analyzed) and also own less expensive homes and cars, which may reflect lower quality. They had lower credit card balances at age 30 than their white counterparts, which may suggest lower consumer spending if most of the balance reflects spending rather than unpaid amounts. Asian students, on the other hand, had a higher likelihood of homeownership than white students, but a lower probability of taking out an auto loan and lower credit card balances. Women were less likely to own a home or a car and had a lower credit card balance than men.

In general, the lower propensities to hold mortgage and auto debt (along with lower origination balances) and lower credit card balances for women and minority students signify gender and racial gaps (most notable for Black-white and Hispanic-white comparisons) in consumption, of both durable and nondurable goods. The gender and Black-white gaps could potentially have been driven by larger student debt burdens we find above. These findings cast light on racial and gender differences in consumer borrowing behavior, and pose bigger questions about the implications and sources of these disparities. In the next post, we will look at delinquency outcomes for these debt categories, to further understand the gender and racial gaps in financial health.

Chart data

Ruchi Avtar is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Rajashri Chakrabarti is a senior economist in the Bank’s Research and Statistics Group.

Kasey Chatterji-Len is a senior research analyst in the Bank’s Research and Statistics Group.

Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

Unequal Distribution of Delinquencies by Gender, Race, and Education

Published by Anonymous (not verified) on Tue, 04/01/2022 - 7:48am in

This post is the second in a three-part series exploring racial, gender, and educational differences in household debt outcomes. In the first post, we examined how the propensity to take out household debt and loan amounts varied among students by race, gender, and education level, finding notable differences across all of these dimensions. Were these disparities in debt behavior by gender, race, and education level associated with differences in financial stress, as captured by delinquencies? This post focuses on this question.

As in our previous post, we draw on a novel merger of individual-level demographic and education data from CUNY and consumer debt data from the New York Fed/Equifax Consumer Credit Panel, resulting in an anonymous data set covering more than 84,000 students who entered CUNY as first-time freshmen between 1999 and 2014. (See the previous post for more detail on this topic.)

Once again, we utilize multivariate regression analysis and present bar charts for the regression coefficients of interest; these show the correlations between demographics, educational outcomes, and debt delinquencies, controlling for factors such as immigration and visa status, type of high school attended, year of entry to CUNY, and whether a student has a disability, is economically disadvantaged, or is an English language learner. The charts shown below are split into two panels: the upper panel represents results for students who enter CUNY for an associate (AA) degree, while the lower panel depicts results for students who enter CUNY for a bachelors (BA) degree. We will refer to the former group of students as AA students and to the latter group of students as BA students.

Student Loan Delinquency

We find that 37 percent of AA students, and 21 percent of BA students were ever delinquent on their student loan by age 30. The corresponding rates in the nationally representative data from our CCP-NSC sample (described in our first post) are respectively 22 percent and 21 percent for the two-year and four-year public school students.

Recall from our previous post that women and Black students were more likely to take out student debt and in larger amounts than men and white students, respectively, while the pattern was opposite for Asian and Hispanic students (with the exception of Hispanic BA students, who were more likely to take out student debt). Exploring gender differences in student loan delinquencies (chart below), we find that female AA and BA students were less likely to be ever delinquent on student loan debt by age 30 in comparison to their male counterparts (with differences of 3.1 percentage points and 1.5 percentage points respectively, which amount to 9 percent and 7 percent respectively of the AA and BA sample averages).

Differentiating by race, we find that Black and Hispanic AA and BA students were more likely to be ever delinquent than white students by age 30, with differences of 12.0 percentage points and 9.3 percentage points respectively for Black and Hispanic AA students and 16.9 percentage points and 12.0 percentage points respectively for Black and Hispanic BA students. These are large differences—the AA Black-white and Hispanic-white differences correspond to 33 percent and 25 percent of the AA sample average while the BA Black-white and Hispanic-white differences constitute 80 percent and 57 percent of the BA sample average. In contrast, Asian AA and BA students were less likely to be delinquent than the corresponding white students.

To sum up, higher origination balances and higher propensities to borrow were associated with larger delinquency probabilities by age 30, as seen for Black AA and BA students. Conversely, lower origination amounts and lower propensities to borrow were associated with lower delinquency probabilities, as seen for Asian AA and BA students. Hispanic students had higher probabilities of delinquency relative to white students, even though they originated smaller dollar amounts of student loan debt, while female students had a higher rate of taking out student loans but were less likely to be delinquent. This apparent puzzle may be contributed by potential differences in labor market outcomes of these two groups.

