I'm sorry I have to say this but I just do. In the wake of Ralph Nader's decision to run for President, again, I have to vent on the idea that his candidacy merits any consideration.
First of all, let me say that the pratice of casting a vote is not a sacred experience. It is not a communion with God. It is not an existential affirmation of your deepest convictions in your heart's very core. It is a practical decision made on the Surface of the Planet Earth that has tangible effects on real people's lives. In some cases, it can be a matter of life and death for the people affected.
Approaching one's vote otherwise amounts to an elevation of hollow symbolism and a sense individual moral superiority over the practical consequences of one's actions on real people's lives. Many of us would strongly prefer more left-wing policies than what the Democrats have historically offered, including myself. If Nader had any chance whatsoever of winning, by all means we should vote for him. But here on this planet, the decision of millions of left-leaning people to vote for Nader in 2000 has led to absolutely disastrous results. It accelerated the extreme concentration of wealth in this country through regressive tax cuts and created a massive budget deficit that will make future social programs more difficult to implement. It made possible an unjustified war in Iraq that cost hundreds of thousands of Iraqi lives and thousands of U.S. soldiers. It led to cuts in funding for student loans, Medicaid, and a heinous overhaul of the bankruptcy code. It led to a serious (but thankfully unsuccessful) attack on America's most successful social program and anti-poverty measure, Social Security. These are all bad things, we can all agree. And they could have been prevented if the people who voted for Nader in 2000 had voted for Gore.
Nader will proclaim til his death that he did not cause the defeat of Al Gore in the 2000 election. I'll accept that. You know who caused Gore's defeat? The people who voted for Nader over Gore in swing states. Anyone who has far-left policy goals and voted for Nader in swing states completely abdicated his or her responsibility to help prevent a global disaster.
Saturday, March 1, 2008
Friday, February 29, 2008
An Idea on How to Latch On Socialism to the Present System
Hello everyone, this is my first post.
Ok, so seeing that the mainstream political will is wanting, this is a potential way of circumventing the state and creating a sort of guaranteed employment system in the form of a non-profit (or maybe for-profit, for that matter) organization, a sort of socialist latch-on to the present system. Im not sure if the present labor and tax structures allow a system like this (Finley, you can help with this), but here's the general idea. Also, Im sure it has lots of holes, so please poke at will.
So, the organization is set up to provide contract employment services to corporate clients, similar to what a Manpower or Labor Ready does. A worker joins the organization, but unlike Manpower or Labor Ready, is guaranteed a full day of productive work and thus fair compensation for that work. The burden lies with the organization to find the person productive work for the day, week, year, however long the worker is a member of the organization. Services are provided to corporate clients for full or part time work at various jobs and skill levels. The organization handles all human resources work and benefits, including full health care, and charges the corporate client a fee for services rendered. Corporate clients of the organization join a sort of club where the products or services they provide are advertised and deals are provided to other member clients.
So far this is not very revolutionary.
Several things. Entry for both corporate clients and workers is free. No fees are associated at either end. The organization matches client needs with worker skills for the duration required, and corporate clients pay for those services they use only.
Now with a guaranteed employment, my guess is that the ranks of this organization on the worker side would swell pretty quickly. It would need plenty of startup capital to provide these workers their benefits before enough corporate clients sign up to absorb the supply of labor. However, once you start controlling a sizable portion of the labor supply, with available workers that can provide any service you need, and you provide corporate clients a quick, flexible, and no-commitment way of handling their employment needs, lots of private enterprises would sign up.
Now, part of the key is for the organization to grow to a large enough scale where it can start providing more and more services to its members while taking advantage of sufficient economies of scale to do so at a relatively low cost. For example, the system would provide health care to its employees. However, in the beginning, in order to provide full health care, it would have to use one of the standard health insurance programs which we have already characterized correctly as being inefficient and costly. However, as the number of employees swells, it will quickly begin to become affordable to provide first one, then another ambulatory doctor, hired by the organization, to provide free checkups to employees. Pretty soon you can set up a few primary care clinics, and eventually, with enough employees and thus patients, you can set up larger proprietary health care facilities, and start weaning off the health insurance companies, saving resources as you do. This health care system would be run the way a state health care system is run, with all its intrinsic efficiencies, and hopefully grow large enough quickly enough to be able to negotiate increasingly better terms with drug and medical good suppliers.
