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Economist Tyler Cowen of Marginal Revolution interviews Stanford economist Raj Chetty and borrows a number of his questions from my appreciative 2015 critique in Taki’s Magazine, “Moneyball for Real Estate,” of the flaws in Chetty’s methodology in his huge and much publicized study of how income mobility over the generations varies by county across the United States.

Chetty is trying to find out what are the local policies or customs that make one county a better place to raise your kids than another county. I think that’s a good topic, but he is still a long ways from finding those kind of subtle answers because his results are still clouded by three big methodological problems. As I concluded two years ago:

In summary, Chetty’s data still suffers from crippling problems with:

- Regression toward the mean (especially among races)
- Temporary booms and busts
- Cost of living differences.

Yet, these should not be impossible challenges for him to overcome in future iterations.

Here’s the transcript of the interview (and the podcast if you like listening rather than reading). Excerpts:

… On drivers of upward mobility

COWEN: Let’s go now to some of your research on mobility, which is maybe, at this moment, what you’re best known for. You can identify counties or parts of the United States where mobility for generations is going to be especially high. To what extent do you think that’s picking up that simply some of those regions end up with resource booms or other good events that is, in a sense, just random? It doesn’t per se have to do with the region? Or do you think we can adjust for that?

CHETTY: Yes. Some of what drives upward mobility, of course, is just having a very vibrant economy. To give you an example, parts of North Dakota, with the natural resource boom there, we see are having very high upward mobility. Of course if you discover natural resources, that’s going to help more people move up the income distribution.

But by and large, that is the exception rather than the key driver of the differences in upward mobility that we find across places. I say that for a couple of reasons. First, even if you hold fixed the rate of growth, the rate of economic growth, you find that some places have much higher rates of upward mobility than others.

To give you an example, Atlanta is a city that’s booming in terms of jobs and economic growth overall. But Atlanta’s one of the places with the lowest levels of upward mobility for kids growing up in low-income families there.

Chetty’s 2013 income mobility map: red=bad

Sorry, but an obvious explanation for why the Atlanta metro area has low upward mobility is the classical statistical phenomenon of regression toward the mean. Atlanta, unlike Chetty’s favorite metro area, Salt Lake City, is heavily black. Atlanta has one of the most prosperous and best educated black communities in America, but blacks in America still regress toward a lower mean income than do whites, so it’s almost statistically inevitable that Chetty would find that Atlanta has lower upward income mobility than Salt Lake City.

The second thing you see is these rates of upward mobility, to the extent we have data, they tend to be quite persistent overtime. It’s not like the places that have high upward mobility in one decade, suddenly a very low upward mobility in the next decade. It’s a pretty persistent phenomenon.

A striking example of that is states in the middle of the US, like Iowa for example, which historical data going back to work by Claudia Goldin and Larry Katz has always looked like a place with very good outcomes for kids in lower-income families. And what’s amazing about that is, Iowa suffers from a brain drain phenomenon where the most successful people often end up leaving the state, going to Chicago, going to New York, to get higher-paying jobs. Yet generation after generation, Iowa seems to produce very good outcomes for low-income families. So that again suggests it’s not about natural resources or temporary booms. It’s something more persistent.

Chetty’s single best county in America for blue collar kids’ upward income mobility is Sioux County, Iowa, where iSteve commenter The Last Real Calvinist is from. Somewhat like Mormon Salt Lake City, Sioux County is famously Dutch and socially conservative. Of course, like all the top 25 counties on Chetty’s list, it’s also extremely white.

But there is some evidence from Chetty’s research that social conservatism is good for blue collar kids’ future earnings. Unfortunately, he needs to adjust for the three big problems I identified above to test his hunch.

CHETTY: Yes. Where did that come from? Why does Iowa have good public schools?

COWEN: Right.

CHETTY: One of the strong correlates we find is that places that are more integrated across socioeconomic groups, that have lower segregation, tend to have better outcomes for kids. And that kind of thing in a rural area — you can see why that occurs and why it might lead to better outcomes.

Obviously, Chetty is being silly here. Sioux County, Iowa and his other 24 top counties are not at all what normal people would call “integrated.” They are extremely white.

Instead, he’s using “integrated” as a euphemism for “heavily white and/or Asian,” and “segregated” as a euphemism for “heavily non-Asian minority.” Liberal sociologist Philip N. Cohen pointed out:

Philip N. Cohen pointed out how Chetty’s 2014 paper tries to euphemize the role of blackness behind related factors like de facto “segregation:” in a 2014 blog post entitled “Where Is Race in the Chetty et al Mobility Paper?

Instead, they drop percent Black for racial segregation. I have no idea why, especially considering … [I]n these normalized correlations, fraction Black has a stronger relationship to mobility than racial segregation or economic segregation! In fact, it’s just about the strongest relationship on the whole long table (except for single mothers, with which it is of course highly correlated).

Back to the interview:

If you live in a big city, it’s very easy to self-segregate in various ways. You live in a gated community, you send your kids to a private school. You essentially don’t interact with people from different socioeconomic classes. If you live in a small town in Iowa, pretty much there’s one place your kids are going to go to school. There’s one set of activities that you can all participate in. And that is likely to lead to more integration.

But living in a small corn-farming town in Iowa will not lead to more racial integration.

COWEN: And you think that’s causal rather than just restating the same fact about the quality of the place?

CHETTY: We don’t have definitive evidence on this, and we’re working on trying to establish clear evidence. But our sense is that integration — actual contact with people from other backgrounds — is a strong predictor and likely a causal determinant of kids’ long-term outcomes. I suspect that that’s one major factor in what’s going on.

This is basically Charles Murray’s Coming Apart view that growing up in Newton, Iowa (home to Maytag) was a healthy social environment because the children of Maytag execs played with the children of local tradesmen. These days, however, Maytag executives mostly live in an upscale suburb of Des Moines and reverse commute 35 miles to Newton. But this doesn’t have much at all to do with racial integration.

It would be perfectly reasonable for Chetty to maintain a stance of agnosticism toward the ultimate causes of the national race gaps in mean income. He could admit that “Until whatever it is that causes the races in America to have different average incomes stops happening, it’s almost statistically inevitable that my methodology will show lower income mobility in heavily non-Asian minority counties than in counties that are heavily white and/or Asian.”

But he doesn’t want to admit that, perhaps because there isn’t much interest in America in how we can influence, say, whites to be more like the whites in Sioux County, Iowa and less like the whites in McDowell County, West Virginia.*

All the excitement and money and prestige is in Closing the Race Gap. Chetty encourages people to assume that his study will find out how to close The Gap between blacks and whites, even though his study is almost hopeless at finding that (because even though he has your IRS returns and mine, he doesn’t have the race of taxpayers due to the IRS not collecting it and the IRS anonymizing the data before giving it to Chetty).

* McDowell County, WV has been notorious since JFK’s famous visit for having the poorest, most backward, most self-destructive white hillbillies in America. And yet, even McDowell Co. does fairly well in Chetty’s measures of upward mobility: such is the power of Regression Toward the Mean. McDowell County comes in at the 46th percentile in Chetty’s rankings, just slightly below the average county in America.

It would be perfectly reasonable for Chetty to adjust for regression toward the racial mean in some fashion so he could look for more subtle drivers of income mobility.

If that’s not feasible, Chetty could simply end up doing what Charles Murray did in Coming Apart and in much of The Bell Curve: just compare highly white counties to other highly white counties. There might still be something interesting to find, although I suspect his white vs. white results would tend to echo David Hackett Fischer’s Albion’s Seed.

Overall, there’s a fair amount of evidence that Chetty’s study really is on to something, which is why I want him to clean up its three big remaining methodological problems of Regression Toward the Mean, Temporary Booms and Busts, and Cost of Living Differences.

If Chetty would take those problems seriously and fix them, he might actually get some results in what he’s been hoping to find out about government policies and social norms that make a difference, pro or con, for the next generation.

Commenter The Last Real Calvinist, who is from heavily Calvinist Sioux County, Iowa, Chetty’s #1 Best County in America explains the trick Chetty is pulling on audiences:

The Last Real Calvinist

I read the whole interview; it’s pretty remarkable stuff.

I think your take (and Steve’s) on this is right; Chetty is referring on one hand, initially, strictly to socio-economic — i.e. class — integration in places such as Sioux County. And he’s right; I went to school with the children of doctors and lawyers and bankers as well as those of farmers and manual workers.

And then he’s saying that this kind of integration is promoted by limitations on options, e.g., presumably, living in a boring, social-capital-scarce setting leads to better outcomes:

If you live in a small town in Iowa, pretty much there’s one place your kids are going to go to school. There’s one set of activities that you can all participate in. And that is likely to lead to more integration.

But then he conflates this class-based integration with — presumably, although he doesn’t come right out and say it — racial/cultural integration:

But our sense is that integration — actual contact with people from other backgrounds — is a strong predictor and likely a causal determinant of kids’ long-term outcomes.

At the least, he’s leaving the door open here to those who would like to interpret his findings in a way that fits The Narrative. That is, successful outcomes are the product not of Sioux County’s cultural homogeneity, but rather of its ‘diversity’.

Nice trick.

Surely there are no other identifiable factors that could possibly be leading to the good outcomes for Sioux County kids.

It’s also interesting to juxtapose this class-integration success narrative with Chetty’s own experience in his ‘outstanding college prep school’ as the son of an economist and a medical specialist. How intrepid he must have been to overcome his limited chances to integrate with the proletariat! I wonder how his school managed to compensate for its no doubt shocking deficit in magic class integration opportunities?

Or perhaps I’m assuming too much, and his school instead carefully assembled an alchemically-potent mixture comprising the correct proportions of children from all classes, no doubt mimicking the class breakdown in Sioux County’s schools?

By the way, in my Taki’s Magazine article on Chetty, I speculated:

Fertility is actually a promising avenue for Chetty to pursue in the future. As we’ll see below, his income calculations are stricken with problems, but he appears to have the data to estimate the answers to questions such as: where should you move if you want your child to present you with a legitimate grandchild by the time you are, say, 70? That is the kind of thing you aren’t supposed to discuss in public these days, but I’d be surprised if Mr. and Mrs. Chetty don’t worry about it.

It turns out my speculation was largely on the money:

On geography and gender

COWEN: Yes. Have you thought much about within this country, geographic differences in gender inequality? …

CHETTY: Yeah, that’s a very interesting question. We find sharp differences in outcomes by gender across areas for various reasons. Let me give you a couple of examples. One, we find that areas with more concentrated poverty — take the city of Baltimore, for example — we find very poor outcomes for boys in particular, relative to girls, and we think that that has to do with crime, and getting involved in gangs, and so forth — things that girls are less likely to do.

As a result, growing up in a place like Baltimore turns out to be extremely detrimental for boys. We estimate that you lose something like 30 percent of your earnings relative to if you’ve grown up in an average place in America. Whereas for girls, it’s slightly negative but not nearly as bad. There are a set of urban ghettos, places with concentrated poverty, that tend to have particularly negative outcomes for boys.

There are also other phenomena that are more subtle, related to things like marriage patterns. Relating this back to personal experience, I remember when working on these issues and thinking about our decision to move from Harvard to Stanford. At the time, we actually were expecting our first child, a daughter. And I noticed in our data that, for kids in affluent families in the Bay Area, daughters tend to have very low household earnings. And I found that kind of curious and we spent some time trying to dig into why what was, partly given my personal interest in the issue.

COWEN: So, your own moving decision was influenced by this research.

CHETTY: [laughs] In some ways.

COWEN: Yeah.

CHETTY: What you find is an interesting explanation, which is, if you look at individual earnings rather than household income, girls growing up here in the Bay Area do extremely well. However, when you look at household income, they don’t do so well, and that’s because they’re much, much less likely to be married than if they grew up somewhere else.

COWEN: Yes.

CHETTY: So if you’re in your mid-30s, only something like a quarter or less of girls growing up in the Bay Area are married, and we show in our paper that every extra year you spend growing up in the Bay Area, you’re less likely to get married. I remember telling my wife, “I don’t think we need to worry. Our daughter will be fine in terms of earnings. It’s just that she might not be married if we move to California.”

COWEN: So, you’ve lowered your expectations for grandchildren?

CHETTY: Yes. [laughs]

I’d be interested to know what Mrs. Chetty thinks about not having grandchildren.

 
• Category: Economics • Tags: Chetty, Inequality, Political Correctness 
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I had only been vaguely aware of the Elizabeth Holmes saga until recently. My impression from all the magazine covers had been that the celebrated Silicon Valley startup foundrix had invented some revolutionary disruptive new method for testing blood and made the Forbes 400 off her invention.

Back in 2014, this high tech startup’s board of directors was … remarkable. From Fortune:

Little known and privately held, Theranos has assembled what may be, in terms of public service, the most illustrious board in U.S. corporate history. It includes three former U.S. cabinet secretaries, two former U.S. senators, a retired Navy admiral and a retired Marine Corps general.

In 2011, explains company founder Elizabeth Holmes, she realized that changing the way health care is delivered in this country would require the help of great strategists.

That July she finagled an introduction to George Shultz (above), the former Secretary of State, Treasury, and Labor, at Stanford’s Hoover Institution. Shultz had held four cabinet-level positions, counting his stint as director of the Office of Management and Budget, and had also been president of engineering giant Bechtel Group and a director at biopharmaceutical company Gilead Sciences. …

Schultz, Holmes, the late Lee Kwan Yew

Three years later nearly all the other outside directors on Theranos’s board are people who were introduced to the company through Shultz, now 93. They are former Secretary of Defense Bill Perry, former Secretary of State and National Security Adviser Henry Kissinger, former U.S. Senators Sam Nunn and Bill Frist (a heart-transplant surgeon), retired U.S. Navy Adm. Gary Roughead, retired U.S. Marine Corp Gen. James Mattis, former Wells Fargo CEO and chairman Dick Kovacevich, and former Bechtel Group CEO Riley Bechtel.

Why isn’t Prince Bandar on her board?

This sounds a lot like that Strategic Advisory Board for Genie Oil and Gas, which is drilling in the Golan Heights: Dick Cheney, Rupert Murdoch, Bill Richardson, Mary Landrieu, Lord Rothschild, Jim Woolsey, and Larry Summers.

This sounds like a good data mining project for moneyballing investors: which famous name on boards is most often associated with firms with something to hide? Can you detect patterns of board membership that have predictive value?

Maybe statistics would suggest that adding superlawyer David Boies to your Board isn’t a good sign?

David Boies – Director
David Boies is the Chairman of Boies, Schiller & Flexner LLP, an internationally recognized trial lawyer, legal advisor and counselor to boards of directors. Mr. Boies served as Special Trial Counsel for the United States Department of Justice in its antitrust suit against Microsoft; lead counsel for former Vice-President Al Gore in connection with litigation relating to the 2000 Florida vote count; and as co-lead counsel for the plaintiffs in Perry v. Brown, which established for the first time the federal constitutional right for gay and lesbian citizens to marry.

From the WSJ just after Christmas:

At Theranos, Many Strategies and Snags
Elizabeth Holmes’s blood-testing ambition has long collided with technological problems

By John Carreyrou

The night before a big meeting with a Swiss drug company in 2008, Theranos Inc. founder Elizabeth Holmes and a colleague sat in a Zurich hotel, sticking their fingers with a lancet.

They drew drops of their own blood to try the company’s testing machine, but the devices wouldn’t work, says someone familiar with the incident. Sometimes the results were obviously too high. Sometimes they were too low. Sometimes the machines spit out only an error message.