Black and Hispanic Students More Likely to Be Delinquent on Their Student Loan Debt, while Asian Students Less Likely to Be So

Difference in Probability of Student Loan Delinquency by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel / Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Credit Card Debt

The average credit card delinquency rates in our sample were 38 percent for AA students and 22 percent for BA students by age 30 (which, in turn were similar to those in the representative NSC-CCP sample of 40 percent for two-year students and 28 percent for four-year students).

Turning to credit card delinquency rates and distinguishing by gender, we found that female AA and BA students were 3 percentage points and 1 percentage point more likely to be delinquent on their credit card debt by age 30 respectively as compared to their male counterparts (although the difference for BA students is not statistically distinguishable from zero), with the AA female-male gap equaling 8 percent of the average delinquency rate for AA students.

Distinguishing by race, we found that Black and Hispanic AA and BA students were more likely to be delinquent than white students (the differences were 22.2 percentage points and 12.8 percentage points, respectively, for Black and Hispanic AA students and 23.9 percentage points and 15.4 percentage points for Black and Hispanic BA students). These differences were very large in comparison to the sample average. For AA students, the Black-white and Hispanic-white gaps respectively constituted 58 percent and 34 percent of the sample average; for BA students, these gaps were respectively 109 percent and 70 percent of the sample average. Breaking from this pattern, Asian AA and BA students were less likely to be delinquent than corresponding white students, although the difference for BA students was not statistically significant (or different from zero).

The higher delinquency rates for women and minority students (except Asians) relative to men and white students respectively despite their lower credit card origination amounts is intriguing. These seemingly opposite patterns can potentially be attributed to differences in labor market outcomes of these groups, a potential mechanism we will discuss more in the third post in this series.

Black and Hispanic Students More Likely to Be Delinquent on Credit Card Debt despite Lower Average Balances

Difference in Probability of Credit Card Delinquency by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel /Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Auto Loan Delinquency

11 percent of AA students and 5 percent of BA students ever held delinquent auto loans in our sample by the age of 30. The numbers in the nationally representative CCP-NSC sample were similar: 13 percent for two-year public students and 7 percent for four-year public students by age 30. In the first post, we saw that women and racial minorities had lower average origination amounts (except Black and Hispanic BA students) and were less likely to take out an auto loan by age 30 compared to male and white students respectively.

Turning to auto loan delinquency rates and differentiating by race, we find sizable differences–Black and Hispanic AA students were 12.2 percentage points and 6.1 percentage points more likely to be delinquent by age 30 (110 percent and 56 percent of the sample average), while Black and Hispanic BA students were 9.5 percentage points and 3.9 percentage points more likely to be delinquent (190 percent and 79 percent of the sample average). The delinquency rates of women and Asians, on the other hand, were not statistically different from those of men and white students, respectively. The markedly higher delinquency rates of Black and Hispanic AA students despite lower origination amounts once again may have stemmed from differences in labor market outcomes between white students and these racial groups.

Black and Hispanic Students Markedly More Likely to Be Delinquent on Auto Loan Debt by Age 30

Difference in Probability of Auto Loan Delinquency by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel /Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Mortgage Delinquency

In the nationally representative NSC-CCP sample, 4 percent and 2 percent respectively of two-year and four-year public school students were ever delinquent on their mortgage debt by age 30. In contrast, we find that in our sample 14 percent of AA students and 6 percent of BA students were delinquent on their mortgage debt by age 30, thus exhibiting substantially higher delinquencies than in the national public-school students’ sample.

Even though Black and Hispanic AA and BA students were less likely to hold mortgage debt and had lower origination amounts, we find in the chart below that Black and Hispanic students were considerably more likely to be delinquent on their mortgage debt than corresponding white students (with Black-white and Hispanic-white differences being 6 percentage points and 8 percentage points, respectively, for AA students and 9 percentage points and 6 percentage points for BA students), though the differences for Black AA students were not statistically different from zero. Once again, these differences are substantial, with the AA Hispanic-white gap constituting 54 percent of the sample average and the BA Black-white and Hispanic-white gaps constituting 148 percent and 103 percent of the corresponding sample average. Asian students had lower delinquency probabilities than their white peers, even though the gaps were not statistically different from zero. This is despite the fact that they had higher propensities of originating mortgage debt and had larger origination amounts.