Another case: housing. Once the system employs enough construction workers, it can organize its own development arm, or enter into special contracts with developers within its corporate clients, to build housing for its employees. Projects would be developed emphasizing density and proximity to public transit. Allocation of housing would be flexible and preference would be given based on proximity to the general area of your employment. Communities would be planned, with organization health care clinics and educational retraining centers (another key benefit of the organization) close by.
About the educational retraining centers, these would be a sort of night school, or half -day school (or whatever) that would provide employees with additional productive skills on demand. So, if someone wants to learn a new craft, they just have to sign up for one of the free classes and get certified for the task. This increases the flexibility of both the individual workers and the organization as a whole, since it will be able to mold its productive capacity to whatever the requirements of the market at the moment are.
How will all of this be paid for?
While charging of corporate clients for services rendered would be done based on the service, meaning, of course, that higher skilled or more complicated work would be better compensated, or whatever - based on the prevailing wage rate + a service premium, the compensation structure for workers (in terms of cash reimbursement) would rise at a lower rate. That is, all workers are guaranteed the legal minimum wage, but as their skill level increases, they will be compensated to lesser degree with monetary rewards and to a greater degree with non-monetary rewards. The organization will provide workers with a higher skill levels whose work is compensated at the private enterprise contract side at a high level with a medium level increase in pay and, say, rewards for a slightly larger organization-supplied house. Within the organization, a person can be compensated with badges or awards the way, say, the soldiers in the military are compensated with medals and promotions of rank... in fact there could be actual ranks to which workers belong, based on their skill level, and they get compensated based on rank. Oh, that carpenter, he's a Level 3 Master Carpenter. He gets a big apartment and to wear that cool officer uniform. Still, he makes only 2 bucks an hour more than me. Whatever, you get the idea.
The purpose of this is two-fold. First of all, it may help build worker loyalty and solidarity with the organization. But second of all, it begins to divorce the labor force from the traditional monetary reward system that is a hallmark of capitalism. Money, and thus what you can exchange for it in the wider capitalist economy, ceases to be as important. The reward for work ceases to be "look at me, I have enough money to buy a PlayStation 3" and begins to be "look at me, I have a merit badge for hard work and dedication". This begins to redirect economic resources away from frivolous spending on fabricated needs, which has characterized the last thirty years in the advanced economies, and towards more (hopefully) meaningful things... these excess resources would be controlled by the organization, and thus allocated as needed or directed, either towards the organizational health fund, education fund, building housing, factories, setting up research facilities, or whatever.
The downside is, of course, that you are keeping actual wages relatively down, and a corollary to this, you are keeping tax revenues to the state at a relatively low level. I don't know if, because of this, this would be construed as a form of tax evasion and would thus be legally impracticable (Finley, you can help with this). But while it deprives state of higher income tax revenues, I figure given how the present system does not provide the basics to the people (housing, health care, education) and this system would, that it makes up for it.
Acknowledging that this is not enough to pay for schools, hospitals and apartment buildings, productive arms of the organization can be set up to produce manufactures or sell services to the outside market. Once you have the workers, and you will probably have the managers too, and the construction crews to build the factories or offices, the step towards pushing into the outside world is simple. With enough scale, you can probably move to dominate several industries relatively quickly. Also, in a less predatory fashion, as long as you have construction crews at your disposal you can build office buildings and factories (appropriately close to your worker residences) which you can lease to your corporate clients. For example, Company A outsources their labor force but also their office space and their manufacturing facilities to the Organization. At that point, the corporate client becomes your surrogate, almost a branch of your organization, a client that has an account with you and owns a name and some proprietary knowledge and maybe some, but not all, of the capital. The organization controls the rest.
Anyway, thats a general sketch. I have not addressed the fact that once you control a large enough portion of the labor force, you can begin acting like a union and demanding higher wages from the corporate clients, who would now be forced to use our organization to find any kind of employment. Anticipating this, there could be a corporate member backlash or boycott once the danger of this becomes apparent but before the organization has the strength to handle it. There could also be a government reaction. But in any case, this is an idea I was floating around with as a sort of surreptitious way of getting socialism into the system, masquerading as flexible employment system without anybody realizing it what it really was before it was too "late".
Thursday, February 28, 2008
Work and Effort
There are a couple of specific arguments regarding my proposed labor system that I’d like to address. I’d basically like to defend my proposals against suggestions/criticisms from the radical left and the center-right, both of which concern the murky concept of "effort."
