I’ve read many articles criticizing the post baby boomer generation, Gen Y, for expecting a better quality of life than their talents and efforts have provided. It’s often said that they were raised to think they were special when they weren’t and that they don’t make the effort required to be successful. This is a case of blaming the victim.

The world war II generation gave birth to the baby boomers. At that time, jobs were plentiful and a college education was easily affordable if not free through the GI Bill. The Baby Boomers had a good childhood. Most grew up in families with one working and one stay at home parent. Not only was higher education affordable but the only requirement to enter a state college was to have earned a high school diploma. As a result, the Baby Boomers have done well.

Things began to change in the 60’s and 70’s. Working wages were not raising with inflation. It came to the point where it took both parents working to maintain a middle class family life style. This meant that the Gen Y kids became “latch key” kids, coming home from school to an empty house and no parental guidance. There were many articles written about the latch key kid problems.

As Gen Y was finishing high school, the cost of a college education had increased to the point that it was necessary for most middle class kids to get student loans. In addition to college becoming very expensive, it took much more than just a high school diploma to be admitted to a 4 year college. Many had to settle for a 2 year community college and then try to qualify for their junior and senior years in a 4 year college.

While this was going on, wages stayed below inflation levels and two working parents were no longer enough to maintain a middle class life style. Many Baby Boomers found that the value of their house had increased allowing them to borrow against the equity in their homes. Borrowing against their homes allowed the Boomers to continue providing their kids with a middle class lifestyle through high school and perhaps even college. This was the housing bubble.

The bubble burst in 2008 and the Great Recession started as most Gen Y’s were starting their careers. Many Boomers lost their homes and were in no position to offer much assistance to their kids. So the Gen Y unemployment rate is more than twice that of the national average. The jobs they prepared for aren’t available and so the Gen Y college grads are taking minimum wage jobs, flipping burgers, delivering papers, bagging groceries and the like. That is, if they have jobs. One Gen Y who’s working as a bouncer was laughingly told by his boss that he was the first bouncer with a college degree he’d ever hired. Meanwhile, those Gen Y kids who did seek higher education suffer crushing debt. The college loan debt is greater than the sum total of credit card debt.

Let’s all recognize that the Gen Y disappointment isn’t due to having been coddled, having unrealistic expectations or personality defects. Their disappointment is due to the failure of the United States economy and the destruction of the middle class. They are the victims. The coming generation is in worse shape as half of our children in the United States are now living in poverty. We can only imagine what blame will be cast on this next generation.




I’ve had many thoughts about the Republicans. Why did they suddenly go so far to the right that their right wing went over the edge. After some consideration, it now seems clear to me that it’s Bill Clinton’s fault. He set this all in motion.

Remember the Republican complaint when Clinton ran for office? “He’s stolen our issues!” was the cry from the GOP. Sure enough, Clinton was taking the Democratic party deep into Republican ideological territory.

The Democratic party is now so firmly ensconced right of center that a staunch republican like Arlin Spector had to switch parties to get re-elected. His ideologic position was that of the current moderate Democrat. To stay in the game, what choice did the GOP have except to lurch awkwardly further right still.

There were always fringy far right wing extremists. Now, they have been pushed so far that they don’t identify as GOP but as Tea Party members. Polls show that 55% of Tea party members disapprove of the GOP. We need to recognize that we’ve become a three party political system. Giving birth to a third political party is proving to be messy and painful.

The three parties will be the true, Democrats (liberals), the Republicans that are made up of right leaning former Democrats as well as the traditional GOP members and then there will be the Tea Party. I can’t suppress the image of the Mad Hatter each time I type Tea Party.

The quicker we acknowledge and formalize this three party system the sooner we can return to having a reasonable political system.

I can see the graphic symbols now, the Donkey, the Elephant and the Mad Hatter. But let me say again, I hold Bill Clinton responsible for throwing our political system so far out of balance.