The higher delinquency probabilities of Black and Hispanic BA students (relative to white students) may relate to their higher probabilities of taking out student loan debt seen in our first post and higher student loan delinquencies seen in the first chart above. They may also relate to differences in labor market outcomes between Black and Hispanic BA students and their white peers. Notably, the delinquency likelihood of Black BA students relative to white students were larger than the corresponding likelihood for AA students.

This pattern, along with the fact that the Black-white gaps in homeownership rates and origination amounts were more prominent for BA rather than AA students by age 30, may indicate higher financial stress for the BA students, potentially due to higher tuition and a higher incidence of student debt for this group, as shown in the earlier post.

Black and Hispanic Bachelors Students More Likely to Be Delinquent despite Lower Mortgage Debt Origination Amounts

Difference in Probability of Mortgage Delinquency by Age 30


Sources: CUNY; New York Fed Consumer Credit Panel /Equifax.
Note: Bands for the 95 percent confidence interval are shown.

Summing Up

In every single category of debt, Black and Hispanic students in our sample were more likely than white students to be delinquent by the age of 30. This is true even though Black and Hispanic students were less likely to have held three of the four types of debt in the first place (credit card, auto, and mortgage) and in many cases their origination amounts/credit card balances were lower.

This leads us to ask the question: why are delinquency rates so much higher for Black and Hispanic students? Asian students, on the other hand, were less likely to have held a delinquent debt. Yet, very few of the delinquency results for women and Asian students were statistically different from zero, especially among BA students.

In the next and final post of this three-part series, we will explore possible mechanisms for our results so far. We will seek to understand why Black and Hispanic students had a higher propensity for delinquency despite their lower rates of debt origination, and why Asian students experience the reverse phenomenon.

Chart data

Ruchi Avtar is a senior research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.

Rajashri Chakrabarti is a senior economist in the Bank’s Research and Statistics Group.

Kasey Chatterji-Len was a summer analyst in the Bank’s Research and Statistics Group.

Renegade Predictions 2022

Published by Anonymous (not verified) on Fri, 31/12/2021 - 5:01pm in

A selection of Renegade Inc. guests mull over events of the past year and make suggestions as to what we can expect for the year ahead.

The post Renegade Predictions 2022 appeared first on Renegade Inc.

Renegade Predictions 2022

Published by Anonymous (not verified) on Fri, 31/12/2021 - 5:01pm in

A selection of Renegade Inc. guests mull over events of the past year and make suggestions as to what we can expect for the year ahead.

The post Renegade Predictions 2022 appeared first on Renegade Inc.

The economic insanity of record stock market prices during the omicron crisis

Published by Anonymous (not verified) on Wed, 29/12/2021 - 8:38pm in

This is from the Guardian this morning:


This is a definition of economic insanity.

We are still in a pandemic.

The economy has far from recovered.

We face massive economic uncertainties this coming year.

However, UK stock markets are at a record high.

Why is that? It is because of quantitative easing, or QE. Instead of the government investing the new money it created to address the economic crisis the pandemic created so that it might  deliver  a positive outcome from it, it did instead permit the funds created to be used by financial institutions in an6y way they chose. They chose to speculate it.

As a result we have no silver lining from Covid spending.

We are no better prepared for the climate crisis.

And inequality has increased, dramatically.

What dies the government propose to do about that? Precisely nothing at all.

If ever there was a moment for increased taxation of wealth this was it. But this government would rather see people on average and lower earnings suffer instead.

One day we will learn the lessons from this.

Cartoon: Right to be a jerk states

Published by Anonymous (not verified) on Tue, 28/12/2021 - 11:50pm in

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‘Life Unworthy of Life’: The Lessons of T4

Published by Anonymous (not verified) on Tue, 28/12/2021 - 8:00pm in

‘Life Unworthy of Life’ The Lessons of T4

Stephen Unwin delves deep into the intellectual traditions and cultural mindset that produced the Nazis’ ‘wild euthanasia’ of people with disabilities, and finds we have not yet put those prejudices to rest 

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Although eugenics was created in London and enthusiastically nurtured in America and Scandinavia, it was in Nazi Germany that it found its most appalling realisation. Indeed, the persecution, forced sterilisation and subsequent murder of as many as 275,000 “useless eaters” is one of the most overlooked chapters in the whole ghastly history of the Third Reich. 

