Because their value is not strongly and equally protected.  If you’re Mark Zuckerberg, Sean Parker, Bill Gates, etc. etc. and you have some amazing programming skills and endeavors that compete with college, you have the option of dropping out and still pursuing your passion.

Student Athletes don’t have that option.  The NCAA took control over their value so you can’t be a standout athlete AND not go to college.  That privilege is reserved for non-athletes, sorry.

This leads to some very unfortunate outcomes:

http://www.bloomberg.com/video/unc-whistleblower-tells-her-story-rpc_7GRIRtyMH7KATwyZEA.html

Ultimately this begs the question of “Why do early adult athletics have anything to do with academics?”  The answer, “Because academic institutions control the value of college-aged athletes – if they want to play, they have to be in college.”

http://www.businessinsider.com/sec-employee-stock-picking-skills-study-2014-2

“The academics, Emory University professor Shivaram Rajgopal and Georgia State University accounting PhD candidate Roger M. White found that SEC employees tend to sell a company’s stock before the SEC takes enforcement action against the company.

The result, they wrote, were abnormal returns of about 4% for the market in general, and about 8.5% for the U.S. stock market.”

Remember, control over value can always be monetized.

http://www.nytimes.com/2014/02/16/business/the-untouchable-profits-of-fannie-mae-and-freddie-mac.html?partner=yahoofinance&_r=0

“Do the Treasury’s actions amount to a backdoor nationalization of the companies? A full-fledged takeover would have required Treasury to put all the companies’ obligations — $4.9 trillion at the time — on the government’s balance sheet. A nonstarter.

Furthermore, nationalization would have required the government to provide compensation to shareholders for what it took. Now the government gets the benefits of the companies’ profits while avoiding any compensation payments.

“People disagree about what should happen to the G.S.E.’s,” said Matthew D. McGill, a lawyer at Gibson, Dunn & Crutcher in Washington who represents Perry Capital. “But if the plan is to wind them down, Congress provided a means to do that in the 2008 law — it’s called receivership, and it provides a host of procedural protections to claimants. What the Treasury cannot do is abuse its conservatorship powers to nationalize the companies and then, when it deems convenient, wind them down without the protections enacted by Congress.””

The Constitution does say that the government can’t seize value without compensating the owners…Is that passe now?

HT @UsefulAggregate

http://marginalrevolution.com/marginalrevolution/2014/02/indirect-bribing-with-plausible-deniability.html

Quotes from the linked article on LBJ:

http://www.slate.com/articles/news_and_politics/press_box/2007/07/the_honest_graft_of_lady_bird_johnson.html

“Asked in an interview whether Johnson’s status as a member of Congress helped his wife’s application, Corcoran said, “How do you think these things work? These guys [FCC staffers] have been around. You don’t have to spell things out for them.”
…
Mrs. Johnson’s ability as a business woman was not the crucial factor in the acquisition of the station or, once it was acquired, in its early growth. … Lyndon Johnson had worked at politics for years to achieve power; now he was working at politics to make money.“

So, the protections were dismantled but that doesn’t mean that control was lost. So, looking at the states in 1913 with Valerian Vision and we would say that 1) the states control almost all of their value, and 2) there are few protections to that control. Really, the only remaining protection is the 10th Amendment telling them that they have control. So, only the Supreme Court can protect their control now. Whereas, previously they could 1) protect themselves (via the election of Senators) and 2) the people protected them because through equal taxation laws, they were only hurting themselves by trying to extract more taxes out of citizens of other states. So, previous to 1913 the states’ control of their value was protected by: 1) the Supreme Court, 2) the states themselves, and 3) the people. After 1913, the control of the states was protected by 1) the Supreme Court. What do you think happened?

Well, that Supreme Court fought valiantly. They fought off several incursions into state control but ultimately, a single protection was not enough in the onslaught of attacks to control that precious value. And now the federal government controls the majority of the value in this country. Taxes exceed 50% of GDP. Regulations regulate nearly every bit of economic activity in the country. This is what always happens when something very valuable is left with little protection.