There needs to be a homeostatic balance between the interests of communities, labor and business. The federal government has the task of maintaining this dynamic balance. In my neighborhood, there is a similar dynamic, managed by the homeowners association, between residents, rabbits and coyotes.

In 1971, the National Cancer Act was passed and the National Institute for Occupational Safety and Health, and the National Health Service Corps were established. Jesse L. Steinfeld was Surgeon General with an extensive background in cancer research. Tobacco was being recognized as a significant threat to public health.

Lewis Powell, an attorney who practiced primarily in the areas of corporate law and in railway litigation law had been a board member of Philip Morris since1964 and had acted as a contact point for the tobacco industry with the Virginia Commonwealth University. Through his law firm, Hunton Williams Gay Powell & Gibson (later just Hunton & Williams) he represented the Tobacco Institute and the various tobacco companies in numerous law cases. Powell had turned down Nixon’s appointment to the Supreme Court in 1969 but accepted the position when presented to him again in 1971.

Powell felt strongly that the government was exerting too much control over business and in the year he accepted appointment to the Supreme Court, he wrote a brilliant memo to the U.S. Chamber of Commerce. In this memo, he argued that business had too little political power and that the U.S. economic system was being threatened by government actions. In this memo, Powell presented a brilliant strategic plan for business to gain political power and thus protect “the system.” This ten page memo is well worth reading. Go to: (

It is amazing to me how well the business community has followed Powell’s directions and how successful it has been. I can agree that the balance of political power in the 1960’s may have been leaning too far toward labor and community interests and that it needed rebalancing. However, by the 21st century, the system is again out of balance. This time, it is tilted too far toward business interests to the detriment of labor and communities. Just as coyotes suffer when they deplete the rabbit population, so business suffers when communities and labor lose purchasing power.

We seem to have created a national situation similar to that of the late Soviet Union. The Soviet Union suffered from a neglected and crumbling infrastructure, widespread poverty and political power controlled by the a privileged few. We’re seeing the same symptoms now in the United States. In the Soviet Union, government had captured business. We seem to have created the mirror image with business having captured government. We need to reestablish our economic homeostatic balance or I fear the United States will follow further in the footsteps of the Soviet Union.

The federal government, overly influenced by business interests, is failing in it’s anemic attempts to reestablish the homeostatic balance that labor, communities and business all depend on. It seems that leaders in government, communities and labor are all limited to thinking tactically and that only business leaders think strategically. Unfortunately, our business leaders, being good strategic thinkers, are focus on the global economy rather than our national economy.




Written by Michael Pinto, Ph.D.

We think of debt in monetary terms, dollars borrowed for one purpose or another, to be repaid in some future time. But debt predates the creation of currency, one of the best examples being that of a farmer who borrows seed, the use of another’s land, livestock and other such things, in the expectation that through his labor a bountiful harvest will more than repay the debt owed.
What happens, though, if the harvest is not bountiful through no fault of the farmer? Maybe there is not enough rain and the seeds don’t germinate. Or there is too much rain and the fields are flooded, destroying the crops. Or maybe, as in biblical prophecy, a seven year plague descends on the farm and locusts devour the crop. What then of the debt and how does the destitute farmer repay the seed, use of land and borrowed livestock?
This conundrum is at the heart of today’s debate about debt, both public and private, and is playing out as something of a morality play. Robert Kuttner in his article, “The Debt We Shouldn’t Pay,” (The New York Review of Books, May 9, 2013), paraphrases David Graeber in his seminal book Debt: The First 5,000 years (Melville House, 2011),
Graeber observes that debt is often conflated with sin. The version of the Lord’s Prayer drawn from Matthew (used by most Protestant denominations) asks God to forgive us our “debts,” while most translations of Luke (and the Catholic liturgy) ask forgiveness for our “trespasses” or “sins.” Graeber notes that in modern German, the same word, Schuld, means both debt and guilt. Likewise, in several ancient languages. In market terms, he writes, a debt is ‘an exchange that has not been brought to completion.’ One party received the goods; the other is owed a payment. To fail to honor a debt, therefore, is to be in a condition of guilt on both moral and economic grounds. ”(Kuttner, p. 16)