The Germans were much influenced by the American eugenicists, and the Rockefeller Foundation bankrolled the new Kaiser Wilhelm Institute in Berlin (where Josef Mengele worked before being transferred to Auschwitz). C. M. Goethe, the wealthy leader of the California Genetics movement, was delighted to learn that, within a year of Hitler coming to power, 5,000 Germans a month were being forcibly sterilised, and praised a fellow eugenicist for helping to shape “the opinions of the group of intellectuals who are behind Hitler in this epoch-making programme”.

Similarly, the virulent American eugenicist, Harry H. Laughlin (himself epileptic), boasted that his Model Sterilisation Law had been adopted by the Nazis in their 1935 Racial Hygiene Law, while one American asylum director expressed concern that “the Germans are beating us at our own game”.

It was German academics, however, who really paved the way. In 1920, Karl Binding, a senior academic lawyer, and Alfred Hoche, a professor of medicine, had produced the bluntly titled polemic Permission for the Destruction of Life Unworthy of Life. In it, Binding declared that, in addition to the terminally ill and the seriously wounded, all “incurable idiots” should be killed. Such people, he insisted, are “absolutely pointless” and impose “a terrible heavy burden upon their relatives and society as a whole and their death would not create even the smallest gap – except perhaps in the feelings of their mothers or loyal nurses”. 

Hoche, meanwhile, insisted that they were “human ballast” without any “capacity for suffering” on “an intellectual level, which we only encounter way down in the animal kingdom”. To show pity was illogical, he argued, “for where there [is] no suffering, there can be no pity”. Above all, he emphasised the cost of looking after them, contrasting “the sacrifice of the dearest human good” with “the enormous care for existences that not only are devoid of value but even ought to be valued negatively”. He also expressed a ghoulish interest in the research that such slaughter would allow. 

Although demands in Weimar Germany for such drastic action were relatively rare, more common was support for sterilisation. Thus, in late 1932, the Prussian Health Council approved “limited medically supervised and voluntary sterilisation designed to stop the breeding of genetic defectives”, and the German Parliament permitted the same, just weeks before Hitler became Chancellor.

In 1933, the new National Socialist Government passed the Law for the Prevention of Offspring with Hereditary Diseases, which sanctioned the compulsory sterilisation of people suffering from nine supposedly heritable conditions: such action (the ‘Hitler cut’) was a sacrifice made by the “defective” for the good of all. Doctors were ordered to report all such cases and could be fined for failing to do so. As a result, as many as 400,000 adults (1% of people of child-rearing age) were sterilised, many forcibly, often with disastrous health consequences. 

An Aktion T4 propaganda poster

This action was popularised on the grounds of cost, with a poster claiming that a man “suffering from a hereditary defect” cost ‘the People’s Community’ 60,000 Reichsmarks during his lifetime, while school textbooks asked students to calculate the money to be saved if support was to be withdrawn: “An idiot in an institution costs around four Reichsmarks a day. How much would it cost if he has to be cared for there for 40 years?” Indeed, after the war, a document was found in which a Nazi statistician had “worked out that 70,273 ‘disinfections’ saved the Reich 885,439,980 marks over a period of 10 years and that Germany had been saved 13,492,440 kilograms of meat and wurst”. This equates to an astonishing £4 billion in today’s values. 

The Nazis were helped by the fact that many parents of disabled children accepted these arguments. Indeed, when one sympathetic director of an asylum for backward juveniles surveyed their parents, he was appalled to discover that 73% said they would support the “painless curtailment of the life of your child if experts had established that it was suffering from incurable idiocy”, and that half of those who disagreed thought euthanasia would be acceptable if the parents “were no longer in a position to care”. This, combined with growing support from doctors, educationalists, journalists, politicians, lawyers and academics, provided fertile ground for what was to follow. 

With the outbreak of the Second World War, the persecution escalated exponentially.

Hitler’s ‘top secret’ Euthanasia Decree stated that “after the most careful assessment of their condition… those suffering from illnesses deemed to be incurable may be granted a mercy death”. As a leading Nazi doctor said, “the idea is unbearable to me that the best, the flower of our youth, must lose its life at the front in order that feeble-minded and irresponsible asocial elements can have a secure existence in the asylum”.

Under Aktion T4 (the programme was based at a confiscated Jewish villa at Tiergartenstrasse 4 in Berlin), those selected were systematically assembled and transported to six converted psychiatric hospitals. Initially, lethal injections were used but soon – at Hitler’s personal recommendation – carbon monoxide and poison gas were employed. These were often supplemented by gradual starvation as well as medical experimentation. 