After two hours, the colleague called it quits, leaving Ms. Holmes still squeezing blood from her fingers to test it again.

Ever since she launched Theranos in 2003 when she was 19 years old and dropped out of Stanford University, Ms. Holmes has been driven by ambition that is big even by Silicon Valley standards. Instead of a smartphone app to hail a car or order food, she wants to revolutionize health care with a vast range of diagnostic tests run with a few drops of finger-pricked blood.

Now 31, Ms. Holmes has emphasized a variety of strategies—a hand-held device, tests for drugmakers, drugstore clinics—while trying to turn her dream into a business. She often has collided with technological problems, according to interviews with more than 20 former Theranos employees, company emails and complaints filed with federal regulators.

In Switzerland, she went ahead and pricked her finger in front of a group of Novartis AG executives at the meeting the next day, testing for a protein that measures inflammation, says the person familiar with the incident.

All three of her Theranos devices flickered with error messages, the person says. Ms. Holmes was unfazed, blamed a minor technical glitch and continued to pitch the vast potential of her technology.

At the WSJDLive 2015 conference, Theranos founder and CEO Elizabeth Holmes discusses her company’s proprietary technologies, the FDA’s inspection of its facilities and the assertion that Theranos was too quick to market its products.

Ms. Holmes and several current or former Theranos directors declined interview requests. A spokeswoman for Theranos, Brooke Buchanan, says Ms. Holmes recalls only one machine with an error message, because someone tripped over the cord. A second machine ran perfectly, and the third wasn’t used, the spokeswoman says. A Novartis spokeswoman wouldn’t comment.

Since a Wall Street Journal article in October, Ms. Holmes has defended the Palo Alto, Calif., company’s laboratory work and promised to publish data proving the accuracy of its more than 240 tests, ranging from pregnancy to diabetes.

She said earlier this month that customer volume was higher than ever. The company has said it performed millions of tests, with highly positive feedback.

For now, though, Theranos has stopped collecting tiny samples of blood from patients’ fingers for all but one of its tests while it waits for the Food and Drug Administration to review the company’s applications for wider use of the small proprietary vials called “nanotainers.” As a result, Theranos is using traditional lab machines for most of its tests.

But it turns out that back in 2003 she only came up with the idea that it would be awesome to invent some revolutionary new method for testing blood that wouldn’t require a big needle. (Getting rich off a replacement for the needle isn’t a wholly original idea, either. In the 2000 movie Boiler Room, a fictionalized version of The Wolf of Wall Street shenanigans, the boys are pushing a penny stock firm said to have invented a replacement for the hypodermic needle.)

The various devices that Theranos’s engineers have come up with since then evidently haven’t worked well enough to get FDA approval, so Theranos has apparently been using its large sums of investor money to have the blood tests it does at drug stores processed the old-fashioned way. (And / or deliver not very reliable results.)

This kind of fake-it-until-you-make-it strategy is hardly unknown. I suspect numerous successful companies went through just such a ploy of promising a revolutionary cheaper technology and then delivering on contracts using an expensive old fashioned technology until making the new tech work.

Of course, so did lots of ultimately unsuccessful companies.

It’s also not uncommon in Silicon Valley for entrepreneurs who are funded for their original idea to get repurposed into working on something else when the original idea proves a dud, but the investors still like the founders’ personalities.

Obviously, she’s good at impressing important men. That’s a remunerative skill, even without being an inventor. The interesting question is why didn’t she get redirected away from a field, biotechnology, in which she had no particular technical skills to one in which her abundant people skills would be useful?

But perhaps the Elizabeth Holmes’ reality distortion field was so strong that all the venture capitalists and famous board members backing her never noticed that she actually wasn’t a genius biotech inventor? Or did it have something to do with everybody who was anybody getting too invested in the idea that it was time for Silicon Valley to have a female Steve Jobs (she wears black turtlenecks like Jobs) to notice?

P.S., Back in October, Holmes was named to the Board of Trustees of the Center for Strategic & International Studies:

CSIS Names 9 New Members to its Board of Trustees
OCT 1, 2015
WASHINGTON, October 1, 2015—The Center for Strategic and International Studies (CSIS) is pleased to announce that Erskine Bowles [Clinton Administration chief of staff], William Daley [Obama chief of staff], Stanley Druckenmiller [formerly Soros Management Fund], Martin Edelman [real estate legal rainmaker active in Persian Gulf gigadeals], Elizabeth Holmes, Ronald Kirk [black mayor of Dallas, US Trade Rep], Leon Panetta [got Osama as CIA boss, then Sec of Def], Bob Schieffer [Face the Nation], and Frances Townsend [chair of Homeland Security Council under Bush] have joined the CSIS Board of Trustees.

 
• Category: Economics • Tags: Elizabeth Holmes, Silicon Valley, Theranos 
Almost 7 billion people live in countries poorer than U.S., 6 billion in countries poorer than Puerto Rico
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SevenBillion3d-g

Out of the 187 countries represented by spheres, highlighted countries from bottom left to top right include: Pakistan is the pink sphere, Nigeria black, India indigo, Indonesia dark red, China mint green, Brazil blue, Mexico brown, Poland purple, UK yellow, Germany green, and USA red-white-and-blue red.

It’s hard for Westerners to grasp how many people there are in the rest of the world, which is why we often treat frivolously data points that ought to be thought-provoking, such as the Gallup Poll’s finding that 640,000,000 adults want to immigrate. To increase awareness, here’s a graph I’ve created based on the International Monetary Fund estimates for 2015. It shows that almost seven billion people live in countries with lower per capita GDPs than America’s $56,000 (red sphere), most of them much lower.

On the vertical axis is GDP per capita (PPP), while on the horizontal axis is the cumulative world population at that GDP level or lower.

Each country’s population is proportional to the area of its disk.

The IMF doesn’t break out data for Puerto Rico, but it would fall on this graph between Mexico and Germany. One estimate of its per capita GDP is $29,529, while another is $34,938 (due to massive subsidies since the 1950s intended to persuade Puerto Ricans to stay home). In either case, over six billion people live in countries with lower per capita GDP’s than Puerto Rico. Yet, somewhere around 5/8ths to 2/3rds of all Puerto Ricans now live in the Fifty States.

And they’re still coming.

Poland, with a slightly lower GDP than Puerto Rico, represents a non-impoverished country that has been flooding wealthy London with jobseekers who underbid from Brits from the North. With Poland at least there’s some hope that the immigrants might actually return home someday. In contrast, nobody (except Puerto Ricans) seems to think Puerto Ricans will ever go home.

But the take-away lesson is that six billion people live in countries poorer than Poland and Puerto Rico.

By the way, Qatar, host of the 2022 World Cup, is literally off the chart at $144k per capita GDP, by far the highest in the world in the IMF tables. If helping out refugee Arabs is the world’s highest priority, why hasn’t the 2022 World Cup in Qatar been moved (to, say, 2010 host South Africa) and the $200 billion Qatar had budgeted to throw itself a party been freed up to help Qatar’s fellow Arabs and Muslims?

Under the fold is the data for this graph (downloaded from the IMF):

Country GDP Per Cap K Population (Mil) Cumulative Pop
Central African Rep. $1 5 5
Dem. Rep. of Congo $1 82 86
Malawi $1 18 105
Liberia $1 4 109
Burundi $1 9 118
Niger $1 18 136
Eritrea $1 7 143
Mozambique $1 27 170
Guinea $1 12 182
Guinea-Bissau $1 2 183
Madagascar $1 24 208
Togo $2 7 215
Comoros $2 1 216
Ethiopia $2 93 308
Burkina Faso $2 18 326
Kiribati $2 0 327
Sierra Leone $2 6 333
Rwanda $2 11 344
Mali $2 16 361
Haiti $2 11 371
Solomon Islands $2 1 372
Benin $2 11 383
Afghanistan $2 32 415
Uganda $2 39 454
Zimbabwe $2 13 467
South Sudan $2 12 479
Senegal $2 15 494
Vanuatu $2 0 494
Nepal $2 28 523
Tajikistan $3 8 531
Chad $3 12 543
Tanzania $3 49 592
Papua New Guinea $3 8 600
Lesotho $3 2 602
Micronesia $3 0 602
Cameroon $3 23 625
Djibouti $3 1 626
Kenya $3 44 670
São Tomé $3 0 670
Côte d’Ivoire $3 23 693
Marshall Islands $3 0 693
Tuvalu $3 0 693
Kyrgyz Republic $3 6 699
Cambodia $3 16 715
Bangladesh $4 160 875
Yemen $4 28 903
Ghana $4 27 930
Zambia $4 16 945
Sudan $4 38 984
Mauritania $4 4 987
Honduras $5 8 996
Pakistan $5 190 1,186
Nicaragua $5 6 1,192
Moldova $5 4 1,196
Tonga $5 0 1,196
Myanmar $5 52 1,248
Lao P.D.R. $5 7 1,255
Timor-Leste $5 1 1,256
Samoa $5 0 1,256
Uzbekistan $6 31 1,287
Vietnam $6 92 1,379
Nigeria $6 179 1,557
India $6 1,276 2,834
Bolivia $6 11 2,845
Cabo Verde $6 1 2,846
Republic of Congo $7 4 2,850
Guyana $7 1 2,851
Philippines $7 101 2,952
Armenia $7 3 2,956
Angola $7 25 2,981
Guatemala $8 16 2,997
Georgia $8 4 3,001
Swaziland $8 1 3,002
Morocco $8 34 3,036
Bhutan $8 1 3,037
El Salvador $8 6 3,043
Ukraine $8 43 3,086
Belize $8 0 3,086
Fiji $9 1 3,087
Paraguay $9 7 3,094
Jamaica $9 3 3,097
Bosnia $10 4 3,101
Sri Lanka $11 21 3,122
St. Vincent $11 0 3,122
Indonesia $11 255 3,377
Dominica $11 0 3,377
Egypt $11 88 3,466
Namibia $11 2 3,468
Ecuador $11 16 3,484
Tunisia $12 11 3,495
St. Lucia $12 0 3,495
Albania $12 3 3,498
Peru $12 32 3,530
Jordan $12 7 3,537
Grenada $12 0 3,537
Mongolia $12 3 3,540
South Africa $13 55 3,595
Serbia $13 7 3,602
Dominican Rep. $14 11 3,613
China $14 1,375 4,988
Colombia $14 48 5,036
FYR Macedonia $14 2 5,038
Iraq $14 37 5,075
Algeria $14 39 5,114
Thailand $15 69 5,183
Maldives $15 0 5,184
Turkmenistan $15 6 5,189
Costa Rica $15 5 5,194
Montenegro $16 1 5,195
Brazil $16 204 5,399
Libya $16 6 5,406
Venezuela $16 31 5,437
Barbados $16 0 5,437
Palau $17 0 5,437
Botswana $17 2 5,439
Suriname $17 1 5,440
Iran $17 79 5,519
Azerbaijan $18 9 5,528
Belarus $18 9 5,537
Bulgaria $18 7 5,545
Mexico $18 121 5,666
Lebanon $18 5 5,670
Mauritius $19 1 5,672
Turkey $20 78 5,749
Panama $20 4 5,753
Romania $21 20 5,773
Croatia $21 4 5,777
Uruguay $21 3 5,781
St. Kitts and Nevis $22 0 5,781
Argentina $22 42 5,823
Antigua $23 0 5,823
Chile $24 18 5,841
Gabon $24 2 5,843
Russia $24 144 5,987
Kazakhstan $24 18 6,004
Latvia $25 2 6,006
The Bahamas $26 0 6,007
Malaysia $26 31 6,038
Hungary $26 10 6,047
Poland $26 38 6,085
Seychelles $26 0 6,085
Greece $27 11 6,096
Equatorial Guinea $27 1 6,097
Portugal $28 10 6,108
Estonia $28 1 6,109
Lithuania $28 3 6,112
Slovak Republic $29 5 6,117
Slovenia $31 2 6,119
Cyprus $31 1 6,120
Czech Republic $31 11 6,131
Trinidad $33 1 6,132
Israel $33 8 6,141
Malta $35 0 6,141
Spain $35 46 6,187
Italy $36 60 6,248
New Zealand $36 5 6,252
Korea $37 51 6,303
Japan $38 127 6,430
Oman $41 4 6,434
United Kingdom $41 65 6,499
Finland $41 6 6,504
France $41 64 6,568
Belgium $44 11 6,580
Iceland $45 0 6,580
Denmark $45 6 6,586
Canada $46 36 6,621
Germany $47 81 6,703
Austria $47 9 6,711
Sweden $47 10 6,721
Australia $48 24 6,745
Taiwan $48 23 6,769
Netherlands $48 17 6,786
Ireland $51 5 6,790
Bahrain $53 1 6,791
Saudi Arabia $53 31 6,823
United States $56 321 7,144
Hong Kong SAR $56 7 7,151
Switzerland $59 8 7,160
San Marino $62 0 7,160
United Arab Emirates $65 10 7,169
Norway $67 5 7,174
Kuwait $71 4 7,178
Brunei Darussalam $72 0 7,179
Singapore $85 6 7,184
Luxembourg $93 1 7,185
Qatar $144 2 7,187
Syria
The Gambia
Kosovo
EndFragment
 
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With the federal government working up a new housing ploy, I figured it’s timely to dredge up the 2008 short story I published in The American Conservative:

 

Unreal Estate

Memorial Day Weekend, 2005

“So, this guy joins a monastery where he’s not allowed to talk.” Travis, your brother-in-law, is telling a joke. He’s told it to you before. “After five years, the head monk tells him he can say two words. ‘Tiny room,’ the guy answers.”

“That reminds me,” Travis continues, “You kids have been engaged, like, what? Two years now? That’s great. No rush to get married, not with the market the way it is in West LA. Who can afford to marry and settle down in LA? I couldn’t. Georgie Cooney can’t afford to get married in LA.”

While you’re trying to figure out whether Travis means actor George Clooney or boxer Gerry Cooney, he’s already onto his favorite topic, “Still, isn’t it time to buy a place of your own? I mean, West LA’s a great place to meet somebody, but, c’mon, are you going to entrust your kids — and I know how much my wife’s little sister wants some (you know how women are, they can’t keep a secret) — to the Los Angeles United School District?”

You have this conversation, if you could call it a conversation, each time you visit your brother-in-law’s house. Travis lives out in the Santa Clarita Valley, an hour or two north of West Los Angeles. You get on the 405 at Pico, head over Sepulveda Pass, down through the Valley, onto the 5 and up through Newhall Pass into LA County’s northern exurbs.

You’re sitting on the edge of the Travis’s deck, overlooking a canyon lined with oaks and sycamores. It’s hotter out here than back in West LA, where your $1900 per month one bedroom apartment doesn’t have air conditioning because it seldom gets over 82. It’s hot out here, but it’s not bad. There’s a breeze blowing with a hint of the far-off ocean.

Travis says, “I’d be all for you staying in LA if you were an entertainment lawyer or something where you need to be working with the stars. But you manage a drug store and Emma’s a nurse. People buy drugs and get sick everywhere.

“I bought this place in 2000 for $255,000,” Travis says, repeating a number you know by heart now. “Here we are, five years later, and the Schmidts next door just sold their’s for $810,000. So I’m up, what, six, seven hundred thousand? The home equity loans have paid for some nice vacations, I’ll tell you. My house is my ATM.

“I know what you’re thinking,” says Travis, who generally does know what you are thinking.