The first thing I’d like to respond to is the idea, which several readers have referred to, that we should use an effort-based reward system (and implicitly, a lack-of-effort based “punishment” system in the sense that the reward given to those who give the appropriate level of effort will be withheld from those who do not). The idea obviously has philosophical appeal. It sounds fair. Ultimately, however, it strikes me as too vague in theory and unworkable in practice.
First of all, what is effort, and does it really form a coherent moral basis for reward? Is effort the amount of subjective pain or hardship one experiences while he or she performs a productive activity? Is it the amount of concentration, focus, or consistency with which someone attends his or her task? Or is it the amount of calories someone burns in the process of doing something? Think of the problem of the talented individual for whom anything is easy – should we deny an effort-based reward to this person who, though he or she meets every reasonable expectation regarding his or her performance, finds the job relatively easy? Or should we just give the effort-based reward to anyone who meets certain minimum standards of diligence and responsibility? I personally have no idea how to answer these questions. Perhaps one of you does.
There is also the abstract problem that the willingness to expend effort, like any personal characteristic, is something that is largely inherited and/or absorbed by social influences over which the individual has little control. So in a sense, society “owns” the amount of effort that an individual is willing to put forth just as much as it “owns” their other inherited/socially acquired abilities. If this is the case, as a purely abstract matter, no individual reward is appropriate for extra effort.
But most fundamentally, the attempt to objectively measure and reward effort strikes me as a utopian undertaking. Whatever we think effort is, it is almost certainly something that is only truly known, if at all, by the specific individual concerned. Until we learn how to, and decide we are willing to, monitor people’s thoughts and feelings, this task strikes me as absolutely impossible.
Second, the use of effort as a basis for reward would totally eliminate the “market” aspect of the labor market. Some people consider this a positive thing, but I don't. My view is that some play for market forces can be a useful way to allocate resources towards making products and providing services that people actually want, and can help, to some extent and in conjunction with a whole lot of equally important factors, motivate additional effort. Perhaps some of you will see this position as “un-socialist.” But I think the philosophical basis of socialism is not the total rejection of any and all private property and market exchange, but the conviction that the “right” to private property is not a right at all. Rather, property rights are a social and economic expediency that society can and should (even “must”) modify to accomplish important social goals. This implies that some market exchange may be tolerable to the extent that it can further general welfare AND to the extent that the fruits of such exchange are equitably redistributed.
So for me, the labor market should represent a kind of revenue sharing agreement between society and the individual with respect to the surplus productivity created, where society’s cut should be generally quite large, and should get progressively larger as a percentage as the individual’s reward increases. Once again, the benefit of this arrangement is not its inherent moral superiority, but its ability to effectively allocate resources and to preserve some incentive (albeit a radically compressed one) for increased productivity, while simultaneously providing the economic means to give everyone a relatively high standard of living. So long as the means to be productive are open to all (through free higher education, etc.) and the economic surplus is redistributed to maintain a radically compressed income and wealth distribution, I think an olde-fashioned labor market can be a good thing.
...
The other concern that I would like to respond to comes from the right. The question/concern is: how can a system of guaranteed employment ensure that certain minimum standards of diligence are met (like just showing up, for instance) by the people who resort to guaranteed government employment? After all, if employment is guaranteed by the government in all cases, someone who works for the government can essentially never be fired. So what do we do with the person who couldn’t find a job anywhere else, works for the government, but just doesn’t show up half the time and doesn’t try to be productive while he or she is there?
Here are the possible solutions I can think of:
a.) suspend the offender, without pay, for a period of time based on the severity of the offense
b.) continue to pay them but assign them to increasingly more distasteful tasks as punishment
c.) provide some kind of other punishment, like a fine
d.) send cops to their house and make them show up, and supervise their work closely to make sure they do it
e.) make them attend some kind of intensive community service work program in order to earn their right to work back
f.) just ignore their misbehavior and pay them anyway
Personally, I am somewhat uncomfortable with the idea that we should use the threat of withdrawing someone’s basic subsistence (in this case, a minimum income), even for a short period, as leverage to get them to be productive. So I have some trouble with a. We could also give them the lousy jobs to do, as in b., but then they really wouldn’t show up. A fine runs into the same problem as a. – it imposes an extra financial burden on someone who is probably on the lower end of our (albeit compressed) income distribution. D. and e. seem somewhat authoritarian. And f. seems kind of like it amounts to an acceptance of failure. In short, I find all of these solutions at least somewhat distasteful.