Appallingly, the slaughter started with children (the first, Gerhardt Kretschmar, was murdered in response to a request by his father). By early 1941, at least 5,000 children, many only a few months old, with a wide range of conditions – ‘mongolism’, ‘idiocy’, cerebral palsy, and so on – had been assessed, registered and killed. Their parents were asked for consent and a panel of three ‘medical experts’ was convened to agree on the course of action. 

Deception and social pressure were increasingly deployed, however, and such “garbage children” were soon placed in so-called “special sections”, apparently to receive medical treatment, but instead packed-off to their deaths in buses (run by a commercial company) with windows painted grey, to spare the hard-working people of the Third Reich from distressing sights. Indeed, children living near Hadamar Castle referred to these buses as “murder boxes” and were heard teasing each other, saying: “You’re an idiot! You’ll be sent to bake.” Letters were dispatched to parents expressing regret that their child had died of “natural causes”, and inquiries were greeted with the blankest of denials.

Tens of thousands of adults with a wide range of disabilities – including, of course, learning disabilities – soon followed, and the accounts of these mass killings are harrowing. 

The victims were made to strip naked and ushered into gas chambers disguised as shower rooms; their bodies were quickly cremated, with any valuables stolen to help finance the programme. There are appalling stories of the sense of pride – and evident sadism – of the perpetrators, most of whom were medical professionals (with some eager volunteers). The stench from the crematoria was such that villages near the killing centres were soon worried. Following brave protests from some family members and leading churchmen, the adult programme was officially terminated in August 1941. 

Although the killing centres were mostly closed, the informal murder of the disabled – sometimes called ‘wild euthanasia’ – continued in different but equally dreadful ways, and was caught up in the much greater genocide of the Holocaust. The techniques perfected on the disabled, especially deception and poison gas, were soon applied to these much larger populations, and about a hundred of the personnel responsible for T4 – including the loathsome Christian Wirth, later Commandant at Treblinka – were transferred to the extermination camps being constructed in Poland, where their expertise was valued. Brains and other organs of the murdered (many of whom are still nameless) were preserved and used for lucrative research, some not being buried until 2001.

As if this catalogue of cruelty and murder wasn’t bad enough, many of those responsible never met justice and, where they did, the punishments tended to be lenient: 57% of those who faced trials were found not guilty, compared with just 24% of those accused of crimes against the Jews. Of those convicted, less than 2% received life sentences, compared with 11% for genocide. Only seven individuals were sentenced to death, and several went on to have distinguished medical careers.

This is partly a reflection of the status accorded to disabled people by the Allies, but it is also because their general intentions were acceptable – not just in pre-Nazi Germany, but in the homelands of the judges. As the disabled actress and artist Liz Crow puts it, the Nuremberg prosecutors “were confused about whether killing disabled people was a public service. The prevailing attitudes about disabled people, that they were inferior, pitiable and burdensome, defined their judgement”.


Eugenics& the Intellectuals
Stephen Unwin

We must be careful not to draw simplistic parallels between the grotesque cruelties of the Third Reich and the very real, but much more nuanced, injustices faced by disabled people today. However, certain lessons can be drawn. 

The first is the way that this barbarism was supported by lawyers, university professors, and other respected professionals. We can too easily dismiss eugenics as pseudo-science, but that is not how it seemed at the time, with many people – including a large number of progressives – wanting to straighten out Kant’s “crooked timbers” of humanity and improve the health, happiness and prosperity of “the race”. In other words, the animus behind this campaign wasn’t confined to Nazi Germany, but was evident in advanced societies around the world between the two wars.

Furthermore, 1945 didn’t discredit eugenics, and many of its core beliefs endured. Indeed, the much-celebrated William Beveridge, the founder of Britain’s welfare state, was a committed eugenicist.

The long-stay hospitals, which were the destiny of so many people in post-war Britain and America, treated learning disability as a medical issue and were often appallingly badly managed – resulting in dehumanising, regimented and squalid living conditions. While the worst of these places were eventually closed down in the 1970s and 1980s, hardly a week goes by without new accounts of neglect, abuse and cruelty. The dreadful roll-call of places such as Winterbourne View, Muckamore Abbey, Whorlton Hall and so many others, should make us consider whether we have moved beyond the mentality that enabled the catastrophe of T4. The appalling catalogue of bullying and violence around the learning disabled suggests we live in a society which all too readily devalues the disabled and regards them as fair game.