“You’re wondering why I’m the lucky bastard who turned 32 in 2000 and decided it was the right time in my life to get out of an apartment in LA and buy a house back when houses in California were cheap. Meanwhile, you’re 32 in 2005, when they’re expensive. Well, they seemed expensive then, too. But I took the plunge anyway.

“I also know you’re thinking you don’t have $810,000. Who does? That’s what they got mortgages for. And you’re good with numbers so you’ve already figured out what a 20 percent down payment on $810,000 is. It’s, like … a lot.

“Okay, coupla things you need to bear in mind.

“First, Emma’s told me about how your dad always talks about the years saving up for the 20 percent down payment he made when he got that 30 year fixed rate mortgage on his little place in Sherman Oaks. “That’s ancient history. Dude, nobody puts down 20 percent down anymore, no matter how iffy they seem.”

Travis’s voice has gone up a third of an octave. When he’s talking about the Lakers or whatever, he’s laidback. But when he gets going on real estate, which is more and more often over the last couple of years, he lets his inner Dennis Hopper out.

“These days, somebody arrives in California from Gautelombia and wants to buy a house, do you think they make him document his credit history? It’s in Spanish, and who knows how many million pesetas were worth a dollar in 1985, and besides, the courthouse in El Carrumbo collapsed in an earthquake anyway, so he doesn’t have a paper trail. Documents? He’s undocumented. He don’t need no steenking documents! He just pays some extra points on his rate, but that’s all on the backend. Everybody’s happy.

“Don’t you watch the news? The President says down payments are un-American because they keep minorities from buying houses. But you don’t have to be diverse to get a zero down loan. IndyMan is happy to hand them out to everybody.

“Second thing, Santa Clarita seemed like a long way out when I moved from Venice in 2000. So, maybe you got to move a little farther, like out to Palmdale, Lancaster. Antelope Valley’s the new Santa Clarita!”

You’re not quite sure how it happens, but ten minutes later, you’re standing on his driveway admiring the rims on Travis’s Lexus SUV, which are bigger than the tires on your Corolla. Soon, you’re rolling northeast on the 14, past the slanting Vasquez Rocks where, according to Travis, lots of Westerns were filmed, but you only remember them from Bill and Ted’s Bogus Journey. The highway turns north away from the mountains through the high desert. A sign says you are heading toward “Edwards AFB.”

“Edwards Air Force Base!” exclaims Travis. “T he Right Stuff, man! That’s where Chuck Taylor broke the speed barrier in 1957. This is All-American country out here,” he says, gesturing vaguely at the brownish-gray sagebrush. “Granted, it’s a haul from the jobs in LA, but with Iraq calming down now that they captured Saddam Insane, soon they’ll be pumping like crazy from those Iraqi oilwells and the price of gas will be back down to a $1.00 per gallon.”

You pass another sign. This one reads, “San Andreas Fault.” Travis doesn’t seem to notice.

Once off the highway, you see at least one person standing at every intersection twirling or jiggling a giant arrow pointing to an open house. “Human Signs,” nods Travis. “Like back in the Depression when guys would walk around wearing sandwich boards reading ‘Eat at Joe’s.’ But this is the opposite of a depression. Real estate commissions are six percent, so, on a $400k house, that’s $20k, which pays for a lot of twirling.”

Stretching off to the horizon are half-built houses and recently finished ones. Eventually, you follow one particularly active arrow to the Cypress Creek Estates. “Yeah, I know,” says Travis, “The nearest creek is 20 miles south and the nearest cypress tree is 100 miles west in Santa Barbara. But that’s not the point, the point is that everybody in Guatelombia grew up watching Baywatch and has wanted to move to California ever since. Do you know how many people there are in the world? Well, I don’t either, but, trust me, it’s a big number. There’s an endless supply of people who want to live in California. And their brothers, too! Do you think Bush is going to shut the borders? The President says, “Family values don’t stop at the Rio Loco.’”

Travis’s voice gets intense. “They’re coming, man, and nothing can stop them. It’s the American Dream!”

“Same with the money,” he continues, in a more relaxed tone. “When the Chinese get a check from Wal-Mart for a billion bucks for their latest boatload of plastic crud, they ask the smartest guy in Peking where to invest it. He calls up the smartest lad in London, who tells him, “Lend it to people buying California real estate. It’ll be safe as houses.” Nobody cares where they lend in California, just so long as it’s in California. You should see the prices they’re getting this year for dumps in Hawaiian Gardens, Bakersfield, Pacoima, Compton. Compton.

“See, in Abu Dubai, nobody knows nothing about Hawaiian Gardens, other than it’s in California. Over in Arabia, Sheik Rattleandroll thinks, ‘It’s like “Hawaii” and it’s full of “Gardens,” so how bad could it be?’

“Although, you’d figure,” muses Travis, shaking his head, “That by now, even an Arab would’ve heard of Compton.”

“There’s no stopping them. And the same with normal American people moving to the exurbs. Every year, kids get out of college and move from Mom and Dad’s house in the boring ‘burbs to an apartment in the sexy city. They love hanging out in Hollywood. But after ten years or so, they’ve found somebody. The one. They start looking at the price on those cute little cottages around the corner from their favorite restaurant on San Vicente. The price has seven digits. And it doesn’t start with a “one.” They wonder, “How does anybody buy in the city?” They finally realize: people do it family style. If they’re American and they buy on the Westside, then you know that Mom and Dad gave them a half mil, at least. If they’re Armenian, they have mom and dad move in with them, along with cousin Aram and his uncle-in-law. But Americans can’t live with their relatives. We go nuts. So, it’s out to the exurban frontier for us. It’s a perpetual motion machine.”

You pull up in front of an attractive Mediterranean-style model house. Two stories, 3,150 square feet, the sheet says. It seems enormous — both compared to your apartment and to its lot, with its miniature front yard consisting of a tiny sapling and a tinier sodded lawn. It’s hotter than in Santa Clarita, so the walk from the Lexus to the front door through the grit-laden wind has you sweating. “It’s breezy out here, but that’s good, it lowers the wind-chime factor,” observes Travis.

Then you’re hit by the blast of air conditioning, and you’re standing in the Great Room, with a 20’ ceiling. “Sure, it seems kind of big, but that’s the crucial element,” explains Travis. “What are they asking, $450k? That’s not a cost to you, that’s an investment, like joining a country club. The sticker price keeps out the riff-raff. You don’t want every peon in Guatelombia who grew up dreaming about Baywatch moving in next door to you, do you?

“What you want is like … well, look at Valencia High School near my house. It’s diverse. It’s … What does the LA Times call the neighborhood when there’s a gang shooting in South Central? … It’s vibrant. But Valencia High School is not too vibrant, if you know what I mean. Valencia’s like mostly white, some Asian, the black kids’ parents are all celebrities. The son of what’s his name, Wesley Snipe Dogg, rushed for 2,500 yards last year. The Latino kids are all from solid home-owning families, no accents, everybody’s dad is a contractor or something. You can’t afford to buy in my neighborhood if you aren’t in a cash business.”

One stair creaks loudly as you ascend to the lavish master bedroom suite on the second floor. “The construction’s just settling in,” assures Travis. “This house is only, it says here, nine months old. The owner is flipping it. Probably moving to a 4000 square foot house with the $50k he’s going to make and do it again. With a no down payment mortgage and a low teaser rate for the first two years (which you deduct on your 1040, by the way), that’s about a … a million percent return on investment. Can you get that kind of interest on your CDs?”

“In fact, I think I’m going to pick up one of these babies, too, and sell it in six months. We’ll be neighbors! Sort of. The mortgage company get a little snottier about down payments and interest rates when you tell them it’s an investment, so I’ll just check the “owner occupied” box. The broker doesn’t care. He gets his commission, then Countrywise bundles it up with a thousand other mortgages and sells it to Lemon Brothers. The Wall Street rocket scientists call this “secretization” because nobody can figure out what anything’s worth. It’s a secret.

“Lemon sells shares in the package all around the world. The Sultan of Brunhilde ends up owning a tenth of your mortgage. Do you think the Sultan’s going to drive around Antelope Valley knocking on doors to see if you’re really living there?”

“Maybe you’d like to come in with me on it, buy yourself a one-eighth share?”

 

Thanksgiving, 2005

The sky over the Antelope Valley is blue, your Marathon Sod minilawn is green, the temperature is 68, and your bride and her sister are cooking the turkey in your new granite counter-topped kitchen. Travis and you are standing in your driveway in Cypress Creek Estates, admiring the house you two own next door. Travis is explaining, “So, after ten years, the head monk, the abbatoir, tells the new guy he can say two more words. And the guy replies, ‘Roommate snores.’” By the way, this couple from Hermosa Beach counteroffered me $477k on our little investment. I told them I’d think about it. Nice people, they’d make good neighbors for you. But, I don’t think I’m going to sell it yet. I’m going to wait for an even $500k. There’ll be no problem getting that next spring. Yeah, it’s a nice neighborhood. Quiet.”

That it is. You don’t have all that many neighbors because about a third of the homes on the street appear to be unoccupied, owned by speculators waiting to flip them. And the people who do live on your street tend to start their commute to LA before dawn and get back after dark. It’s quiet, except on Sunday, when a stream of looky-loos pour through for the open houses.

 

Voice Mail, April 2006

“Hey, it’s Travis. Look, my accountant was crunching the numbers, and he says I’ve got a slight cash flow problem, what with me paying for 7/8ths of an empty house and the market not quite hitting our target price yet. So, he says that we should rent it out for awhile, just until we sell it. The thing is, what with everybody out there buying with no money down, there aren’t that many people left in the rental market. Most of the local jobs are in construction, building houses. (Well, construction and being a Human Sign.) Now, my accountant keeps the books for this contractor, who tells him he’s got some construction workers from this village down south who need a place to live. Real quiet hardworking types. You hablo un poco Espanol, right? If you need to talk to them, talk to their leader, Juan. He speaks Spanish. The rest of them only speak Mixed-Up. It’s an Indian lingo. But you won’t need to talk to them. They’re very quiet.”

 

July 2006

It’s Sunday afternoon. Travis peers down as you pry a flattened disk of lead out of the miniature crater in your driveway. “Well, they are real quiet, hardworking types from Monday through Friday,” he says. “You’ve gotta admit that. I guess they just want to relax on Saturday, have a little fiesta, drink some cerveza, shoot their pistolas in the air. It’s their culture. What are you, prejudiced?”

You look at Travis.

“Okay, okay, I’ll go talk to Juan.”

He comes back 20 minutes later. “Juan is gone, man. That’s what they kept telling me: ‘Juan is gone.’ One of the fellows had his stomach bandaged up. He just got back from the emergency room. I couldn’t quite follow what they were saying, but I think Juan had a bottle of tequila on Saturday night and stabbed this dude. Nothing serious. Just a friendly little argument. C’mon, they aren’t gangbangers, they’re working men … Okay, well, then Juan headed for the Border like OJ in his white Bronco. Juan is gone, and with the rent money they all owed us, too. Oh, man…”

 

Voice Mail, September 2006

“Hey, it’s Travis. I got good news. We’re not going to mess around anymore trying to extract our rent from some mob of illegals. No way, Jose. Instead, we’re going to get paid by check on the first of each month straight from the U.S. Treasury! The Department of Housing and Urban Development. Section 8 rent vouchers. They’re tearing down a housing project in the, uh, LA – Long Beach area, in, uh, Compton, I guess, to be precise, and they’ve got this highly respectable elderly grandmother who needs a place to stay with her family. Really cute grandkids. A few daughters, too. She wants a safe place with good schools to raise them. Actually, she’s not all that elderly. The HUD man said she’s 39. A church lady, you know, pillar of the community, big hat, all that. You’ll like your new neighbors.”

 

Voice Mail, December 2006

“It’s Travis. Okay, okay, I’ll admit that I hadn’t really thought through the part about the daughters having boyfriends, or grandma having boyfriends either, for that matter. But I think this whole Bloods v. Crips thing is being blown way out of proportion. It’s just graffiti. And lots of kids wear red these days. It’s a very In color. And these days all the young people make those goofy signs with their hands. For that matter, how can anybody know for sure that the Chevy that cruises by every night is full of MS-13 gangbangers planning a drive-by on the Bloods next door as payback for the race riots at the County Jail in Castaic? Are you sure you read the tattoos on their necks right? It’s nighttime, how can you be certain that their neck tattoos say ‘MS-13.’ Maybe they just have, like, ‘Mom’ tattooed on their necks. Did you think about that?”

 

May 2007

“So, after fifteen years, the abbadabbadoo tells the new monk he can say two more words, and—Whoa!” Travis flinches when the 120-pound Presa Canario lunges at him. The steel chain securing the dog to the front of the house across the street from your house snaps taut and its massive jaws come up short. “Man,” says Travis, shaken, “That’s one of those dogs that the Aryan Nation breeds to guard meth labs, isn’t it? What’s in that house? A meth lab? No, don’t tell me. I don’t want to know.”

“Look at this neighborhood,” he says, his dismissive gesture taking in the empty malt liquor bottles on the curb, the wheelless car jacked up on a brown front lawn, and the knots of sullen youths playing hip-hop and reggaeton on boomboxes. “All these speculators buy houses, hit a little bump in the road, need some cash, then start renting them out to lowlifes to get by until they can cash in. Property values drop like a rock. It would be no problem if just one investor did that, but when all these speculator jerks do it, the whole ‘hood is hosed.

“Oh, yeah, I came by to mention that in June the mortgage rates reset after two years. Bush put this new guy in at the Fed, Ben Barnacle, and he’s raised interest rates. So that will push up your share of the payment.”

 

Voice Mail, June 2007

“It’s Travis. Sorry to hear about you having to sell both your cars to make that new monthly nut. Taking the bus to work in that heat, man, that’s rough.

“But, that’s all history. I’ve got great news! I sold the house next door. To the Section 8 grandma. Who else would buy it? I only got what we paid for it, but I figure that was the smart play. She didn’t think she could qualify for the mortgage, but I told her to put down as her household income all the money made by all the people who have ever stayed there. What, is Washington Mutant going to be so racist as to question that a woman like her could have an income of $160,000?

“Don’t thank me for getting you out of that monthly payment. It’s the least I could do for you, bro.”

 

Phone call, October 2008

You pick up the ringing phone.

“It’s me, Travis. Long time no hear! Hey, I’m sorry about houses in your zip code being down 55 percent versus last year. Bummer.

“Anyway, I’ve been listening to Senator Omama’s speeches about how he is going to invest hundreds of billions to make America energy independent in ten years. So, I wanted to let you in on the next big thing. Alternative energy! When the Democrats get in come November, alternative energy will be bigger than houses. I’ve got great investments lined up with some start-ups in this emerging growth sector. Like biodiesel trolleys. Al Gore is this close to making a big investment. I just need a little help making the minimum required investment. They don’t need chump change. This is just for the big money boys. So, are you in or are you out?

You say nothing.

“Are you going to quit on me? Remember, quitters never prosper.”

You say: “I quit.”

Travis says: “Well, it’s about time. You’ve done nothing but bitch and moan since I met you.”

 
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Charles Murray writes in the Wall Street Journal:

Why the SAT Isn’t a ‘Student Affluence Test’
A lot of the apparent income effect on standardized tests is owed to parental IQ—a fact that needs addressing.