It is common wisdom that debts must be repaid, for if they are not and instead are forgiven, then there is a lack of incentive to guard against future risk where one is protected from its consequences. This condition is commonly known as moral hazard. Or to put in common parlance, if you aren’t forced to live with the consequences of your foolish financial choices, then what prevents you from repeating them. This makes for a good morality play, but according to Robert Kuttner, lousy economics, for the question is not what is moral or immoral action but rather what is the pragmatic thing to do in the case of a catastrophic downturn in the economy.
He gives as an example the pivotal event in British law that took place in 1706. Prior to that time, if you were unable to repay a debt then you went to prison even though this practice was economically irrational. Bruce Mann, Harvard professor, economic historian, husband of Senator Elizabeth Warren and prolific researcher and writer on the history of debt and bankruptcy, wrote in the “The Republic of Debtors: Bankruptcy in the Age of American Independence,” “…it beggared debtors without significantly benefiting creditors. (p. 18). An economic crisis of the 1690’s caused by the confluence of bubonic plague, recent wars with France and a storm that devastated the merchant fleet were the proximate causes of a significant number of insolvencies, the result being incarceration of much of the British merchant class. It dawned on the authorities, though, that if much of the merchant class was in prison, then who would start the engine to revive the economy? The answer, they realized, had to be another way than imprisoning debtors and from this realization came the seeds of modern bankruptcy law.
Across the Atlantic, Bruce Mann’s research demonstrated the shifting attitude towards debt
as economic risk rather than a moral sin. “With the spread of the market during the 18th century, increasingly formal written instruments that were legally enforceable became more and more common. The Seven Years War and its roller-coaster economic aftermath drove home the point to many people that economic forces were often beyond the control of individuals and spurred colonial legislatures to make some early experimental forays with insolvency legislation. The Revolutionary War and its immediate aftermath of financial chaos brought the issue of debt even more to the fore. With Shays Rebellion in 1786 and rampant speculation in western land and government bonds/securities that occurred in the 1780s and 1790s, more and more people fell under debt and ended up in debtor’s prison (including Robert Morris, signer of the Declaration of Independence). Debtor’s prison in particular, which had been unquestioned as a legacy of English law for much of the 18th century, came under fire.