Appallingly, such attitudes are not confined to the poorly educated and can be found in professional and academic circles. 

One example might be the philosopher Peter Singer’s statement in 1979 that “killing a disabled infant is not morally equivalent to killing a person. Very often it is not wrong at all”. This was based on his views on the relative capacities of animals. Another example is the geneticist Richard Dawkins who in 2020 tweeted: “It’s one thing to deplore eugenics on ideological, political, moral grounds. It’s quite another to conclude that it wouldn’t work in practice. Of course, it would. It works for cows, horses, pigs, dogs and roses. Why on earth wouldn’t it work for humans?” The fact that the breeding of physical characteristics in animals and plants is quite different from ensuring intellectual capacity in human beings is one objection; another is that eugenics has been tried and made absolutely no difference. It is astonishing that such eminent figures should be spreading such pernicious nonsense.

We also have to recognise just how deeply rooted is the popular prejudice against learning disabled people, not just among a handful of ‘look at me’ intellectuals. The fact that parents internalised the views of their child’s worthlessness demonstrates just how pervasive such attitudes can be. And acknowledging that the thinking behind T4 enjoyed popular support should give us pause. After all, this was an advanced society with an enviable reputation for medicine, science and social care with a population who had absorbed a culture of contempt to such an extent that it allowed these things to happen. 

The fact that the programme of murder was carried out by medical professionals – from nurses and junior doctors right up to the most senior academics and experienced physicians of the time, and in hospitals and other medical settings – offers us the second lesson.

We rightly praise the NHS and entrust our bodies to the expert care of its staff, but medical professionals are no more immune to prejudice, often unconscious, than the rest of us. The fact that the learning disabled have suffered disproportionately during the Coronavirus pandemic for reasons entirely unconnected to their condition should make us question medicine’s hierarchy of values. Especially worrying was the National Institute for Care Excellence’s early triage advice which identified learning disabilities as an underlying health condition. This was quickly changed when it was pointed out that a learning disability is not an illness, but it is troubling that it was issued in the first place. Even more concerning was the fact that ‘Do Not Resuscitate’ notices were slapped on learning disabled residents of care homes without consent being sought.

An Aktion T4 graveyard

Thus, in thinking about T4, we need to explore the extent to which our own medical professionals sometimes regard the learning disabled as in some sense lesser. 

Thirdly, we should examine how a cost-benefit analysis was used to vindicate the murders. For, although irrational hatred no doubt fuelled this assault, it was given social and political justification by the calculation which set expenditure on such people against their productivity and concluded that they were a net loss.

Now, while most disabled people are quite capable of working, and many are eager to do so, a minority are not. Indeed, people like my profoundly learning disabled son Joey will never hold down a job or pay tax, and will require frankly expensive care throughout his life. As a parent, I have often been made aware of the costs incurred and am reliably informed that the first question asked when local authorities (under dreadful financial pressures of their own) consider an application for support is financial. But T4 shows in the most vivid way imaginable that the moment an individual’s fundamental rights are subjected to a simple cost-benefit analysis, is the moment the gates of hell open wide. 

The final lesson that can be drawn, however, is more positive, more energising and more creative, albeit tinged with tragedy and dreadful pain. It can be found in the extraordinarily courageous opposition that took shape and, astonishingly, managed to stop the adult programme. This was partly possible because (unlike the Jewish or Romany experience) it wasn’t entire families that were destined for slaughter. But the opposition provided by a handful of brave and fiercely determined relatives with a few influential and largely Catholic churchmen, is a remarkable story of courage and principle which is not widely known. 

Today, we still see families heroically battling against the many injustices that they face. These range from the endless bureaucratic tedium of fighting local authorities for basic support, to the powerful crusades for justice led by the grieving families of too many disabled people who have died entirely preventable deaths, often in the hands of badly trained and managed health and care staff. The fact that mothers like Sara Ryan, whose son Connor Sparrowhawk drowned in a bath in an NHS assessment and treatment unit in 2013, were vilified and blamed by the authorities, shows that the days of gaslighting are hardly behind us. What these committed campaigners also show, however, is just how powerful the family’s voice can be, especially when allied with the lived experience of the learning disabled themselves.

From Antigone onwards, whenever the authorities are confronted by the passionate rage of real families suffering genuine injustice, they do, eventually, have to acknowledge their shortcomings and face up to the consequences.

What is required to ensure that T4 can never be repeated? And how will we know when its lessons have been learned and we can put its dreadful example behind us? I suspect that three things are required.