By CHARLES MURRAY
March 24, 2015 7:11 p.m. ET

… The results are always the same: The richer the parents, the higher the children’s SAT scores. This has led some to view the SAT as merely another weapon in the inequality wars, and to suggest that SAT should actually stand for “Student Affluence Test.”

It’s a bum rap. All high-quality academic tests look as if they’re affluence tests. It’s inevitable. Parental IQ is correlated with children’s IQ everywhere. In all advanced societies, income is correlated with IQ. Scores on academic achievement tests are always correlated with the test-takers’ IQ. Those three correlations guarantee that every standardized academic-achievement test shows higher average test scores as parental income increases.

But those correlations also mean that a lot of the apparent income effect is actually owed to parental IQ. The SAT doesn’t have IQ information on the parents. But the widely used National Longitudinal Survey of Youth contains thousands of cases with data on family income, the mother’s IQ, and her children’s performance on the math and reading tests of the Peabody Individual Achievement Test battery, which test the same skills as the math and reading tests of the SAT.

For the SAT, shifting to more than $200,000 of family income from less than $20,000 moved the average score on the combined math and reading tests to the 74th percentile from the 31st—a jump of 43 percentiles. The same income shift moved the average PIAT score to the 82nd percentile from the 30th—a jump of 52 percentiles.

Now let’s look at the income effect in the PIAT when the mother’s IQ is statistically held constant at the national average of 100. Going to a $200,000 family income from a $1,000 family income raises the score only to the 76th percentile from the 50th—an increase of 26 percentiles. More important, almost all of the effect occurs for people making less than $125,000. Going to $200,000 from $125,000 moves the PIAT score only to the 76th percentile from the 73rd—a trivial change. Beyond $200,000, PIAT scores go down as income increases.

In assessing the meaning of this, it is important to be realistic about the financial position of families making $125,000 who are also raising children. They were in the top quartile of income distribution in 2013, but they probably live in an unremarkable home in a middle-class neighborhood and send their children to public schools. And yet, given mothers with equal IQs, the child whose parents make $125,000 has only a trivial disadvantage, if any, when competing with children from families who are far more wealthy.

Why should almost all of the income effect be concentrated in the first hundred thousand dollars or so? The money itself may help, but another plausible explanation is that the parents making, say, $60,000 are likely to be regularly employed, with all the things that regular employment says about a family. The parents are likely to be conveying advantages other than IQ such as self-discipline, determination and resilience—“grit,” as this cluster of hard-to-measure qualities is starting to be called in the technical literature.

Families with an income of, say, $15,000 are much more likely to be irregularly employed or subsisting on welfare, with negative implications for that same bundle of attributes. Somewhere near $100,000 the marginal increments in grit associated with greater income taper off, and further increases in income make little difference.

Let’s throw parental education into the analysis so that we can examine the classic indictment of the SAT: the advantage a child of a well-educated and wealthy family (Sebastian, I will call him) has over the child of a modestly educated working-class family (Jane). Sebastian’s parents are part of the fabled 1%, with $400,000 in income, and his mother has a college degree. But her IQ is only average. Jane’s family has an income of just $40,000 and mom has only a high-school diploma. But mom’s IQ is 135, putting her in the top 1% of the IQ distribution.

Which child is likely to test higher? Sebastian is predicted to be at the 68th percentile on the PIAT. Jane is predicted to be at the 78th percentile. If you want high test scores, “choose” a smart but poor mother over a rich but dumb one—or over a rich and merely ungifted one.

One way of analyzing the effect of “privilege” — wealth and parental investment — on test scores and outcomes as adults would be to check how much an only child is advantaged relative to a child in a larger family.

For example, consider my wife v. myself. Harvard social scientist Robert D. Putnam’s new book Our Kids uses a super-simplified definition of class based solely on parents’ educational levels. By Putnam’s standards, my wife, whose mother and father both had masters degrees, would have grown up upper middle class. In contrast, my father had a junior college 2-year diploma and my mother had only a high school diploma, so I’d be lower middle class, I guess.

On the other hand, I was an only child, while my wife has three siblings. So, growing up, I never felt terribly strapped for money nor, especially, for parental time and energy, while my wife’s upbringing was more exigent.

Although you don’t hear about it much now that small families are the norm, back in my Baby Boom childhood, the privileged nature of being an only child — only children were widely said to be spoiled — was a frequent subject of conversation. This was especially true since I went to Catholic schools for 12 years, where very large families were common. For example, one friend, the class clown and best singer (his rendition of “MacNamara’s Band” in 4th grade remains a vivid memory), had eight siblings in his Irish family.

How privileged was I by being one of a family of three rather than one of a family of eleven?

My friend from the huge family has had a long, successful career as a TV sportscaster, along with some TV and movie credits as a comic actor. If you live in L.A., you’ve seen him on TV dozens of times over the last 30 years. So, growing up in a huge family didn’t ruin his life.On the other hand, if he’d been an only child with a real stage mother for a mom, I could imagine somebody with that much presence (his affect is reminiscent of that of the late Philip Seymour Hoffman or of a straight Nathan Lane) becoming a semi-famous character actor with maybe one or two Best Supporting Actor nominations.

Back during my more egalitarian childhood, people didn’t think that much about tutoring and Tiger Mothering, but, to some extent it works.

For example, I have had a pleasant life, but looking back I can see wasted opportunities. After my freshman year at Rice I came home and got a summer job at Burger King. After my sophomore year, I repaired dental equipment. Finally, after my junior year I worked as the assistant to the Chief Financial Officer of a big weedwacker manufacturing company. But what did the Burger King and repair jobs do for me other than teach me not to be a fry cook or repairman? These days I would have plotted to get internships in Silicon Valley or D.C. or Wall Street and had my parents pay my rent.

So, yes, I do think I was privileged to have the extra resources I was afforded by being an only child, even if I didn’t exploit my privileges as cunningly as I could have.

Quantifying how big a privilege that was seems challenging but doable. In fact, I’m sure somebody has done it already, and I invite commenters to link to studies.

It seems to me that measuring the effects of being an only child ought to be the first thing we do when we decide to theorize about Privilege.

By the way, however, there are other factors that may matter more in determining how Privileged you are. For example, my parents happened to turn out to be winners in the Great American Random Lottery of choosing a neighborhood to buy a home in during the 1950s — the demographics of their neighborhood have barely changed since the 1950s.

In contrast, my in-laws had the bad luck to draw what nightmarishly turned out to be one of the shortest straws in America: the Austin neighborhood on the West Side of Chicago. It was almost all white until Martin Luther King came to Chicago in 1966 to demand integration. Being good liberals, my in-laws joined a pro-integration group of neighbors who all swore to not engage in white flight. But after three years and three felonies against their small children, my in-laws were pretty much financially wiped out by trying to make integration work in Austin. And thus after they finally sold out at a massive loss, they wound up living in a farmhouse without running water for the next two years.

Bizarrely, while the once-pleasant street where my wife grew up in Austin looks nowadays like a post-apocalyptic wasteland, a couple of miles to the west is Superior Street in Oak Park, IL where my father grew up in the 1920s. It looks like an outdoor Frank Lloyd Wright museum today. The Wright district was saved by Oak Park’s secret, illegal, and quite effective “black-a-block” racial quota system imposed on realtors to keep Oak Park mostly white (and, these days, heavily gay).

So a not insignificant fraction of White Privilege in 2015 actually consists of whether or not the Eye of Sauron turned upon your parents’ neighborhood or not.

 
• Category: Economics, Ideology • Tags: Charles Murray, College Admission, IQ, SAT 
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A friend writes:

A few notes on the implications of China displacing the United States as the world’s number one country over the course of the 21st Century:

1. The Chinese business cycle will become the world’s business cycle (replacing the U.S.). It will be a huge shock the first time a recession hits the U.S. because China goes into a downturn. How might this work? A recession in China slashes Chinese demand for imports. Some of those imports are from the U.S. Others are from other countries, that in turn buy less from the U.S.

However, all of this is a bit indirect. The more likely (and powerful) mechanism is that a financial panic starts in China and spreads. There is plenty of history showing that financial panics typically don’t stop at national borders. The East Asian crash of 1997 was one example. The Great Recession was/is another. By contrast, the Argentine Great Depression of 2001-2003 was mostly limited to Argentina (Argentina is not a global economic power). Note that even in the 19th century, economic crises swiftly spread around the world.

2. China’s incessant demand for commodities drives global commodity prices up, and China’s exports drive the prices for manufactured goods down. Of course, this is already happening. Given that the U.S. is a net importer of commodities (by far) and an exporter of manufactured goods this is bad for U.S. terms of trade. Basically, China is a direct competitor to the U.S. in world trade and China’s growth tends to impoverish the U.S. Note that many economists already believe that the gains from cheap imports from China, have been more than offset by China’s impact on commodity prices (food and fuel).

Tangentially, does it seem like restaurant prices are going through the roof? A Cobb or chef salad at a diner now seems to start at $13.95. And how much am I supposed to be tipping these days?

3. At some point, China may become a political model for countries around the world. Given that China is a one-party state with a mixed economy, this will pain all sorts of folks on the left (and the right). Basically, the western political and economic model will lose credibility in favor of China’s. Of course, this is already happening. Notably, the ability of the West to influence the third-world, has substantially declined because of the willingness of China to provide political and economic support without the strings demanded by Europe and the U.S.A.

An NYT op-ed writer is already denouncing India’s new prime minister Modi for showing an interest in how things are done in China.

4. China may emerge as a dominant military power. History says that military power cannot be separated from real economic power. The dominant military power of each modern period has been the dominant manufacturing power. That meant the UK until around 1900 and the U.S. until around 2000. China is the leading manufacturing power of the world today. The gap separating China and the U.S. will only grow (much) larger over time. Manufacturing is crucial for war for two reasons. First, manufacturing provides the national wealth required to pay for war. Second, manufacturing (the manufacturing infrastructure) provides the means for actually producing the weapons needed for war. Note that services are not a substitute for manufacturing in this context. Services are not (typically) tradable and don’t provide the convertible currency income needed to fight international wars.

More specifically, the U.S. may end up fighting an aircraft carrier war with China at some point in the future. History suggests that the U.S. Navy could lose just quickly as Britain did in WWII. On December 10th, 1941 the Japanese sunk the Prince of Wales and Repulse in just a few hours ending British naval power in the Pacific. Conversely, the U.S. ended Japanese naval power with the destruction of Kito Budai (the main Japanese fleet) in the Battle of Midway. Like it or not, America’s carrier fleet could be destroyed just as quickly and just as decisively [and without nuclear weapons]. In one day (less), both the reality and perception of American global power could essentially evaporate.

5. China may become a dominant setter of technology standards. After all, if China is the dominant producer and consumer of some technology, why wouldn’t China’s standard(s) become the world standard(s). Of course, the dissemination of technology standards is never that simple. The rest of the world is metric, but that hasn’t driven metrification in the U.S. Conversely, the U.S. uses 120 volts, 60 cycle power. Most of the rest of the world does not. Even when the U.S. electric utility business dwarfed any other country, the ROW (Rest Of World) didn’t rush to embrace U.S. standards (120 volts is too low, 60 cycle is correct). All that having been said, China may become influential with respect to new technology standards even if the old ones don’t change much.

6. China may become a dominant source of technology innovations. That hasn’t happened so far. Only a handful of new technologies can be said to have been “invented in China”. However, this is to be expected. The early years of U.S. economic growth were mostly imitative. Indeed, the U.S. was notorious for violating foreign copyrights and patents and refusing to pay for the privilege (Dickens hated the U.S. for years). Japan was widely derided for years (decades) as a producer of cheap copies of American goods. When that stopped being the most profitable model for Japanese firms, they (Japanese manufacturers) invested heavily and successfully in innovative products and moved upscale. The same process can be observed in South Korea and Taiwan now. China will inevitably follow.

The notion that America has some inevitable advantage in “creativity” is popular, but I have a hard time even defining “creativity,” so I don’t put all that much faith in this theory of American dominance.

7. China will almost certainly become the dominant financial power in the world. China is already the world’s largest creditor and holder of foreign exchange reserves ($3.95 trillion). The U.S. is the world’s largest debtor. It’s obvious that creditors gain power and debtors decline. Sadly, the “supply-side” right is so obsessed with tax cuts for the rich and “free trade” (unlimited outsourcing) that they deny what’s self-evident to everyone else. Of course, the welfare-state left is just as unwilling to admit that debt and deficits aren’t free and hobble a nation over time.

8. More subtly, the Chinese language and culture may gain influence worldwide. At some point, Chinese authors, playwrights, movie producers, musicians, and artists may become highly influential globally. Chinese may become the mandatory second language for everyone (as English is now). In my view, the Chinese language is likely to gain global market share (for economic reasons) considerably faster than Chinese artists and musicians.

“Mandarin immersion” grade schools are popular among SWPLs since they act as NAM Repellents, but I haven’t seen much evidence that white people are actually learning to speak Chinese. For example, in 2013, only 520 high school students in America who say they didn’t grow up speaking Chinese got a 5 on the Chinese Language and Culture Advanced Placement test, which is higher than I would have thought, but still not much.

It remains to be seen if China can produce books, movies, songs, etc. that the rest of the world yearns for. Conversely, their no doubt at all about China’s ability to produce globally competitive goods.

A decade ago it looked like the Chinese would become competitive in movies. Zhang Yimou’s film “Hero” was spectacular, but the Chinese film industry hasn’t made much of an impression since.

Lately, Hollywood blockbusters have routinely included a segment filmed in China (with perhaps a shout-out to Russia in the plot), because China and Russia are developing American-style movie-going cultures where youths go to opening weekend movies. For example, Transformers: Age of Extinction opened this weekend with $100 million in America and $92 million in China (with $22 million in Russia). (Here’s my 2011 review of the previous Transformers movie.)

So, Hollywood’s strategy is simply to assimilate China into the Blockbuster Borg. So far, it seems like it’s working to head off the Chinese threat.

The American college admissions system is an important leverage point. The Chinese crave the status of American university degrees, which allows Americans to encourage the Chinese to learn to jump through the various SWPLifying hoops they choose to erect. Or they can just accept the Chinese money and test scores, no questions asked.

 
• Category: Economics, Foreign Policy • Tags: China 
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I’ve long been fascinated by the Affordable Housing racket. Josh Barro writes in the NYT:

Abington House, at 500 West 30th Street near the High Line in West Chelsea, is a new luxury residential building and, like a lot of new luxury developments in Manhattan, it’s extremely expensive. The cheapest two-bedroom apartment now listed there rents for $5,850 a month. That gets you only one bathroom; a two-bed, two-bath can run as high as $8,695.

But 78 apartments in the building, or 20 percent of the total, are set aside as affordable housing under New York City’s “inclusionary zoning” program. That means 19 two-bedroom apartments are priced from $687 to $873 — about a 90 percent discount to market rents. Those apartments were granted to 19 households that make from $25,612 to $42,950 a year and won a housing lottery the city held last year.

So that’s a discount of about $75,000 per year or so, presumably for many years. After all, how anxious would you be to move if you were getting $75,000 per year, tax-free, each year for staying in your luxury apartment? So, what’s the net present value of being chosen for an affordable housing unit in this building? A million dollars? What would you do to win a million dollar gift? (I mean, not you, personally, of course, but other people, those dishonest swine.)

The link goes to a Curbed article and the link to the city lottery appears to now be dead. But that’s still the least opaque process I’ve ever come across for handing out these affordable housing goodies.