I would probably accept some judicious combination of a. - e. as necessary, but undesirable, punishments (I realize this is a very mushy answer). But it probably wouldn’t be that big of a problem, really – I think it’s actually a very, very small percentage of the population that really wants to sit at home and do nothing and/or to go to work and accomplish nothing at all. And if we are going to err in one direction I’d rather err in favor of giving everyone a minimum (i.e., higher than the poverty rate) income and letting some people by without really contributing than to run the risk of denying deserving people the necessaries of life. And, after all, all economic systems have some inefficiency. Just look at the current internet-surfing, time-wasting juggernaut that is the capitalist office. Talk about total waste.
So I guess the upshot is I think we should try as hard as possible to get everyone to do their fair share of work by using some sensible combination of a. - e., depending on what works, while taking comfort in the fact that if this system is to suffer some inefficiency because of the employment guarantee, at least that inefficiency is incurred for a good cause. And in a society as rich as ours, we can certainly afford to sacrifice some productivity in order to satisfy overriding moral imperatives.
The first thing I’d like to respond to is the idea, which several readers have referred to, that we should use an effort-based reward system (and implicitly, a lack-of-effort based “punishment” system in the sense that the reward given to those who give the appropriate level of effort will be withheld from those who do not). The idea obviously has philosophical appeal. It sounds fair. Ultimately, however, it strikes me as too vague in theory and unworkable in practice.
First of all, what is effort, and does it really form a coherent moral basis for reward? Is effort the amount of subjective pain or hardship one experiences while he or she performs a productive activity? Is it the amount of concentration, focus, or consistency with which someone attends his or her task? Or is it the amount of calories someone burns in the process of doing something? Think of the problem of the talented individual for whom anything is easy – should we deny an effort-based reward to this person who, though he or she meets every reasonable expectation regarding his or her performance, finds the job relatively easy? Or should we just give the effort-based reward to anyone who meets certain minimum standards of diligence and responsibility? I personally have no idea how to answer these questions. Perhaps one of you does.
There is also the abstract problem that the willingness to expend effort, like any personal characteristic, is something that is largely inherited and/or absorbed by social influences over which the individual has little control. So in a sense, society “owns” the amount of effort that an individual is willing to put forth just as much as it “owns” their other inherited/socially acquired abilities. If this is the case, as a purely abstract matter, no individual reward is appropriate for extra effort.
But most fundamentally, the attempt to objectively measure and reward effort strikes me as a utopian undertaking. Whatever we think effort is, it is almost certainly something that is only truly known, if at all, by the specific individual concerned. Until we learn how to, and decide we are willing to, monitor people’s thoughts and feelings, this task strikes me as absolutely impossible.
Second, the use of effort as a basis for reward would totally eliminate the “market” aspect of the labor market. Some people consider this a positive thing, but I don't. My view is that some play for market forces can be a useful way to allocate resources towards making products and providing services that people actually want, and can help, to some extent and in conjunction with a whole lot of equally important factors, motivate additional effort. Perhaps some of you will see this position as “un-socialist.” But I think the philosophical basis of socialism is not the total rejection of any and all private property and market exchange, but the conviction that the “right” to private property is not a right at all. Rather, property rights are a social and economic expediency that society can and should (even “must”) modify to accomplish important social goals. This implies that some market exchange may be tolerable to the extent that it can further general welfare AND to the extent that the fruits of such exchange are equitably redistributed.
So for me, the labor market should represent a kind of revenue sharing agreement between society and the individual with respect to the surplus productivity created, where society’s cut should be generally quite large, and should get progressively larger as a percentage as the individual’s reward increases. Once again, the benefit of this arrangement is not its inherent moral superiority, but its ability to effectively allocate resources and to preserve some incentive (albeit a radically compressed one) for increased productivity, while simultaneously providing the economic means to give everyone a relatively high standard of living. So long as the means to be productive are open to all (through free higher education, etc.) and the economic surplus is redistributed to maintain a radically compressed income and wealth distribution, I think an olde-fashioned labor market can be a good thing.
...
The other concern that I would like to respond to comes from the right. The question/concern is: how can a system of guaranteed employment ensure that certain minimum standards of diligence are met (like just showing up, for instance) by the people who resort to guaranteed government employment? After all, if employment is guaranteed by the government in all cases, someone who works for the government can essentially never be fired. So what do we do with the person who couldn’t find a job anywhere else, works for the government, but just doesn’t show up half the time and doesn’t try to be productive while he or she is there?