The first is cultural: above all, the understanding that having a disabled family member – especially one with learning disabilities – isn’t the worst thing imaginable, and that learning disabled people are valued human beings who have so much to offer the world. But healthcare professionals still talk about the ‘risks’ of having a child with Down’s Syndrome, and hateful terms such as ‘idiot’, ‘imbecile’, ‘retard’ and ‘moron’ remain in common parlance.

Language and representation needs to change radically if the disabled – especially (though not exclusively) those like my son who find it difficult to speak up for themselves – are to be granted the dignity, respect and affection that they so manifestly deserve. 

Then, we need to stop assessing people by their productivity and earning ability, and start to create a new sense of community and belonging. That will require a reshaping of our entire system of values, wherein we stop regarding intellectual achievement as the single most important quality a human being can have.

From Plato to this day, philosophers have struggled with the problem of ‘idiocy’, with a deep anxiety about whether people with limited rational capacity, certainly those lacking speech, can be admitted into the category of the ‘human’. In my experience, however, learning disabilities provide a powerful ‘alienation effect’, turning the assumptions of classical thought on its head and insisting that the best definition of a human being is the product of two human parents, and nothing to do with intellectual ability, speech or rational powers. In other words, as Hamlet put it, we need to learn that there are more things in heaven and earth than are dreamt of in our philosophy and the time has come to rethink some of our most cherished prejudices. 

Finally, we need to develop nothing less than a new social contract, to ensure that our fellow humans, whatever their frailties and differences, are not just protected but are given the best that society can offer them.

The moment an individual’s fundamental rights are subjected to a simple cost-benefit analysis is the moment the gates of hell open wide

The extraordinary achievements of modern medicine mean that far more disabled infants survive and such advances are to be welcomed. But, if we are to help people have a decent and happy life, we have to develop a new understanding of our shared experiences and responsibilities. Profound disabilities can be found in any family, class, educational background and ethnicity, and need to be accepted as fundamental: as Rosemarie Garland-Thomson shrewdly observed, “what we call disability is perhaps the essential characteristic of being human”.

The renewed interest in the enormous challenge of social care is largely dominated by concern for the elderly, but at least half of the recipients of care are, in fact, working age adults with disabilities. Families still provide the vast majority of unpaid support, with an incalculable impact on mental and physical health, let alone prosperity and quality of life.

And so what is needed, I increasingly think, is a re-articulation of society’s fundamental duties to those people whose physical or intellectual impairments limit their ability to make a ‘full’ economic contribution. No longer can they be seen as a burden that others are expected to carry. Instead, we must recognise that they are our brothers and sisters, our mothers and fathers, our daughters and sons. We are they and they are us. And this new social contract should be built on as firm legal foundations as a child’s right to an education, an adult’s access to medicine, or a citizen’s rights to legal protection. 

As we’ve seen, the human rights of disabled people still have to be fought for and protected. But this struggle is also a cultural one, in the way that disabilities are represented and described in the media, education and everyday life. We rightly celebrate the achievements of talented and remarkable disabled people, but that too re-emphasises the old metrics by which others fail.

We need a new way of celebrating, championing and supporting those who don’t win the races that the so-called meritocracy is so eager to set. We have a long way to go before our fundamental duties to the so-called losers are unquestioned: when everyone, whatever their condition, whatever their limitations, however profound their impairments, is granted full human dignity, in all settings and at all stages in life. And when we finally do, we may be able to say that we are free of the dreadful mindset that led to this publicly endorsed, legally enabled and professionally delivered programme of mass murder. 

The challenge is clear, but who is prepared to take the lead?

This article was first published in the November 2021 print edition of Byline Times

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The post ‘Life Unworthy of Life’: The Lessons of T4 appeared first on Byline Times.

Stimulus, Savings, and Inflation: The Top Five Liberty Street Economics Posts of 2021

Published by Anonymous (not verified) on Wed, 22/12/2021 - 4:19am in

New York Fed researchers tackled a wide array of topics on Liberty Street Economics (LSE) over the past year, with the myriad effects of the pandemic—on supply chains, the banking system, and inequality, for example—remaining a major area of focus. Judging by the list below, LSE readers were particularly interested in understanding what comes next: the most-viewed posts of the year analyze households’ use of stimulus payments, the implications of lockdown-period savings, the risk of a new housing bubble, the compression of the breakeven inflation curve, and the potential roles that central banks could play in the digital currency sphere. As the year draws to a close, take a look back at the top five posts of 2021.