I’m remind of when I applied my son to a charter school founded by his old teachers. They set up lots of hoops to jump through to apply for the lottery such as parents having to drop off applications in person and find out if he was chosen in person. I show up to find out if he was chosen in the lottery, all nervous, and the man with the clipboard of winners, who used to teach my son math, doesn’t even bother to look at it when he tells me my son got in. I asked him to check just to make sure my son is in, and he laughs at my naivete: of course my son, who got a 5 on the Biology AP in 7th grade, is in. What do the founders of this charter school look like, idiots?

I’ve never seen an article about who gets affordable housing units in the best new buildings. I think we are supposed to believe they routinely go to single welfare mothers from the South Bronx. But if you were paying $100,000 per year for an apartment, how happy would you be about riding the elevator with the single mom’s boyfriends?

Somehow, I suspect affordable housing apartments are more likely to go to, say, the nephew of a City Commissioner of Building Safety or, say, the daughter of another real estate developer who is an adjunct instructor of creative writing at NYU for $3,800 per class, or somebody else whom the paying tenants won’t complain about.

 
• Category: Economics • Tags: Housing 
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Harvard financial historian Niall Ferguson has gotten himself into the usual sort of Larry Summers / James D. Watson-style trouble for answering a question about economist John Maynard Keynes’s famous quip—“In the long run, we are all dead”—by cheekily pointing out that Keynes was a childless homosexual. There’s no transcript of his original remarks, but a writer who heard him speak wrote it up on his magazine’s website. [Harvard Professor Trashes Keynes For Homosexuality, By Tom Kostigen, fa-mag.com, May 3, 2013.]

Ferguson commented: “In the long run our children, grandchildren and great-grandchildren are alive, and will have to deal with the consequences of our economic actions.”

Ferguson has groveled, needless to say, but the Homintern is still pursuing him—see Niall Ferguson: Keynes Was Gay for Germany, by Jonathan Chait, nymag.com, May 7, 2013.

(In contrast to Keynes, the philoprogenitive Ferguson has three children by his first wife and one by his latest, the courageous anti-Islamist activist Ayaan Hirsi Ali.)

Ferguson’s off-the-cuff comments generated a vast global spasm of gasping and tsk-tsking. A Google search of “niall ferguson keynes gay” comes up with over two million hits.

Why the hysteria?

Because intellectual life has declined to the point where all that matters is Are You on the Side of the Good Guys or the Bad Guys? And the Good Guys are powerful groups of self-proclaimed victims.

Ferguson’s suggestion that family life can influence ideology is, of course, true. For example, Mitt Romney carried only 16 percent of the gay vote in 2012 in contrast to 57 percent of the married vote. Over the last four elections, the rate in each state at which whites are married has been the strongest determinant of the Electoral Vote.

But Ferguson felt it necessary to issue “An Unqualified Apology” [May 4, 2013]because he makes a lot of money giving speeches to financial organizations, so he can’t afford to offend Designated Victim Groups that play a major role within them—such as gays, Jews, and women. At this moment in our culture, gays are particularly dominant, and thus are looking for ways to throw their weight around to intimidate skeptics for good.

What’s more striking, though, are the Voluntary Auxiliary Thought Police who rush in to denounce heretics. As Dennis Dale commented during another recent brouhaha of ridiculous moral outrage:

The Left has routed us and is now chasing us into the weeds to cut us down individually–because they haven’t even the capacity to imagine doing anything else.

What are they going to do, declare victory and behave graciously? Where’s the fun—or more importantly the influence and cash—in that? They are like a vast standing army with nothing to do and no wish to return to civilian life.

Still, Ferguson was somewhat unfair. Keynes (1883-1946) betrayed today’s conventional wisdom by doing the supposedly impossible: he converted, permanently, from a homosexual lifestyle to a heterosexual lifestyle when—to the shock and dismay of his former Bloomsbury boyfriends—he married the popular ballerina Lydia Lopokova in 1925.

He wasn’t under any particular social or career pressure at the time. He just switched his affections.

Moreover, we can see that Keynes was concerned about the welfare of future generations of the British from his lifelong advocacy of….(wait for it) eugenics!

After all, in 1911 Keynes, along with the great statistician and geneticist Ronald A. Fisher, R.C. Punnett, and Horace Darwin, helped found the Cambridge Eugenics Society. Keynes was a eugenics activist throughout his life, serving as an official of the national eugenics promotion organization from 1937-1944. In the year of his death,1946, Keynes made a speech citing eugenics as “the most important and significant branch of sociology.”

If Ferguson had excoriated Keynes for pushing eugenics, he would have not heard a peep of criticism. He just forgot who is riding high at the moment and who is not.

While the economist indeed had no children (his wife apparently miscarried in 1927), his brother, Sir Geoffrey Keynes, the leading surgeon, married Charles Darwin’s granddaughter. Their son, the scientist Richard Darwin Keynes, married the daughter of a Nobel laureate. The economist’s great-great-grandnephew Skandar Keynes is the young movie star who played Edmund in the Narnia series.

Still, Ferguson’s sniping offered a not unreasonable summary of the overall agenda of the Bloomsbury Group of North London intellectuals, which included Keynes and novelists E.M. Forster (A Passage to India) and Virginia Woolf (Orlando). Perhaps more books have been written about the upper-class Bloomsbury clique than about any similar group. The most famous members were homosexual or bisexual, and the relationship of their sexual orientation to their aversion to the traditional Victorian virtues has been analyzed at endless length. Ferguson’s crime, of course, is simply that he mentioned this correlation with less than full approbation.

Bloomsbury was run by a former boyfriend of Keynes, Lytton Strachey. A conscientious objector, Strachey had succeeded in 1916 in being exempted from conscription due to his doctors’ excuses. During a hearing, he was famously asked:

“Tell me, Mr Strachey, what would you do if you saw a German soldier attempting to rape your sister?”

“I should try to interpose my own body.”

Strachey’s 1918 bestselling attack on 19th Century worthies, Eminent Victorians, popularized gay snark. Strachey’s undermining of the sense of duty laid the basis for the intellectual climate of pacifism and appeasement that triumphed, so catastrophically in Britain, in the 1930s.

As Paul Johnson noted in Modern Times, the goal of the Bloomsberries was to sap the Victorian public virtues that had put Britain on the top of the world by the later 19th Century in favor of private pleasures (of a muted English variety). Strachey had seized upon the Cambridge philosopher G.E. Moore’s quietist, anti-patriotic endorsement of friendship and made it the central ideology of the Bloomsbury coterie. Thus, Forster notoriously wrote (in 1938!):

If I had to choose between betraying my country and betraying my friend I hope I should have the guts to betray my country.

Of course, under Strachey’s guidance, Moore’s notion of “friendship” was given a particular twist that had to be kept half-concealed under a vague impression of aestheticism. Bloomsbury was, in essence, a languid, elitist homosexual conspiracy.

Strachey wrote to Keynes in 1906 about the short-term difficulties facing their project and its long-term prospects of success:

It’s madness of us to dream of making dowagers understand that feelings are good, when we say in the same breath that the best ones are sodomitical. If we were crafty and careful, I dare say we’d pull it off. But why should we take the trouble? On the whole I believe that our time will come about a hundred years hence, when preparations will have been made, and compromises come to, so that at the publication of our letters, everyone will be, finally, converted. [Bloomsbury's final secret, By Paul Levy, Telegraph (UK), March 14, 2005]

Emphasis added.

Yet, in contrast to Strachey, Forster (who didn’t write a single novel over the last 46 years of his life), and Woolf (who killed herself in 1941), Keynes himself turned out to be made of sterner stuff. He made an unexpected transition from hedonist to something of a hero as he more or less worked himself to death in the service of his country from 1939 to 1946, dying of a series of heart attacks at age 62—35 years younger than his father and mother, who both survived him.

Whether Keynes’ impressive last two decades had something to do with his marrying a woman is an interesting question—which, naturally, hasn’t been asked in the current tumult. The other Bloomsberries were frightfully snobbish toward the new Mrs. Keynes, whose father had been born a serf, even though other great men, such as T.S. Eliot and H.G. Wells, found her a delight. But Keynes didn’t particularly care about his coterie’s disdain for his wife. He loved her.

I used to have opinions on macroeconomic theories, but I found I didn’t have anything useful to contribute, so I’ve stopped. But I will venture that, whatever else you can say about Keynes’ The General Theory—published in 1936, a decade after his marriage—it’s formidable piece of work.

The next year, Keynes suffered his first heart attack. His wife, who had been a dance partner of Nijinsky, a model of Picasso, and a mistress of Stravinsky, retired from the glamor of public life to nurse him. Eventually, Forster had to admit , “How we all used to underestimate her.”

Nevertheless, Keynes took an active role in wartime economic policy from 1939 onward, increasingly in setting up the postwar institutions such as the IMF and the World Bank. The American Treasury official Harry Dexter White (who was a Soviet agent) had the greater say in the negotiations, but Keynes kept Britain from being steamrollered.

Worn out, Keynes died in 1946 at age 62, but with the basic Bretton Woods template in place that would serve adequately through the 1960s. Most everybody else in Keynes’ carefully crafted genetic line lived into their 90s, so the speculation down through the years on whether a nonagenarian Keynes would have stuck with dogmatic Keynesianism after, say, the disasters of 1973 are not wholly absurd.

More reasonably, though, it’s enough to say that the postwar dispensation that Keynes had a hand in designing in the mid-1940s proved more economically successful than the interwar one, serving reasonably well for a quarter of a century.

So Niall Ferguson’s point about Keynes is really interesting—even more interesting topic than he may have realized. Unfortunately, in today’s Politically Correct Reign of Terror, that could mean even more trouble for him.

Steve Sailer (email him) is movie critic for The American Conservative and writes regularly for Takimag. His websitewww.iSteve.blogspot.com features his daily blog. His book,AMERICA’S HALF-BLOOD PRINCE: BARACK OBAMA’S “STORY OF RACE AND INHERITANCE”, is available here and here (Kindle)

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Niall Ferguson 
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The econosphere has been abuzz for several years with NYU professor Paul Romer’s plan to bring the benefit of Good Institutions to Central America by building “charter cities” in the banana republic of Honduras. (Here’s Romer’s 2011 TED talk.) As economist Daron Acemoglu has explained, the only thing that differentiates a rich country from a poor country is that the former has Good Institutions. So, what the Third World needs is for American economists to plan for them private chartered cities with world class Good Institutions. It’s a no-brainer.

Thus, Romer worked out a deal with the government of Honduras to turn state of the art development economics theorizing into reality by building three private cities in Honduras.

What could possibly go wrong? Who could object to such a high-minded, altruistic initiative? 

Well, there are always petty carpers everywhere. For example, a Honduran peasants rights lawyer named Antonio Trejo Cabrera disliked Romer’s proposal. The Montreal Gazzette reported yesterday:

Trejo had also helped prepare motions declaring unconstitutional a proposal to build three privately run cities with their own police, laws and tax systems.

In Honduras, however, they have time-honored ways of cutting through red tape and nuisance lawsuits:

Antonio Trejo Cabrera, 41, was shot five times while attending a wedding in the capital, Tegucigalpa, the Peasant Movement of the Valley of Bajo Aguan said in a statement. 

Trejo was a lawyer from three peasant co-operatives in the Bajo Aguan, a fertile farming area plagued by violent conflicts between agrarian organizations and land owners. More than 60 people have been killed in such disputes over the past two years. The lawyer had recently helped farmers gain legal rights to several plantations…. 

Just hours before his murder, Trejo had participated in a televised debate in which he accused congressional leaders of using the private city projects to raise campaign funds.

Meanwhile, Professor Romer has announced (see Marginal Revolution) that he has been frozen out of his oversight role by the government of Honduras, so he’s washing his hands of the whole deal.

An earlier American intellectual who had had big plans for Honduras, the filibuster William Walker, who wanted to add Central American countries to the United States as slave states, died by firing squad in Honduras in 1859. Professor Romer should be glad he’s out of there without enduring the fate of Walker and Trejo. 

It almost seems as if land ownership in Central America is very serious stuff. (Remember the Death Squads of the 1980s?) Maybe it’s hard for American theoreticians to figure out what’s really going on in places like Honduras because the truth is only whispered about among locals for fear of ending up like the brave Attorney Trejo.

Perhaps political power does come out of the barrel of a gun.

This fiasco resembles a miniature version of how the Harvard econ department helped provide intellectual air cover for budding oligarchs stealing much of the assets of Russia in the 1990s. Isn’t it about time for economists to do some soul-searching and collective self-criticism?

(Republished from iSteve by permission of author or representative)
 
• Category: Economics • Tags: Political Economy, Real Estate 
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Asks Don Boudreau in the WSJ.

My impression was that Friedman was a public admirer of Keynes. (Here’s a brief video of Friedman saying nice things about Keynes.) John Maynard Keynes was, obviously, a genius. Bertrand Russell, who didn’t like Keynes, said of him:

Keynes’s intellect was the sharpest and clearest that I have ever known. When I argued with him, I felt that I took my own life in my hands, and I seldom emerged without feeling something of a fool. I was sometimes inclined to think that so much cleverness must be incompatible with depth, but I do not think this feeling was justified.

None of this means that Keynes was necessarily right in his macroeconomics or that Keynes’ self-proclaimed followers are right about what to do in novel situations two-thirds of a century after his death, just that it’s silly to treat Keynes as less than a heavyweight.

(Republished from iSteve by permission of author or representative)
 
• Category: Economics 
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Ron Unz has a big article in The American Conservative on a perennially interesting and important subject:

Race, IQ, and Wealth 

What the facts tell us about a taboo subject 

By RON UNZ • July 18, 2012 

At the end of April, Charles Kenny, a former World Bank economist specializing in international development, published a blistering attack in Foreign Policy entitled “Dumb and Dumber,” with the accusatory subtitle “Are development experts becoming racists?” Kenny charged that a growing number of development economists were turning towards genetic and other intrinsic human traits as a central explanation of national economic progress, often elevating these above the investment and regulatory issues that have long been the focus of international agencies. 

Although Kenny suggested that many of his targets had been circumspect in how they raised these highly controversial ideas, he singled out IQ and the Wealth of Nations, published in 2001 by Richard Lynn and Tatu Vanhanen, as a particularly extreme and hateful example of this trend. These authors explicitly argue that IQ scores for different populations are largely fixed and hereditary, and that these—rather than economic or governmental structures—tend to determine the long-term wealth of a given country. 

Kenny claimed that such IQ theories were not merely racist and deeply offensive but had also long been debunked by scientific experts—notably the prominent biologist Stephen Jay Gould in his 1980 book The Mismeasure of Man.

Read the whole thing there.

 
• Category: Economics • Tags: IQ, Race 
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Political scientist Elinor Ostrom has died. In 2009, she became the first woman winner in the four decades of the Economics quasi-Nobel Prize. She worked on the question of the various ways people arrange to avoid “the tragedy of the commons” of over-exploitation of common resources, such as fisheries.

Jared Diamond notes that there are three possible solutions to what Garrett Hardin called “the tragedy of the commons,” or the tendency for individuals to over-consume resources and under-invest in responsibilities held in common, leading to ecological collapse.

Government diktat.

Privatization and property rights — but that’s often impractical with some resources, such as ocean fish.

Diamond writes: “The remaining solution to the tragedy of the commons is for the consumers to recognize their common interests and to design, obey, and enforce prudent harvesting quotas themselves. That is likely to happen only if a whole series of conditions is met: the consumers form a homogeneous group; they have learned to trust and communicate with each other; they expect to share a common future and to pass on the resource to their heirs; they are capable of and permitted to organize and police themselves; and the boundaries of the resource and of its pool of consumers are well defined.” 