Debates over debt culminated in the 1790s with the eventual passage of the Bankruptcy Act of 1800. The Act provided a legal mechanism for those that were insolvent (unable to pay creditors) to go through a process by which they could declare bankruptcy (resolving their debts with creditors). The Act, however, was limited to large-scale commercial debtors (merchants, bankers, brokers, speculators, etc.), a limitation that was largely taken for granted.”
(Wikipidea, Bruce Mann”)
Note that the American Bankruptcy Act of 1800 applied to large-scale commercial debtors and not to the average citizen. Sound familiar? Corporations walk away from their debts and no one says this is immoral, just good business, one of the best examples being the major American airline companies, every one of which has gone through bankruptcy at least once. The private equity business uses the strategy of acquiring a company with debt and if things don’t work out, taking it into bankruptcy to shed that debt before emerging as a new and profitable concern. Another strategy to void labor contracts or reduce pension debts is the use of Chapter 11 bankruptcy and this is described as good business, a necessary move in the globally competitive market.
The strategy is clear for large-scale commercial debtors but for the average citizen it is just the opposite. Homeowners “…are explicitly prohibited from using the bankruptcy code to reduce their outstanding mortgage debt…Consumers may use bankruptcy to shed other debts, but a revision of the law signed by President Bush in 2005 subjects most bankrupt consumers to partial repayment requirements, while bankrupt corporations get a general discharge from their debts. Thanks to the influence of the same financial lobby, the rules of student debt provide that the obligations of a college loan follow a borrower to the grave.”
…the earlier emphasis on sin lingers when it comes to common debtors. Proposals for debt relief for homeowners(and) college graduates… encounter resistance cloaked in the language of moral opprobrium and moral Hazard…” (Kuttner, p. 18)
Is there an answer to this dichotomy, the protection of the titans of industry while the average citizen languishes in purgatory? Oh wait, some say, the little guy deserves what he gets because he was irresponsible in his spending habits while the economy depends on the creative energy and animal spirits of the industrial/financial class.
I have heard this argument over and over again, so I looked at the causes of personal bankruptcy and what I found was different from the common belief that most bankruptcies were the result of excessive spending on non-essential items. In fact, the largest reason for personal bankruptcy was medical expenses (even for many that thought they were adequately insured) followed by job loss, divorce and unexpected disasters. Sure, some used their credit cards on reckless spending but most bankruptcies caused by credit card debt were for essentials such as food, auto repairs and such things that helped offset a stagnant or lower wage while inflation, mild as it has been, eats away at real disposable income. (“Coping with Adversity; Personal Bankruptcy Decisions…”University of North Carolina at Chapel Hill, 2011, Lindblad, Quercia, Riley, et al.
Then the great recession of 2008 hit and millions of homes were worth less than their mortgage debt. For the banks and other financial institutions, the ones that helped cause the problem in the first place, the Troubled Asset Relief Program was created to make the insolvent banks whole and if that wasn’t enough, the Federal Reserve bought their problematic bonds.
As for the average person in trouble? If they can’t afford their mortgage, then they lose their home. If they can’t pay their bills, let them go bankrupt thus cutting them from access to credit and the ability to get back on their feet quickly. Let them live with the consequences of their actions even if the economic devastation was of no fault of their own.
Our economy, though, is consumer driven and if a substantial number of people are unable to fully participate in the growth of the economy, aren’t we shooting ourselves in the proverbial foot? What then do we do and what has been done to help revive the economy?
Stabilizing the banks was the first step, for without credit, there is no economy. When credit seized up and banks were afraid to lend to one another, let alone industrial enterprises, government recognized that free enterprise ideology was one thing (let them all go bankrupt) but the real world needed action as the consequences of Lehman’s bankruptcy fully demonstrated. So governments stepped in guaranteeing all bank accounts and credit began to flow again. Then TARP was created to inject capital back into the markets, the Federal Reserve purchased troubled bank debt, government fiscal policy boosted the economic activity in the U.S. to offset the drop in private investment, and quantitative easing was implimented to depress interest rates and get the economy moving again.
All of these actions have helped not only the merchant, industrial/financial class but also the average person. Taxation policy reduced the social security tax burden for a few years to get money into consumer’s pockets quickly. Monetary policy, especially with quantitative easing, reduced the interest rates on mortgages to historically low levels not only reducing the monthly cost of owning a home but also helping those on the margin to keep their homes.
This reduction in interest rates also increased the net income of corporate American which in turn helped the stock market to recover. The same can be said for home sales and values; the bottom of the market had finally been reached, homes were now affordable for many more people, and the recovery had begun.
As Carmen M. Reinhart and Kenneth S. Rogoff wrote in This Time is Different: Eight Centuries of Financial Folly (Princeton University Press, 2009), financial repression was in order. When debt is strangling an economy, it makes sense to hold down interest rates and let inflation decrease the ratio of debt to income.
The first element in their prescription is already evident. The second has not happened yet, with the Federal Reserve Bank’s inflation target at 2% but there are signs of increasing that a bit as is also happening in the Euro zone. In fact, as Reinhart demonstrated in a 2011 paper co-authored with M. Belen Sbrancia (The Liquidation of Government Debt, National Bureau of Economic Research Working Paper 16893,, between 1945-1980, real interest rates adjusted for inflation had been negative, which helped to liquidate the public debt (particularly from WW II) while at the same time seeing the economy grow at an astonishing pace:
These findings defy a core precept of conservative economics, the premise that economic growth requires financial investors to be richly rewarded, an idea disparaged by critics as trickle-down economics. The postwar era, by contrast, was an age of trickle-up. Some creditors lost in the short run, but broadly shared prosperity stimulated private business. Eventually, the rising tide lifted even the yachts.
The arguments over moral hazard are far from settled yet it is the responsibility of government, the source of legislation and the enforcer of the laws of the land, to act in ways that both help our economy to recover while at the same time protecting those less able to do so for themselves. Just as those British merchants had been devastated by events completely outside their control, so millions of Americans have had their lives turned upside down by forces and events they had nothing to do with. Both the Bush and Obama administrations have recognized the urgency of swift action, the results being the prevention of another Great Depression and the slow recovery through fiscal stimulus, monetary easing, and historically low interest rates that put money back into the pockets of the consuming public. The last element will be the historically proven stimulus of mild inflation that increases the size of the economy while lowering the ratio of debt to income both for the private as well as public sectors.