An Update on How Households Are Using Stimulus Checks

Having reported evidence on how households used their first economic impact payments (first issued in mid-April 2020), the authors examine how households allocated funds from the second round of stimulus checks (first issued at the end of December 2020) and investigate how they planned to use the third round (authorized in March 2021). They find a remarkably stable pattern over the three rounds of stimulus payments: an average marginal propensity to consume of around 26 percent, with most of the funds put toward saving and debt payments. (April 7)

By Olivier Armantier, Leo Goldman, Gizem Koşar, and Wilbert van der Klaauw

“Excess Savings” Are Not Excessive

How the U.S. economy emerges from the COVID-19 pandemic depends in part on what will happen to the trillions of dollars in “excess savings” that U.S. households have accumulated since March 2020. The authors argue that these savings are not that excessive when considered against the backdrop of the unprecedented government interventions adopted over the previous year in support of households. Further, they make the case that these savings are unlikely to generate a destabilizing surge in demand post-pandemic. (April 5)

By Florin Bilbiie, Gauti Eggertsson, Giorgio Primiceri, and Andrea Tambalotti

Does the Rise in Housing Prices Suggest a Housing Bubble?

During the pandemic, house prices have increased even faster than they did in the period leading up to the 2007 financial crisis, stoking concern that another dangerous housing bubble is developing. The authors take a closer look at the run-up in home prices; their geographic breakdown of the data indicates that we are not seeing a simple repeat of the early 2000s. (September 8)

See also the follow-up post: “If Prices Fall, Mortgage Foreclosures Will Rise.”

By Andrew Haughwout and Belicia Rodriguez

The Persistent Compression of the Breakeven Inflation Curve

Breakeven inflation—the difference in yields between a nominal Treasury security and a Treasury Inflation-Protected Security of the same maturity—is closely watched by market participants and policymakers alike. Scrutinizing the dynamics of breakeven inflation rates, the authors highlight a substantial downward shift in level as well as a marked flattening of the breakeven inflation curve. Evident for a number of years, this pattern has persisted through the pandemic. (March 22)

By Richard K. Crump, Nikolay Gospodinov, and Desi Volker

Central Banks and Digital Currencies

Recent developments in payments technology raise important questions about the role of central banks in the digital currency sphere. The authors consider two ways that a central bank could choose to become involved with digital currencies—by backing stablecoins or by issuing their own digital currencies—and discuss some implications of these potential choices. (June 23)

By Tobias Adrian, Michael Lee, Tommaso Mancini-Griffoli, and Antoine Martin

How to cite:
“Stimulus, Savings, and Inflation: The Top Five Liberty Street Economics Posts of 2021,” Federal Reserve Bank of New York Liberty Street Economics, December 22, 2021, https://libertystreeteconomics.newyorkfed.org/2021/12/stimulus-savings-a....

Disclaimer
The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).

Taxing the multi-millionaires – Charging capital gains tax on death

Published by Anonymous (not verified) on Fri, 17/12/2021 - 5:53pm in

The UK tax system is biased in favour of the wealthiest people in the country. Amongst the many ways in which this is apparent is in the taxation of capital gains, which are the profits people make from owning assets including properties, shares, artwork and even bitcoins. Not only are these usually taxed at half the rate applied to income from work, they are also not subject to tax on the capital gain arising when a person dies and has, inevitably, to therefore passed the property on to others. In general, most gifted assets are subject to this charge. The argument is, of course, that these assets are instead charged to inheritance tax at that time, but this only applies to a small number of estates and can easily be avoided by the wealthiest. The result is that some assets - including peoples’ homes - have fallen out of capital gains tax charge, substantially distorting the distribution of wealth in our society.

In this video, which is one of the series, I argue that there should be a capital gains charge on death, putting aside the inheritance tax implications for another video to be published in due course. This proposal may not be popular, but tackling inequality is essential if young people in our society, in particular, are to have any chance of the life prospects of those in previous generations.

 

This video is one of a series. All of the videos are linked from this page on the Tax Research wiki, which is being updated as new videos are produced.

Renegade Retrospective 2021

Published by Anonymous (not verified) on Fri, 17/12/2021 - 5:00pm in

Ross looks back over the year and selects choice cuts from some of the shows excellent contributors.

The post Renegade Retrospective 2021 appeared first on Renegade Inc.

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