Sure, we’re probably about 20 years ahead of our time.  That’s perfectly fine.  Sometimes you have to start early if you want to be ready with the answers when they’re actually needed.  Ask Winston Churchill.  People thought he was crazy/obsessed always brooding over the German military build up.  Scared of his own shadow…and Nazi’s.  Pfft.

In any event, protection from intergenerational transfers is about to become a much bigger deal:

http://www.zerohedge.com/news/2014-02-11/22-facts-about-coming-us-demographic-shock-wave

From the NYT.

Even she hadn’t expected the cash to make much difference. “The expectation is that social interventions have relatively small effects,” she told me. “This one had quite large effects.”

That’s because most social interventions don’t transfer as much value to poor people. Weekly counseling services may cost $100 per visit for the government to provide, but how much of that $100 in value is actually transferred to the poor recipient? $10 maybe? They get a lot more by just receiving the full $100 to do with as they see fit.

She and her colleagues kept following the children. Minor crimes committed by Cherokee youth declined. On-time high school graduation rates improved. And by 2006, when the supplements had grown to about $9,000 yearly per member, Professor Costello could make another observation: The earlier the supplements arrived in a child’s life, the better that child’s mental health in early adulthood.

…

Professor Costello and Professor Akee don’t entirely agree [that increased community services had a big impact]. They think cold hard cash made the real difference. For one thing, Professor Akee says, outcomes started improving as soon as the supplements began, before many of the communitywide services went into effect.

Your well being is correlated with how much value you control. Couple of lessons:
1) Conservatives have a tough row to hoe in convincing people that government benefits don’t help recipients.
2) If the government sincerely wants to offer a benefit, they should transfer all of the value to the beneficiaries.

See this post on how the benefits of the minimum wage don’t go to the poor.

How would you describe the minimum wage?

I’ll bet something like this, “A law that requires businesses to pay their employees a certain level of wages.”

Let’s simplify the discussion on Minimum Wage with a little Valerian Vision: “Who controls what value?”

A labor contract is entered into between parties: an employee and an employer. If each party controls its own value, then they only enter into a contract when it is mutually beneficial. So, what effect does the Minimum Wage wage have on “who controls what value?” Does it force employers to enter into labor contracts with people the employer doesn’t want to hire? No. Does it bar employers from hiring some people it wants to hire? Certainly. For example, Julian is a high school dropout from a troubled family, but he loved machine shop in high school. He can only produce about $5 per hour worth of value for the first six months as a welder because he’s mainly being trained. Does the employer want to hire him? No, because the employer would lose money for a full six months (paying $9 per hour, but only getting $5 per hour in return). Who knows if Julian would even stick around for 6 months.

But what if Julian wants to become a welder? He’s okay with pay commensurate with his skill while he’s being trained — that should be okay, right? Too bad. It doesn’t matter. As a low-skilled worker, Julian is barred from entering into labor contracts where he is paid commensurate with his skill.

As a consequence of this prohibitions on low-skilled labor, low-skilled workers lose control over their value. To illustrate how discriminatory this is, take the following example from my post on inequality.

Let’s say you have very high productivity. You can program iPhone apps very quickly and you contract yourself out at $200 per hour. If you like a job, can you choose to take less, like $150? Certainly. If you are desperate for work, can you lower your price to $100 per hour? Of course. But now imagine that you have very few skills. Let’s say your productivity is worth $10 an hours, but you’re having a hard time finding a job. You need work desperately, can you lower your price to $5 an hour? No. Because of the minimum wage, you don’t have a right to sign a labor contract at $5 an hour. Sorry, you are not equally protected. For those people that think the minimum wage helps the poor, you need to explain how taking something of value (i.e. the right to choose how much you will charge for your labor) away from the poor helps them? If you want to help the poor, you should transfer value to them not away from them. See the earned income tax credit as an example of a much better way.