A classic supporting case that that Diamond doesn’t bring up: American shrimp fishermen in Texas were universally denounced as racists in the late 1970s when they resisted the government’s efforts to encourage Vietnamese refugees to become shrimpers in their waters. French director Louis Malle made a movie, Alamo Bay, denouncing ugly Americans fighting hardworking immigrants.

What got lost in all the tsk-tsking is that fishing communities always resist newcomers, especially hardworking ones, because of the sizable chance that the outsiders who don’t know the local rules or don’t care about them will ruin the ecological balance and wipe out the stocks of fish.

The evidence Diamond assembles indicates, although of course he never dares to state it bluntly, that the fundamental requirement for dealing effectively with environmental danger is: start with a population that’s limited in number, cohesive, educated, and affluent.

A quick Google search finds Nobel Laureate Ostrom also cautiously expressing Doubts About Diversity in her book The Drama of the Commons.

… Alesina et al. (1999) find that ethnic diversity is associated with lower public goods funding across the U.S. municipalities because different ethnic groups have different preferences over the type of public good … In the kind of rural societies considered in this chapter … the effectiveness of social sanctions weakens as they cross ethnic reference groups. In this vein, Miguel (2000) constructs a theoretical model where the defining characteristics of ethnic groups are the ability to impose social sanctions within the community against deviant individuals and the ability to coordinate on efficient equilibria in settings of multiple equilibria. With data from the activities of primary school committees in rural western Kenya, Miguel then shows that higher levels of ethnic diversity are associated with significantly lower parent participation in parent meetings, worse attendance at school committee meetings, and sharply lower teacher attendance and motivation. 

If social groups (not solely ethnic groups) are defined as those whose boundaries coincide with the effective monitoring and enforcement of shared social norms … this is one way of understanding the notion cited earlier of cultural homogeneity, a variant of what many authors have called social capital or social cohesion. … Irrigation organizations that cross village boundaries can rely less on social sanctions and norms to enforce cooperative behavior …

There are basically two ways to get people to play nice with a common resource such as shrimp or irrigation water: violence or ostracism. The latter works most effectively regarding marriage — if you don’t play by the rules, nobody respectable will let your kid marry his daughter. But when newcomers who don’t ever want their children to marry your children arrive and start exploiting your irrigation system or fishery (or whatever), then the old non-violent traditions break down, and people start turning to violence or its threat, whether anarchic or government-based (e.g., socialism and property rights are based on the threat of the government’s monopoly on violence). 

(Republished from iSteve by permission of author or representative)
 
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[See also by Steve Sailer: Charles Murray Gets Readmitted to Polite Society—At A Price: Ignoring Immigration]

Charles Murray has made the widening of class divisions in America since the relatively egalitarian Eisenhower-Kennedy era the theme of his current book, Coming Apart: The State of White America, 1960 – 2010. Indeed, the phenomenon has been remarked by observers as ideologically disparate as Pat Buchanan, Paul Krugman, and Benjamin Schwarz.

But why did class divisions widen? Murray says, in a throwaway line in Coming Apart, that the growing problems of the white working class don’t have much to do with race or immigration. Of course, these days, you have to say that to be accepted in polite society. Only poor white trash would think otherwise.

In fact, it’s obvious that class, race, and immigration are indeed intimately intertwined in complicated ways. But we are less and less equipped to understand them—as class taboos harden over what refined folk are supposed to notice about race and immigration.

In my next article, I will review some of the substantive ways that immigration impacts the white working class.

But for now let’s consider the evolution of ideological norms in the upper reaches of American society that has largely taken this question off the table. Among the intelligentsia, why has not thinking intelligently about immigration become a mark of gentility?

The most obvious explanation: class-based economic self-interest. People higher up the social pyramid compete less with immigrants, especially illegal immigrants, and employ them more.

But this straightforward class account has been self-servingly obscured, in recent years, by the imposition of taboos borrowed from the subject of race. In 1994, Murray notoriously transgressed the boundaries of good taste by co-authoring with the late Richard J. Herrnstein an 845-page work of social science, The Bell Curve. The book was mostly about class. But nobody remembers that because the fraction on race so scandalized the bien-pensants.

Since then, the immigration debate has been increasingly paralyzed same racial taboo. Yet as late as the beginning of the 21st century, it was common for the Main Stream Media to regard limiting immigration for the benefit of the working class as thinkable and even logical.

This change can be traced in New York Times editorials on immigration. Today, when reading the Times’ frenzied editorials demonizing immigration patriots as evil nativists, it’s remarkable to recall that when I started writing for VDARE in 2000, the NYT editorial board and VDARE.com were substantially on the same side on illegal immigration. We both argued that massive unskilled illegal immigration was bad for the American working class.

For example, on February 22, 2000, the New York Times editorialized against what would become the central immigration policy push of the Bush-Kennedy-McCain establishment in that new decade. As Peter Brimelow noted at the time, it actually cited the work of George Borjas. It concluded:

“Amnesty would undermine the integrity of the country’s immigration laws and would depress the wages of its lowest-paid native-born workers. … The primary problem with amnesties is that they beget more illegal immigration. … It is also unfair to unskilled workers already in the United States.”

[Hasty Call for Amnesty, February 22, 2000]

Thus, back in 2000, the NYT itself was “nativist.” It was expressing concern about “native-born workers”— exactly as if their welfare should be of more concern to Americans than the welfare of foreign lawbreakers!

And this was a respectable liberal position back then. For example, Bill Clinton appointed a widely admired black lesbian, former Congresswoman Barbara Jordan, to chair a Commission on Immigration Reform. She reported back that not only should the laws against illegal immigration be enforced, but that legal immigration should be tightened, too. In 1996, Clinton publicly endorsed Jordan’s findings—although, of course, nothing was done, largely because the Smith-Simpson bill that embodied them was sabotaged by Republican Treason Lobby operatives led by Senator Spencer Abraham.

[Clinton Embraces a Proposal To Cut Immigration by a Third, By Robert Pear, NYT, June 8, 1995]

The NYT’s concern about the impact of immigration on native-born workers was in sharp contrast to the Wall Street Journal’s chief editorialist Robert Bartley, who had been calling for a five-word Constitutional amendment reading “There shall be open borders” since 1984.

From the standpoint of traditional class politics, the split between the New York Times and the Wall Street Journal on immigration was hardly surprising. The WSJ was the mouthpiece of employers who wanted to make higher profits by paying lower wages. In contrast, the NYT saw itself as defending to the interests of the American workingman, along with the Democratic Party. This is hardly to say that NYT editorials back then were written by rough-handed sons of toil—just that being on the opposite side of the class struggle from the WSJ was part of their self-image.

On July 23, 2001, however, the NYT editorial board announced in Rethinking Mexican Immigration that it would no longer fly to the right of George W. Bush on immigration:

“In the past, this page has opposed the idea of a new amnesty for Mexicans who have immigrated illegally to the United States in recent years. We expressed concern that legalizing their status would undermine the integrity of the country’s immigration laws, which were reformed in 1986, and depress the wages of the lowest-paid native-born workers.”

The reasons The Times then gave for its change of mind were less interesting than the tone—which was still civil.

Of course, the NYT was arguing with itself back then. So it’s perhaps unsurprising that it was polite.

But that phase of respectful disagreement quickly ended. By late in the decade, the Times’ editorials on immigration were rabid in their rage at the hateful nativists:

Of course, it’s not as if the demographic change the NYT editorial board cheers on for the rest of America has had much impact on them. The paper may have been bailed out by a Mexican monopolist who profits on every phone call home to Mexico, but it hasn’t hired illegal aliens to write its editorials cheap. Of the 18 NYT editorial board members today, one is black, one is Chinese, and the other 16 are white. None have Spanish surnames. [See list.]

Today, few are surprised that the NYT and the WSJ editorial boards are on the same side on immigration. In the 21st Century, high-class folks have increasingly put aside their differences to band together and denounce anybody who doubts the wonderfulness of mass immigration.

That raises the question: Whatever happened to class analysis on the Left? The collapse of the Soviet Union in 1991 may have finished off the prestige of class analysis outside of college English Departments. But there was always a modicum of insight that should not be wholly lost.

The Left used to have a ready-made set of class-based explanations for just about everything. For example, they said racial conflict in the Jim Crow South was stirred up by the landowning class to keep black and white sharecroppers from uniting against their oppressors. Similarly, the highly successful leader of the United Automobile Workers union, Walter Reuther (1907-1970), a pillar of the Democratic Party during its mid-Century dominance, preached black-white worker solidarity against management.

Maybe none of this ever made much sense. But it’s not notably less ridiculous than the new conventional wisdom that replaced it.

Occupy The BalletIn recent months, the Left has begun congratulating itself on rediscovering class with its Occupy Wall Street protests. Yet, a glance at the original poster in Adbusters that kicked off the movement should raise doubts. The irony is that this Photoshopped image of a ballerina surmounting sculptor Arthur Di Modica’s iconic symbol of Wall Street, Charging Bull, struck very few protestors as ironic. Ballet is perhaps the most expensive and aristocratic of all performing arts, having attained classical perfection under the patronage of the Czars. Ballet would wither without the rich.

But that’s the point of much Leftism in the 21st Century: to assert one’s expensive cultural refinement as against the hicks and rednecks. And, paradoxically, the most compelling way to establish one’s sophistication is by being ignorant about race.

The Victorians notoriously considered discussion of sex vulgar. Nice people didn’t notice. Likewise, elite Americans now believe that being well informed about race ( and, increasingly, immigration) is a sign of ill-breeding.

You can actually hear this at the movies, in the way that audiences of different classes now react to politically incorrect jokes. Working class Mexican-American audiences in Van Nuys exclaim with disapproving delight, “Ooooooohhhh, that’s racist”—rather like, I imagine, an 1870 Cockney music hall audience would respond with shocked titillation when a comedian referred to a woman’s “legs” rather than her “limbs.”

In contrast, upscale audiences at the $16 per ticket ArcLight Cinema on Sunset Boulevard shift around uncomfortably in their seats during racially inappropriate humor. Some even hiss, perhaps to make sure that everybody around them knows that they know which thoughts are improper.

After all, they may well reason, they’ve got more to lose than a bunch of losers in Van Nuys.

Murray might argue, with some truth, that the reason we so seldom hear about working class travails anymore is that the meritocratic sorting system is efficient enough to siphon off the smarter, more articulate youths into higher classes. But we should not ignore the role played by the American upper class’ sheer hostility toward its working class.

American elites have overseen the importation of a vast Hispanic population, largely working class or below. In pre-21st Century Marxist theory, this swelling of the ranks of proletariat could turn out bad for the upper classes if the workers ever overcame, to use Friedrich Engels’ term, their false consciousness.

And, indeed, we’ve seen the elites hype what looks an awful lot, when viewed from an old (but not necessarily utterly obsolete) Marx-Engels perspective, like a divide-and-rule strategy—forestalling any growth of working class political power by an ever-increasing MSM drumbeat urging Latinos to unite racially against whites to demand an ever larger “reserve army of the unemployed” be imported from south of the border.

Without massive immigration from Latin America over the last four decades, the U.S. Hispanic population would have become more diffuse. The more talented and ambitious would have married into the general population. Hispanics would have inevitably become even less of a potential political bloc.

But what actually happened was continued mass immigration—and government and opinion leaders actively working to retard Latin assimilation by rewarding Hispanic racialists with Affirmative Action money and prizes.

I recently tried to look up how big the Hispanic population was in 1960, the initial point in the half century covered in Murray’s book—only to find that the Census Bureau never asked about Spanish background in the 1950 and 1960 enumerations. During the more idealistic early civil rights era, Hispanics were officially considered just plain white. But that changed as the Quota Era took off from 1969 onward and it began to pay to be officially a minority.

Gestures of transracial class solidarity were not unknown in the past. In 1969, Senator Walter Mondale, Rev. Ralph Abernathy (Martin Luther King’s successor), and other liberal luminaries joined labor leader’s Cesar Chavez’s march along the Mexican border in protest against illegal immigration.

But today Chavez’s years of struggle against illegal immigration have almost completely disappeared down the Memory Hole as the MSM has posthumously converted him into the Patron Saint of Undocumented Workers.

In contrast, the most celebrated labor leader of recent decades has been Andy Stern, who headed the almost all-Hispanic Service Employees International Union from 1996-2010.

In sharp contrast to Chavez—a third-generation American who had actually worked in the fields and whose organizing strategy was based the logic of supply and demand—Stern’s role was largely to function as a Capitalist Front by demanding ever more immigration. He would sign up huge numbers of members for SEIU, but seldom achieved much for them because the supply and demand balance was so unfavorable.

This made Stern hugely popular with the Democratic Party (he was the most frequent visitor to the Obama White House in 2009), tolerable to business interests, and not much good at all at getting his rank and file higher wages. SEIU won one big janitors’ strike per decade: Los Angeles in the 1990s and Houston in the 2000s. But each victory would be celebrated in innumerable columns by Harold Meyerson in the Washington Post.

Among intellectuals, it’s hard to think of a single current left-of-center commentator who is in the tradition of Samuel Gompers, the immigrant Jewish labor leader who was a major leader in the successful fight to limit immigration in the early 20th Century. Off the top of my head, the only name I can come up with is Michael Lind. He’s been arguing since the 1990s that, if the Democratic Party actually represented the nation’s working class, it would cut back on immigration. For instance, here’s his “Huddled Excesses” piece in The New Republic of April 1, 1996:

“The greatest gain income by the American middle and working classes, both white and black, took place during the era of immigration restriction, from the 1920s to the 1960s. Not coincidentally, this was also the heyday of union membership … And, of course, it was the golden age of public support for universal entitlements and anti-poverty efforts. Coincidence? Not likely.”

Younger readers, familiar only with the Left’s intensified ideological rigidity on immigration, might assume that this was an April Fool’s Day hoax. It was not. But Lind’s influence seems to have diminished over the years.

One good thing about class conflicts in American politics: they are honestly mercenary. In American debate, class struggles don’t get drenched in misplaced Ellis Island ancestor worship the way ethnic issues do.

Consider, for instance, two major political issues of the 1890s:bimetallism and immigration.

Occasionally, somebody will show off by pointing out that L. Frank Baum’s 1900 children’s novel The Wonderful Wizard of Oz is an allegory about the struggle between the debtor class and the creditor class over the silver and gold standards (e.g., “Follow the Yellow Brick Road”). But, although bimetallism sounds comic now, it was a deeply serious issue at the time.

Nevertheless, nobody today displays any personal passion over the subject (other than to make fun of the chief spokesman for the debtors, William Jennings Bryan, for his views three decades later on Darwinism). There are no enduring divisions in today’s America based on whether your great-grandfathers were silver men or gold men.

We’ve moved on.

In contrast, the topic of Ellis Island is now enveloped in ethnocentric kitsch. The Progressive reformers who waged a long struggle to bring rational regulation to immigration are routinely subjected to character assassination in the 21st Century press as proto-Nazi eugenicists.

The issue of immigration is one of the weirder class phenomena of our era. Thus on St. Patrick’s Day, the New York Times ran an op-ed by a Maine-based novelist named Peter Behrens, [Email him] entitled: It’s About Immigrants, Not Irishness. [March 16, 2012]

No!—St. Patrick’s Day really is about Irishness!