Here are the possible solutions I can think of:
a.) suspend the offender, without pay, for a period of time based on the severity of the offense
b.) continue to pay them but assign them to increasingly more distasteful tasks as punishment
c.) provide some kind of other punishment, like a fine
d.) send cops to their house and make them show up, and supervise their work closely to make sure they do it
e.) make them attend some kind of intensive community service work program in order to earn their right to work back
f.) just ignore their misbehavior and pay them anyway
Personally, I am somewhat uncomfortable with the idea that we should use the threat of withdrawing someone’s basic subsistence (in this case, a minimum income), even for a short period, as leverage to get them to be productive. So I have some trouble with a. We could also give them the lousy jobs to do, as in b., but then they really wouldn’t show up. A fine runs into the same problem as a. – it imposes an extra financial burden on someone who is probably on the lower end of our (albeit compressed) income distribution. D. and e. seem somewhat authoritarian. And f. seems kind of like it amounts to an acceptance of failure. In short, I find all of these solutions at least somewhat distasteful.
I would probably accept some judicious combination of a. - e. as necessary, but undesirable, punishments (I realize this is a very mushy answer). But it probably wouldn’t be that big of a problem, really – I think it’s actually a very, very small percentage of the population that really wants to sit at home and do nothing and/or to go to work and accomplish nothing at all. And if we are going to err in one direction I’d rather err in favor of giving everyone a minimum (i.e., higher than the poverty rate) income and letting some people by without really contributing than to run the risk of denying deserving people the necessaries of life. And, after all, all economic systems have some inefficiency. Just look at the current internet-surfing, time-wasting juggernaut that is the capitalist office. Talk about total waste.
So I guess the upshot is I think we should try as hard as possible to get everyone to do their fair share of work by using some sensible combination of a. - e., depending on what works, while taking comfort in the fact that if this system is to suffer some inefficiency because of the employment guarantee, at least that inefficiency is incurred for a good cause. And in a society as rich as ours, we can certainly afford to sacrifice some productivity in order to satisfy overriding moral imperatives.
America the Free
http://www.cnn.com/2008/CRIME/02/28/prison.population.ap/index.html
This is pretty crazy stuff. Some highlights:
-The U.S. leads the world in people incarcerated per capital (over 1%), ahead of runners up, the notoriously authoritarian ex-Soviet Bloc.
-We have a higher absolute number of people in prison than China.
-Astronomical recent increases in the imprisoned population do not reflect proportional (or even remotely close to proportional) increases in crime.
-For men between 20-34, 1 in 30 are in prison; for black men of that age group, the figure is 1 in 9.
I would also be interested to see what percentage of black men have ever been prison, as opposed to the percentage that is in prison right now. I'm sure the answer would be frightening.
Anyway, what the hell is wrong with us? I have no radical objection to imprisonment in serious cases (e.g., rape, muder, battery, kidnapping), but it strikes me as impossible to deny that we imprison far too many people for relatively minor crimes. I think we should use restitution and community-service based punishment for all property crimes, except the most serious (e.g., large-scale fraud, serious white collar crime, armed robbery, arson). Other than that, the only way you should end up in prison is if you really physically hurt somebody.
Obviously, we should also seriously tackle the problem of spatially concentrated urban minority poverty. Previous posts should shed some light on how I would go about doing that.
This is pretty crazy stuff. Some highlights:
-The U.S. leads the world in people incarcerated per capital (over 1%), ahead of runners up, the notoriously authoritarian ex-Soviet Bloc.
-We have a higher absolute number of people in prison than China.
-Astronomical recent increases in the imprisoned population do not reflect proportional (or even remotely close to proportional) increases in crime.
-For men between 20-34, 1 in 30 are in prison; for black men of that age group, the figure is 1 in 9.
I would also be interested to see what percentage of black men have ever been prison, as opposed to the percentage that is in prison right now. I'm sure the answer would be frightening.
Anyway, what the hell is wrong with us? I have no radical objection to imprisonment in serious cases (e.g., rape, muder, battery, kidnapping), but it strikes me as impossible to deny that we imprison far too many people for relatively minor crimes. I think we should use restitution and community-service based punishment for all property crimes, except the most serious (e.g., large-scale fraud, serious white collar crime, armed robbery, arson). Other than that, the only way you should end up in prison is if you really physically hurt somebody.
Obviously, we should also seriously tackle the problem of spatially concentrated urban minority poverty. Previous posts should shed some light on how I would go about doing that.