And based on the Econlib link above, it is clear why the minimum wage is so popular — it hurts low-skilled workers, who don’t have the wherewithal to protect themselves, and benefits anyone who doesn’t want to compete with low cost labor (Costco, Taco Bell, etc.).

Words matter. Which is why Valerians use the term prohibitions on low-skilled labor instead of the term minimum wage.

Drawing inspiration from Jesse Myerson (Communist) and Matt Walsh (Conservative?).

The truth is that Millennials are getting a bad rap. You do not control as much of your value as previous generations of Americans and that sucks. The playing field is not tilted in your favor. Over the last century we’ve lost key protections — they should be reinstated. We’ve also learned a few things with this modern economy of ours, meaning that new protections should be put in place.

A brief list of what Millennials can do to help themselves and leave our country a better place than they found it:

1) A stand in favor of equal protection for all American Citizens

Take two people. One is a Millennial saving up for a house and currently renting, and another is a Gen Xer who owns a house. Is it fair for the federal government to tax the home owner less than the renter — just because he owns rather than rents his shelter? Is it okay for one person to labor 6 months in the service of the government, while another labors only 3 months, or 0? Should we all have an equal right to our labor? If not equal, then what? Should we all stand shoulder-to-shoulder and be treated the same by our government as American Citizens, or continue as members of diverse classes of varying levels of privilege? You know who will get is hurt the most by inequality? That’s right, Millennials — young and vulnerable.

2) The same for equal protection of organizations

Should oil companies get tax breaks while medical device manufacturers pay a special surtax? Is there something especially sinful about making devices that save people’s lives? Let’s take two companies, both are losing money rapidly. Is it fair that one of those companies transfers its losses to the citizenry, while the other eats its losses and files for bankruptcy? If it’s wrong for the government to favor one religion or church over another, how can it possibly be fair for the government to favor one company over another?

First amendment protections of equal treatment for all religions/churches should be extended to companies and industries.

3) You should have a right to choose your own society

How would your employer treat you if (s)he knew you couldn’t quit? Would you still get a holiday bonus? What if a game designer knew that you were forced to play his game, would he go the extra mile to fix all of the bugs and make it engaging? Owning your own labor and liberty means that you decide who you will transfer your value to. A fundamental right of all people is the ability to opt out — of employment, of activities, of associations. The Founding Fathers wanted to concentrate power at the state level so that if you were not protected in a particular state, it was your good right to join another society that protected you better. Injustices at the federal level are especially egregious because we cannot opt out of them.

Among other things, we should re-enshrine the protections of Federalism that were included in the original Constitution. The 17th Amendment should be revoked and U.S. Senators should be elected by state legislatures. This would ensure that all bills passed were not prejudicial to state power and grant individuals, once again, the strong right to choose their own societies.

4) Every citizen should have a right to fight for justice

A peculiarity of our judicial system today is that an American Citizen’s right to sue the government is limited only to those citizens that can prove they are harmed by a particular law. To avoid such challenges, abusive laws are crafted so that it is very difficult for anyone to show that (s)he is harmed. Some laws start handing out benefits immediately, while delaying the costs so that the people harmed by a law must challenge it years after it is instated. We can never uphold equal protections if we rely only on victims to defend themselves and allow Congress to marginalize challengers. Among the privileges of U.S. Citizenship should be added the right to challenge any federal law irrespective of standing. If you see that some people or some groups are not equally protected, you should be able to sue until they are.

5) Protections against inter-generational transfers

Is it right for one generation to vote itself benefits and pass the costs to the young or unborn? Millennials will very soon realize that many IOU’s have been written in their names and when the bill comes things will get even more difficult for this up-and-coming generation. After freeing yourselves from the bills and debts of previous generations, you should protect future generations so that this injustice never happens again.

There are specific solutions for protecting against inter-generational transfers, but they’re a bit more difficult to explain.