The East Coast press tries to whip up racial animus against white Republicans among Latinos over immigration. Real soon now, we read over and over, the Republican Party will be washed away by the fast-growing Hispanic tsunami … unless, unless—unless the Republicans make sure that the number of Hispanic voters grow even faster!

More than a few elite journalists seem to obsess today over the immigration controversy in their great-grandfathers’ day, feeling it as a personal insult—a festering psychic wound that makes them so irate that they just want to…well, never mind about that, but the point is that surely Mexican-American voters must feel deep, righteous, burning racial hatred toward anyone who opposes Open Borders. I mean, who wouldn’t?

But the years go by. And nothing much happens electorally other than that Latinos tend to vote for Democratic tax-and-spend policies as self-interested representatives of their class, not as the ethnic avengers of New York journalists’ fantasies.

A long time ago, Michael Barone came up with the idea that Mexicans are the new Italians. So far, that hasn’t worked out in terms of economic mobility. And a glance at places where Hispanics have been living for many generations, such as New Mexico, suggests that it might not happen in this century.

But Barone was right in the sense that, when it comes to immigration policy, Mexicans vote like Italians—based more on their families’ current class interests rather than on racial memories. Italian-Americans are more middle class, and so they don’t vote solidly Democratic the way Mexican-Americans do. Italian-Americans can be found prominently on both sides of the immigration issue. They don’t seem to feel the need for an ethnic party line based on their ancestors coming through Ellis Island.

Thus, despite all the elite press effort to get Mexicans to feel simmering hatred over immigration, the numbers suggest that immigration is less of a big deal to Mexican-American voters than it is to the journalists sent to cover them.

Undaunted, the prestige press continues to predict that this will be election in which Hispanic Racial Rage (comprising, as it does, a towering 8.7%, percent of the electorate vs. some 72%.for whites) finally smites the descendants of our ancestors’ enemies for us!

Eventually, they may get what they’ve wanted. Will they be happy then?

Steve Sailer (email him) is movie critic for The American Conservative and writes regularly for Takimag. His websitewww.iSteve.blogspot.com features his daily blog. His book, AMERICA’S HALF-BLOOD PRINCE: BARACK OBAMA’S “STORY OF RACE AND INHERITANCE”, is available here.

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Charles Murray, Immigration 
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Is it a sign of progress in our intellectual life that early published reactions to Charles Murray’s bestseller Coming Apart: The State of White America, 1960 – 2010 have been less smugly dismissive, more non-berserk, more—dare we say?—thoughtful than could be expected?

Perhaps.

Keep in mind that Murray’s greatest solo book Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950, the product of a half dozen years of original research, disappeared almost without a ripple when published nine years ago. Why? Because Murray was still in Coventry for, along with co-author Richard Herrnstein, documenting in The Bell Curve what most people suspected is true.

Similarly, Murray’s 2008 book Real Education received relatively little recognition, even though it was likely his strongest in terms of policy recommendations (not the reason to read Murray anyway).

But, finally, Murray is apparently being readmitted back into the national discussion.

Although Coming Apart lacks the massive original research projects of The Bell Curve or Human Accomplishment, it is a graceful analysis of the American class system. You should buy it and read it.

In the meantime, to get yourself up to speed, the most thorough review is by F. Roger Devlin in The Occidental Quarterly [Elite and Underclass, January 9, 2012]. Other informative analyses are by Ed West in The Telegraph, [How Britain and America are coming apart, February 24th, 2012] Roger Lowenstein in Business Week (the best of the liberal reviews), Foseti at his blog, and mine in The American Conservative [The Bell Curve’s Toll, February 13, 2012].

In brief, Murray argues that the middle class society that dominated white America in 1960 is bifurcating. A flourishing upper middle class continues to follow the fundamental bourgeois norms of monogamy and parental investment in children, but no longer bothers to preach what it practices to the lower orders, who are suffering as a result.

Responses in the first month of publication fall into a number of categories, ranging from the most primitive reptilian brain expressions of loathing to the most sophisticated. Let’s consider the reactions under some stylized categories:

  • Why is anybody allowed to talk about Charles Murray? Doesn’t he have cooties? Shame!

CUNY academic and leftist enforcer Eric Alterman is furious that Murray hasn’t been permanently silenced after all of Eric’s past efforts. He risks an aneurysm by recounting for the umpty-umpth time Murray’s sins against goodthink:

“racist pseudoscience … found guilty… outright phony claims … fraud … fraud … fraud … reactionary politics … abuse of science … racist … Nazi sympathizers …”[Think Again: Charles Murray and the Power of Mainstream Media Amnesia, Center For American Progress, February 9, 2012]

Likewise, Joan Walsh complained in Salon:

I shouldn’t admit this, but I almost didn’t review Murray’s Coming Apart: The State of White America, 1960 to 2010. I told my editors it was just a mashup of his two most infamous books, Losing Ground and The Bell Curve … Only in this book, Murray confined his analysis to poor and struggling white people, to defuse charges of racism that greeted his two earlier bestsellers. …What do I know? Coming Apart is No. 9 on the New York Times nonfiction bestseller list, and it’s been reviewed, with varying degrees of respect, almost everywhere that matters. [My Debate With Charles Murray, February 14, 2012]

But, somewhat surprisingly, these represent the more demented fringe of the early responders.

Of course, Murray isn’t out of the woods yet. Most of the initial responses to The Bell Curve were rational and respectful. Only the berserk mutiny at The New Republic, where 15 staffers demanded to each publish their own ill-informed bile, portended the medium term future dominated by ignorant rage against The Bell Curve. [TNR,October 31, 1994]

As Daniel Seligman, author of A Question of Intelligence, which remains the best intro to I.Q., lamented:

A howling mob of liberal commentators not knowing what in hell they are talking about is a dispiriting spectacle, and media reaction to the Herrnstein—Murray book has been infinitely depressing. I cannot remember any other work of scholarship, in any field at all, that has been assailed so cavalierly by writers ignorant of the material and manifestly unconcerned about accurately representing its ideas. [Trashing The Bell Curve,National Review, December 5, 1994]

As Yeats observed:

The best lack all conviction, while the worst

Are full of passionate intensity.

Unfortunately, as Keynes is commonly said to have noted, “The markets can remain irrational far longer than you or I can remain solvent.” Similarly, the rageaholics can project their own loathing and ignorance upon you a lot longer than most outside observers can be bothered to try to figure out who the real haters are.

In the very long run, however, there are advantages to being right. Eighteen years after The Bell Curve, despite extraordinary exertions to prove it wrong, it’s hard to see much post-1994 evidence that Herrnstein and Murray weren’t right.

  • Charles Murray is, uh, controversial, if you know what I mean …

If you Google “Charles Murray” “Coming Apart” controversial you’ll get 11,000 pages. Talk about a cliché!

(And it’s is particularly amusing if you happen to know Murray, who is perhaps the most careful and judicious thinker in American life. He’s a sensitive soul who gets depressed by the mindless vitriol directed at him. Fortunately for us, he has an inner core on which is etched Illegitimi non carborundum.)

When I started reading newspapers and magazines in the late 1960s, the word “controversial” was used as praise, as a come-on. Today, it’s used to warn readers that you are supposed to avert your eyes.

Why the change? The main reason, I suspect, is that the people who were “controversial” in the late 1960s are now The Establishment.

Consider an intelligent corporate manager browsing in an airport bookstore before flying to DFW on business. He picks up a Murray book, flips through it. The data graphics are elegant and informative, the prose is lucid and understated, and the insights ring true to what’s he’s observed in his own life.

But didn’t he hear something about Murray once? That he was controversial? And the person denouncing Murray as controversial seemed very worked up. What if somebody reported to the HR department that he was seen reading a book by a controversial author? It could come up in discovery in a discrimination lawsuit! Better not risk it. Oh, look, here’s a little book by that Malcolm Gladwell who spoke at the company sales conference a couple of years ago – a much safer purchase!

  • “White America”?!? – That’s racist!

A number of the dimmer critics have gotten angry over Murray’s subtitle. Many, however, have accepted Murray’s explanation that looking just at non-Hispanic whites ages 30-49 is simply a methodological necessity to eliminate the impact of demographic change over the last 50 years. Otherwise, how can trends in class be accurately tracked?

So far, Murray appears to have gotten away with using the term “White America.” This marks a subtle landmark: to refer to “white America” with concern and even sympathy, indeed with any purpose other than derision and condescension, is quite new in the Main Stream Media.

I wouldn’t be surprised, though, if there is a backlash over the next few months against the legitimacy of being interested in the welfare of white America, as the volunteer Thought Police start to get clued in to how important this development may be.

  • Thank God he doesn’t talk about race.

Jennifer Schuessler wrote in the New York Times:

When Charles Murray and Richard J. Herrnstein’s book The Bell Curve appeared in 1994, it was denounced by social scientists, liberal pundits and a little-known Chicago civil-rights lawyer named Barack Obama, who in a commentary on NPR accused the authors of calculating that “white America is ready for a return to good old-fashioned racism [so] long as it’s artfully packaged.”

Anyone who remembers the firestorm over that 845-page doorstop’s dense arguments about race, class, genetics and I.Q. might be tempted to look at the cover of Mr. Murray’s latest book, Coming Apart: The State of White America, 1960-2010, and think, “Here we go again.”

[A Lightning Rod in the Storm Over America’s Class Divide, February 5, 2012]

But, Schuessler goes on to imply, this new book is not about race, so Murray is okay to read now.

From a lot of MSM reviews, you can pick up a widespread sense that being well informed about race is considered “inappropriate.” It’s in bad taste. Ironically, this book about the class system is showing that being ignorant about the basics of race in modern America is a mark of upper class refinement.

Of course, this sort of willful ignorance leads to all sorts of crazy lurches implicitly aimed at trying to Prove The Bell Curve Wrong—such as the No Child Left Behind law…or electing as President a little-known Chicago civil rights lawyer.

  • I’m working class, and I know better than Charles Murray.

Actually, in all my reading of reviews, this has not come up—which validates one of the book’s points—Murray makes clear that he expects that virtually all readers of his book will be from the upper end of the social scale.

Tellingly, I have yet to see any reviewer claim he’s wrong. More typical is Timothy Noah’s review in The New Republic, in which he recalls that back when he was growing up in Beverly Hills, there was still “a tacky Polynesian restaurant on Rodeo Drive.” [The Two Americas, February 20, 2012]

Because people love to reminisce about how they had to walk to school five miles through the snow uphill both ways, I suspect that absence of evidence of working class origins implies evidence of absence.

Murray helpfully includes a 25-question quiz so you can evaluate what class you are and how intellectually isolated you are from other classes. A score of 1 is the most insulated upper crust socialite (say,Caroline Kennedy or Theodore Roosevelt V); 100 being Clevon, the philoprogenitive trailer park denizen from the opening scene of Idiocracy. The highest score I’ve seen any reviewer claim for himself is talk show host Michael Smerconish’s 42. (I would guess that both Barack Obama and Mitt Romney would score below 25.)

Murray is from Newton, Iowa, but he grew up more middle class than working class: his father wasn’t a college graduate, but he became a manager for Maytag, the big home appliance company headquartered in Newton. The only MSM commentator to mention a similar small town background is Nicholas Kristof. He wrote a good column in the New York Times about how he sees the signs of decay that Murray describes when he visits his hometown of Yamhill, Oregon. [The White Underclass, February 8, 2012] (Both of Kristof’s parents, by the way, were college professors. Kristof went to Harvard and then to Oxford on a Rhodes Scholarship.)

Graham H. Seibert, an American social scientist who has become one of the most valuable Amazon reviewers, writing informative and insightful critiques of serious books, scored 41 on Murray’s quiz. More importantly, he notes that his first wife came from Philadelphia’s Fishtown neighborhood, which Murray uses as a synecdoche of the white working class—in contrast to Belmont, MA, where Mitt Romney long lived. Seibert says that Murray’s portrait of Fishtown is accurate:

“Fishtown in 2010 is a very different place. People simply don’t feel an obligation to either work or get married. There are many never married people, and many out of wedlock children. A lot of the guys are just bums—don’t work, don’t want to work, don’t want to get married, and waste their time watching television. An inordinately large number have figured how to game the system by qualifying for Social Security disability. Their attitude is that work is for chumps.”

  • It’s about time to mention the white working class.

Much of the impact of the book comes from the sheer novelty of the topic. I’ve read innumerable essays in this century in the New York Times Magazine alone about how crucial it is for society to send its finest young people into black and Hispanic schools and daycare centers. Kipling expressed this attitude memorably in 1899:

Take up the White Man’s burden—Send forth the best ye breed—Go send your sons to exileTo serve your captives’ need

But today’s conventional wisdom lacks both the sense of history and the sense of irony needed to get that joke.

On the other hand, nobody has much given a damn about white youths in the exurbs and hinterland.

The unfortunate reality: the white working class isn’t thriving, but it hasn’t caused much trouble for its social betters either, so they ignore it.

It’s striking that the white American working class lacks a non-ethnic expression of vigorous bad taste comparable to the chavs of Britain. In the U.S., we have the Jersey Shore phenomenon for Italian-Americans (and would-be Italians like JWoww), but that epitome of lowbrow vitality excludes most other ethnicities.

A decade ago, NASCAR served as a sort of ethnic pride rally demonstrating stratospheric levels of competence and courage for the kind of Americans who are not allowed to hold ethnic pride rallies. But stock car racing has been fading.

In fact, white working class men mostly seem kind of beaten down these days. They’re getting in a lot of couch time. Murray checks time use surveys and discovers that less educated white males are now spending increasing hours per weeks watching TV and sleeping. One of the book’s most indelible images is of the young dad tagging along behind his woman and her toddlers, head down, playing with his Gameboy.

  • What about other countries?

Blue-collar whites are doing reasonably well in Germany, but they seem to be falling apart even faster in Britain than in America.

Neither Coming Apart nor its critics explore this phenomenon.

Back in 2005, I offered half-dozen reasons for why British “youfs” were turning into Ali Gs more rapidly than their distant cousins in America.

One key reason: the chief divide in England is class, while in America it’s race. White working class Americans have retained one subliminal, unspoken bit of racial pride: they believe street crime is a black thing, not a white thing.

In confirmation, last August in England, blacks started looting and white yobs followed them into the streets. It’s hard to imagine that happening on a large scale in America. Historian David Starkey caused a huge uproar by saying on the BBC what everybody was sensing:

“What has happened is that a substantial section of the chavs … have become black. … The whites have become black. A particular sort of violent destructive, nihilistic gangster culture has become the fashion and black and white boys and girls operate in this language together.”

  • Things aren’t so bad.

Economist Paul Krugman argues:

“Reading Charles Murray and all the commentary about the sources of moral collapse among working-class whites, I’ve had a nagging question: is it really all that bad?”[A Strange Form of Social Collapse, New York Times, February 9, 2012]

After all, crime is down and so is teen pregnancy. What’s way up among working class whites are out of wedlock births and males dropping out of the workforce.

I would simply point out: Economists used to be familiar with the concept of ceteris paribus, that the way to analyze is by setting “all else being equal.” We live in the age of Moore’s Law, in which computing power doubles every year or two. That’s one of the most remarkable blessings ever bestowed upon humanity. Thus, life ought to be getting better. If it’s not, it may have something to do with whether there are taboos against open discussion of problems.

  • Who cares if white working class men don’t marry because they’d rather waste time on gaming, gambling, and porn?