Tuesday, February 26, 2008
Usury and ATM Fees
I should clarify my previous post re: usury to state my implicit assumption. That is, the maximum nominal rate of interest should be 15-20% provided that the rate of inflation stays around 2.5%-3.5%. If inflation goes higher, so should the maximum nominal interest rate. Also, I envision the interest rate cap as applying only to personal borrowing, not business borrowing. Financial institutions should be able to charge businesses as much interest as they want.
In any event, many would be surprised to learn that most states still have usury laws on the books. However, their effect has been practically eliminated by the fact that a bank's home state's (i.e., state of incorporation) usury law is the one that applies, regardless of where the borrower is (this is from a 1979 Supreme Ct. decision - I'll look it up later). So a bank can incorporate in a high cap state and charge that rate of interest anywhere it does business. And apparently banks get some kind of exemption from the normally applicable usury rules as well.
Here is my point. ATM charges have now reached $3.00 for foreign bank withdrawals in the campus area at the University of Illinois. If you think about it, a foreign bank withdrawal from an ATM is really a loan: the bank extends you the money, and you pay that bank back automatically from your home bank account. So the charge is a kind of interest charge. It can't be a "processing fee" because the costs of processing are almost certainly negligible with current technology. Besides, to the extent that they exist at all, usury laws often collapse all "fees" associated with a loan into the interest rate so companies can't just get around the maximum rate by charging low nominal interest but high fees.
The upshot of this is that the ATM machine bank charges the customer making a foreign withdrawal an interest rate on a loan (which is redeemed almost immediately) equal to $3 divided by the withdrawal amount, before annualization. Let's be overly generous and say the ATM bank doesn't get its money for 2 business days (the amount of time it usually takes to transfer funds from one bank account to another). And let's say your withdrawal amount is the "fast cash" option, usually $60 (again, very generous - usually people withdrawal less). That means that the annualized rate of interest is equal to ($3/$60) * (365/2), or 912%. And remember, this is almost certainly a substantial understatement. Under more realistic assumptions ($40 withdrawal, 1 day for ATM bank to get its money) the annualized interest rate is 2,737.5%. If it only takes a matter of minutes for the ATM bank to get its money, the annualized interest rate would be absolutely astronomical.
As with most personal finance charges, this charge is highly "regressive" in that it will end up charging people making smaller withdrawals (i.e., people who are concerned about their account balance and can't make larger withdrawals) a higher effective rate of interest.
A good usury law should forbid this kind of nonsense.
In any event, many would be surprised to learn that most states still have usury laws on the books. However, their effect has been practically eliminated by the fact that a bank's home state's (i.e., state of incorporation) usury law is the one that applies, regardless of where the borrower is (this is from a 1979 Supreme Ct. decision - I'll look it up later). So a bank can incorporate in a high cap state and charge that rate of interest anywhere it does business. And apparently banks get some kind of exemption from the normally applicable usury rules as well.
Here is my point. ATM charges have now reached $3.00 for foreign bank withdrawals in the campus area at the University of Illinois. If you think about it, a foreign bank withdrawal from an ATM is really a loan: the bank extends you the money, and you pay that bank back automatically from your home bank account. So the charge is a kind of interest charge. It can't be a "processing fee" because the costs of processing are almost certainly negligible with current technology. Besides, to the extent that they exist at all, usury laws often collapse all "fees" associated with a loan into the interest rate so companies can't just get around the maximum rate by charging low nominal interest but high fees.
The upshot of this is that the ATM machine bank charges the customer making a foreign withdrawal an interest rate on a loan (which is redeemed almost immediately) equal to $3 divided by the withdrawal amount, before annualization. Let's be overly generous and say the ATM bank doesn't get its money for 2 business days (the amount of time it usually takes to transfer funds from one bank account to another). And let's say your withdrawal amount is the "fast cash" option, usually $60 (again, very generous - usually people withdrawal less). That means that the annualized rate of interest is equal to ($3/$60) * (365/2), or 912%. And remember, this is almost certainly a substantial understatement. Under more realistic assumptions ($40 withdrawal, 1 day for ATM bank to get its money) the annualized interest rate is 2,737.5%. If it only takes a matter of minutes for the ATM bank to get its money, the annualized interest rate would be absolutely astronomical.
As with most personal finance charges, this charge is highly "regressive" in that it will end up charging people making smaller withdrawals (i.e., people who are concerned about their account balance and can't make larger withdrawals) a higher effective rate of interest.
A good usury law should forbid this kind of nonsense.
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