From the Rolling Stones: Five Economic Reforms Millennials Should Be Fighting For

First off, let’s hand it to a Millennial who is fired up and proposing changes to the system. We’ll need a lot more of that.

Let’s apply some Valerian Vision to Myerson’s recommendations:

1) “Unemployment blows. The easiest and most direct solution is for the government to guarantee that everyone who wants to contribute productively to society is able to earn a decent living in the public sector.”

Who would control your employment value as an employee of the public sector? Government officials? Do you know what kind of control over you this would grant to the government? Is that really what you want — less control over your labor value? Wouldn’t it be best if we passed laws that strengthened your right to control your own labor?

2) “Enter the jaw-droppingly simple idea of a universal basic income, in which the government would just add a sum sufficient for subsistence to everyone’s bank account every month.”

Not a bad idea really. How will it be paid for? Will you selectively take away the value from a minority (any minority) and transfer it to the majority? If so, then you don’t believe in equality, Sir. Targeting minorities is wrong and it makes us all less protected. If society equally paid for such a program then we’d all be paying for the gov’t to transfer money back to ourselves. That would be rather pointless. What would be much better is a program that society equally paid for, but that benefited the neediest in society. A cash transfer is the best way though, as it transfers the maximum amount of value to the beneficiary.

3) “The most mainstream way of flipping the script is a simple land-value tax. By targeting wealthy real estate owners and their free rides, we can fight inequality and poverty directly, make disastrous asset price bubbles impossible and curb Wall Street’s hideous bloat.”

Yes, yes, we’ve heard this one before. “If only we could break down the protections of a minority and seize their value, we’d all be better off!”

But really, who would control the seized value from this land? Another minority? Government officials? If landowners (humans) behave in a way that maximizes their own value, how does transferring value to government officials (humans) — that also want to control as much value as possible — solve our problem? What empirical evidence do you have that government officials controlling value are more benevolent than landlords?

Don’t get me wrong, Millennials are inheriting an “economic hellhole”, but it’s because of unequal protection. Stronger protection is the answer.

4) “Make Everything Owned by Everybody”

Um. Who would control what value? It’s…er…physically impossible for all of us to control everything. Control is exclusive. If someone else controls who sleeps in my bed, that means that I don’t. It’s like having 100 people control the same Facebook account. That’s not how controlling value works.

“Just buy up their stocks and bonds. When the government does that, it’s called a sovereign wealth fund.”

Oh, I see. “Owned by Everybody” is just a euphemism for transferring value and control to government officials. So, let me get this straight, you want to tear down the protections for some citizens (which really tears down protections for all citizens) and then transfer the pilfered value to an even smaller minority (government officials), in the hopes that government officials are a…genetically different species that is more benevolent? Sounds an awful lot like a recipe for a bad society:

Step 1) Take away protections from a powerful minority
Step 2) Transfer value to a different powerful minority
Step 3) Hope and pray that the new powerful minority a) is not like the old powerful minority and b) doesn’t notice all of the value that is newly unprotected.

There’s a reason why Communism is only a theoretical construct.

5) “A Public Bank in Every State”

“You know what else really blows? Wall Street… Let’s try to change that by allowing state governments into the banking game.”

What really blows about Wall Street is that we are not protected from their losses. If they have a bad year, they transfer the loss to the citizenry (in the form of bank bailouts, Fed purchases, nationalization, etc.). Who is their accomplice in this act? The government. Do you think they would act so recklessly if there were regulations in place that said, “Bad bet? Too bad. By law you own your loss.” Good regulations ensure that people are protected from the losses incurred by others.

The idea of State Banks is not a bad idea. The Founding Fathers envisioned each State as it’s own society. If you were unprotected in one society, you could just leave and join another where you were more protected. By having all of this bank collusion at the Federal level, we ensure that no citizen, anywhere, can escape paying for the reckless behavior of bankers with government connections.