Michael Pinto, Ph.D.
May 2013





Last week, during a relationship management session, the discussion was moved to the classic Powerless Person Problem.

I’m not talking about people who are actually powerless but those who only believe themselves to be powerless. My first encounter with such people was years ago when I was designing a treatment program for the Men’s Reformatory in Chillicothe Ohio. A prisoner, who was soon to be released, wasn’t interested in planning. He told me, “It doesn’t matter what I do – I’ll end up back in prison anyway.”

Powerless people (PP) can be quite destructive. Their belief, that it doesn’t matter what they do, allows them to do anything. If I believe that no one listens to me, I’m free to say anything, even hurtful things. Think of the angry small child. He’s free to tell his mother “I hate you” because he knows he won’t be taken seriously. That same child may hit someone with all his might because he knows that no matter how hard he tries, he can’t do much damage. Now, imagine those same beliefs in an adult. Most all of us know at least one of these destructive Powerless People.

It’s very difficult for such people to change their behavior for several reasons. Friends and family have come to realize “he doesn’t really mean it.” The same friends and family may go so far as to easily forgive violence because they believe “he can’t really help himself and he’s always sorry afterward.” As a result, they tend to reinforce his belief that it doesn’t matter what he does. Those who hold the powerless person responsible usually do so by avoiding him. As a result, the only social feedback he gets is that it really doesn’t matter what he does or says. Perhaps a greater barrio to change is because it means giving up the child like freedom of being irresponsible.

Those who suffer the most from a relationship with a PP are the one’s who take him seriously. They’re like a one legged man in a kicking match. They are hurt and angered by what’s done or said but reluctant to react in kind because they know the harm they can do.

The question is, what’s to be done if you’re stuck in a relationship with a Powerless Person? Some are stuck because it’s a love relationship, others, because it’s a work relationship. Here are some “easier said than done” suggestions.
1. Don’t match anger with anger, fear with fear or hurt with hurt.
We all have mirror neurons causing us to reflect the emotion, posture and motions of the person we’re dealing with. Remember the many times you felt angry because the person you were dealing with became angry. It works for pleasant feelings as well. This is the pragmatic reason it’s wise to “do unto others as you’d wish them to do unto you.
2. Maintain a calm, assertive posture and tone of voice.
This is again taking advantage of the mirror neurons. This is so you’re being the leader, helping the PP behave in a manner similar to yours.
3. Let the PP know they’ve been heard in a calm, assertive voice.
Often, the PP will rapidly disclaim his hurtful or angry words as soon as he realizes someone took him seriously.
4. Ask what the PP wants to achieve in this moment. It most often boils down to wanting to be heard and to actively participate
5. If the request is not acceptable, ask what else would help
If you’re involved with a PP, give it a try and then let me know how it worked.