Matthew Yglesias contends in Slate that video games are getting so awesome that it’s okay that dim guys spend more time twiddling X-Box controllers than trying to earn a living, because what kind of living could they expect to earn?

Murray would answer, following Aristotle, that true happiness is “a lasting and justified satisfaction with one’s life as a whole.”

I would add that Americans on the right half of the Bell Curve are going to have to subsidize their fellow citizens on the Left Half of the Bell Curve one way or another. The least corrupting way to do it is through a market system rigged slightly to bribing them into honest toil by not forcing their wages into a race to the bottom against everybody else on Earth. As Stalin might have called it: libertarianism in one country.

Moreover, Krugman and Yglesias are ignoring the impact on inequality. That’s supposed to be 2012’s buzzword, but everybody (including Murray) overlooks how raising, or merely maintaining, a young person’s status in life is becoming ever more dependent upon having two parents pushing him forward as a team. The growth in the number of Tiger Mothers and Eagle Dads makes it increasingly difficult for the children of broken homes to get ahead.

One point lacking in Coming Apart: a sense of how the upper middle class is not just negligent in moral instruction, but is actively re-engineering society to make it harder for working class youths to compete with their offspring. For example, applying to college these days requires two parents cooperating closely, maybe a tutor, a consultant to write the essays, and a well-off extended family to pass along crucial tips. Oh, and it’s a good idea to redshirt your son by having him repeat kindergarten so he’s bigger and smarter and more socially dominant than his classmate. Of course, this means you’ll have to support him for an extra year. And then he’ll need to intern without pay to get started in his career, so you’ll have to support him then, too.

Working class families just can’t compete.

  • Murray claims the rich are liberal.

This was one of David “Unpatriotic Conservatives” Frum’s complaints in his fevered five-part denunciation of Coming Apart in The Daily Beast. He cited the distinguished Columbia U. statistician’ Andrew Gelman’s research showing that, especially in Republican-leaning states, a large fraction of the rich are (unsurprisingly) conservative.

The brilliant free-floating web commenter Jason Malloy noted in comments on Bryan Caplan’s blog : “I’m glad that Frum was upfront about his personal issues with Charles Murray, since it makes his shrill, belabored opposition more comprehensible.”

Unfortunately, Frum’s personal animus against Murray and his carelessness led to embarrassment for Gelman, who on his blog took Frum at his word about what Murray’s book is about. When Gelman’s commenters pointed out passages in Coming Apart showing that Murray agreed with him, the author of Red State, Blue State graciously acknowledged “I mischaracterized Murray’s statements …”

Gelman goes on to say:

After his offhand remark about the upper class being liberal …, Murray takes pains to emphasize that this popular impression is exaggerated, writing, “the essence of the culture of the new upper class is remarkably consistent across the political spectrum.” The concept of upper-class people being liberal is not central to Murray’s argument;

Gelman explains:

if anything, his point is the opposite, to de-emphasize the liberal tilt of “famous academics, journalists, Hollywooders, etc.” and rather make the point that, that whatever the political attitudes are of the new upper class, their attitudes and actions isolate them from mainstream America.

Indeed, another point that’s lacking in Murray’s book is a more probing examination of the ideological commonalities among Democratic and Republican elites beyond mere “nonjudgmentalism.” The chasm between, on the one hand, both the editorial boards of the New York Times and the Wall Street Journal and the average American on the other, is mostly over globalism versus patriotism. Most Americans feel more loyalty toward their fellow Americans over random foreigners. But American elites across the political spectrum tend to view solidarity among citizens as vulgar, if not downright loathsome.

  • What would the Founding Fathers say?

Murray devotes a number of eloquent chapters to the “founding virtues” that made America a middle class republican society. Frum retorts that Noah Webster orated that “vast inequality of fortunes” brought down the Roman Republic.

Yet the first of the Founding Fathers, Benjamin Franklin, offered a more insightful view than either. Franklin explained in 1754 that life in America is happier than in Europe because we have more land and fewer people, and thus higher wages and lower land prices; and, Ben suggested, we should try to keep it that way—by restricting immigration.

  • Good for Murray for showing there are no differences between the races.

Frum commends Murray’s most statistically slippery chapter:

“Murray then presents a sequence of charts showing that marriage numbers for prime-age adults in the white working class have deteriorated to the point of indistinguishability from the numbers for all working class Americans regardless of race and ethnicity. Ditto for the numbers for children living at home with both parents, ditto for labor force participation by prime-age men, ditto for full-time work by prime-age adults.”

Okay, but can’t anybody see what the sleight of hand is here? It’s like saying that among women over six feet tall, an equally high percentage are six-footers as among men over six feet tall. It’s true that that all working class Americans have roughly the same low IQ—but that, proportionately, there are many more blacks with lower IQs.

It’s hard to blame Murray for slathering on the old soft soap in this instance, but you don’t have to praise him for it.

  • Coming Apart is all about Murray’s libertarian policy prescriptions.

I was surprised that this was what most of the hubbub has been about, since the policy stuff comes toward the end when Murray’s energy and enthusiasm were clearly running down. Murray’s libertarianism has long been tepid, world-weary, and distinctly limited. Murray, more than anybody, knows the limits of treatment versus selection. We’re not going to solve all our problems by either cutting or increasing taxes, by lowering or raising regulation.

  • Where’s the impact of inequality?

Although income inequality is today’s hot topic, it doesn’t particularly interest Murray. Still, Roger Lowenstein has a point in his review in Business Week that the vague libertarian policy suggestions tacked on at the end feel rushed:

Murray says we are becoming a European-style welfare state. That conclusion is debatable, but it is a debate that should follow a different book than the searing sociological study he has written. Coming Apart is, he says, his “valedictory on the topic of happiness and public policy.” But nowhere in this volume are public policies truly discussed; their effect is simply assumed. Maybe welfare kept the lower class low. Maybe assistance programs made the rich want nothing to do with anyone else. Hereby a modest proposition is offered: Vastly diverging wages had something to do with it.

In other words, you get more of what you pay for, and American employers don’t pay workers as much, relatively speaking, as they used to. So, not surprisingly, more guys are finding ways to get on disability or to be supported by their parents or girlfriend(s).

Krugman writes:

“Still, something is clearly happening to the traditional working-class family. The question is what. And it is, frankly, amazing how quickly and blithely conservatives dismiss the seemingly obvious answer: A drastic reduction in the work opportunities available to less-educated men.”

I would extend this analysis from just wages to standard of living. The traditional American bargain with its native sons was that if they worked hard, settled down, obeyed the law, and married they could eventually afford a house with a yard for their children to play in with a nearby public school that would offer the a decent education without their having to endure a soul-crushing commute. Today, though, what’s the point of putting your nose to the grindstone to pursue the American Dream when the dominant classes, whether Republican or Democrat, think that once you start making a decent wage, you should be replaced by a foreigner?

But the policy implications inexorably point to issue that the Main Stream Media definitely don’t want to discuss, such as the problems caused by free trade, and feminism—and immigration,

Roger Devlin explains in Occidental Quarterly:

“In short, the American dream of a home and family through honest labor is now far out of reach for an increasing number of low-status men. Under these circumstances, what is such a man to do with his life? I’d say an unconstrained bachelor existence with plenty of time for amusements looks very much like a rational choice. The male commentariat may make you out to be a bum, but that sure beats years of performing all the hard work traditionally required to support a family and then not getting the family.”

For a Not Safe For Work version of this line of thought, here’s the game blog Chateau Heartiste:

“If you were a man with diminishing job prospects and stagnant wages thanks to mass low-skill immigration and automation, would you ‘man up’ and ‘do your duty’ for the sake of societal health and elite approval…? In short, men will man up when women woman up. Because women, as the gatekeepers of sex, get the men they deserve. And, more often than not, what they deserve is what they want.”

  • What about immigration?

Between 1960 and 2010, the US experienced an unprecedented wave of perhaps 60 million legal and illegal immigrants. It has created whole new ethnic blocs: Hispanics, who have proved especially adept at snagging any new jobs going, increased from roughly 5 million in 1960 to over 50 million in 2010. The impact of this on the white working class’s wages, housing costs, schools, and commutes cannot be ignored. But our punditariat is trying hard to do just that.

And so, unmistakably, is Charles Murray. Immigration is essentially absent from Coming Apart. It does not appear in the book’s index, and a google search finds only three uses of the word in the text.

Maybe Murray judges this part of the price of renewed respectability.

In contrast, to their credit, Nicholas Kristof mentioned the I-word in passing and Mickey Kaus and Ross Douthat discussed it more substantively.

The best statement of immigration’s impact is by Frederick Lynch of Claremont McKenna College:

The primary problem with Coming Apart is that Murray’s focus on a cultural divide among whites obscures something else: The destruction of values, economic sectors and entire occupational classes by automation and outsourcing. And don’t forget the massive movements of cheap legal and illegal immigrant labor: This factor sets up a classic conflict, the ethnically split labor market, in which you find unionized working-class whites pitted against minority newcomers who are willing to work for less (sometimes “off the books” and under abysmal conditions).

For Murray, immigration is evidence that “America had jobs for everyone who wanted to work”. He’s rightly depressed by Harvard political scientist Robert Putnam’s research findings of an inverse relationship between ethnic diversity and strong civic culture. But Murray can’t—or won’t—credit as a causal factor the race-to-the-bottom wage spiral propelled by cheap immigrant labor.

Book review: ‘Coming Apart: The State of White America, 1960-2010′ by Charles Murray, Los Angeles Times, February 12, 2012

More representative, unfortunately, is David Frum (who knows the immigration score, although he mentions it only rarely according to some obscure calculation of his own). In his five separate attacks on the book, he only mentions immigration when he quotes, with approval, Murray’s inglorious bit of CYA:

Don’t kid yourselves that we are looking at stresses that can be remedied by attacking the legacy of racism or by restricting immigration.

There are many problem in this world that can’t be 100% remedied. But that doesn’t mean we should continue to exacerbate them—as mass immigration worsens, ceteris paribus, the problems of the white working class.

I’ve just decided what I’m going to have carved on my tombstone: “If you find yourself in a hole, stop digging.” It ought to be an obvious policy prescription, but it never seems to come up.

[Steve Sailer (email him) is movie critic for The American Conservative and writes regularly for Takimag. His websitewww.iSteve.blogspot.com features his daily blog. His book, AMERICA’S HALF-BLOOD PRINCE: BARACK OBAMA’S “STORY OF RACE AND INHERITANCE”, is available here.]

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Charles Murray 
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Former President Bill Clinton is the latest Establishment type to praise former House Speaker Newt Gingrich for his repackaging amnesty. [Bill Clinton Praises Old Foe Newt Gingrich, Newsmax.com, November 26, 2011] It’s less surprising than it might seem: both, along with former President George W. Bush, are bought-and-paid-for servants of Davos Man.

The truly dominant ideology of our times isn’t anti-governmentism, it’s globalism. It’s so suffocating that at the elite level even an ex-President can only peck at it without daring to call it out by name.

Indeed, the most interesting aspect of Clinton’s recently-published Back to Work: Why We Need Smart Government for a Strong Economy is the subterranean but still noticeable conflict between Clinton’s devotion to his globalist paymasters and his still-sharp political instincts that tell him that American patriotism wins elections.

It’s a struggle. But he manages.

Nobody would call Bill Clinton a profound thinker. While shallow, however, his range is certainly broad. For example, he concludes Back To Work with 46 scattershot suggestions for improving the economy, such as:

  • To support the insourcing movement, we should increase the number of empowerment zones and expand the reach of the New Markets Initiative”.

You have to give Clinton this much credit: he does not bore easily. Bush and Clinton were both born in 1946, but Bush has retired, while Clinton is still out there on the conference circuit sitting through Powerpoint presentations. He gives the impression that he’s actually interested in, say,

  • “21. Speed up the issuance of new energy efficiency rules for the most common household appliances” or
  • “33. Increase the role of the Small Business Administration (SBA).”

Clinton endorses the Obama policy on immigration, but only as #41 out of 46:

  • “41. Keep pushing for comprehensive immigration reform, and in the meantime grant more H-1B visas to immigrants in STEM fields until we have enough qualified citizens to fill the openings.

(VDARE.com links added to quotes thoughout). To my eye, he sounds less enthusiastic, more pro forma, about claiming that “the immigrants who fill the STEM jobs “ will somehow create jobs for Americans than he does about his priority #12:

  • “At least paint the roofs white.”

(Needless to say, Clinton makes no mention of the anti-unemployment immigration moratorium policy option, nor does he even show awareness of the wage and job displacement consequences of increasing the labor supply through legal and illegal immigration.)

In contrast, it’s hard to imagine either Bush or Obama sitting still for this wonkery without at least feeling the urge to flip on ESPN to check out the latest scores.

Yet because Clinton’s prose style is so non-magisterial, it’s hard to feel much confidence that he’s really thought through all these issues himself, rather than just becoming excited by some self-promoters’ ideas that he heard about at Davos or Aspen.

Inevitably, Back to Work is poorly organized. The usual way to write a policy book is to argue for some small number of organizing principles, then show how these ideas can be applied in practice. Perhaps this leads to too much ideology, but at least it leads to better books. Clinton’s brain is so random, however, that he mostly works in the opposite direction: throw out a bunch of ideas and let the reader try to figure out if there are any unifying theme. (Another point of similarity with Gingrich). That’s perhaps not necessarily a bad way to be President, but it’s a lousy way to write a book.

Clinton’s one big assertion is that the “anti-government” ideology he associates with Ronald Reagan and the Tea Party is wrong.

Instead, he reiterates, government and business should cooperate. He attempts to demonstrate this by tossing out lots of proposals he’s heard about from rich guys like his old co-campaign manager Terry McAuliffe about how the taxpayers should help out businessmen.

Significantly, Clinton never seems to notice that his proposals sound like the crony capitalism made notorious by Third World politicos such as Hosni Mubarak or Ferdinand and Imelda Marcos.

A lot of rich interests have handed Clinton a lot of cash since he left office. Since Hillary became Secretary of State, Bill has had to disclose his income, although that hasn’t seemed to slow him down. Last year, he was paid $10.7 million for giving 52 speeches.

I, personally, listened to many Clinton speeches for free in the 1990s, and those struck me as enough for one lifetime. It has never occurred to me since to that I would want to pay to hear another one. But, apparently, a lot of organizations think giving hundreds of thousands of dollars to the husband of the Secretary of State is in their best interests.

(You’ll notice that Muammar Gaddafi never anted-up for a Clinton speech. He just invested in second-stringers like Blair. And look where that got him.)

Perhaps Mr. Clinton has figured out some rules of thumb for distinguishing between public-spirited projects and Solyndra-style rip-offs of the taxpayers. But if he has, I didn’t notice him sharing them in Back to Work.

Clinton and Bush were opposites in managerial style. Especially after he hired Dick Morris for his re-election run, Clinton emphasized a profusion of micro-issues, such as school uniforms.

As President, Bush tried to reproduce his minimalist success in Texas, where he had run on just four issues: limited government, local control of schools, “family values,” and individual responsibility..

But Bush’s grand strategy in the White House mostly turned out to be:Invade the World, Invite the World, In Hock to the World. (Houston sportswriter Mickey Herskowitz, initially signed to write Bush’s first memoir back in 1999, revealed in 2005 that as early as 1999, Bush had expounded to him the political advantages of invading Iraq.)

Still, although Clinton and Bush had different cognitive styles, on substantive issues they were often surprisingly close. Clinton praises Bush for being: “… genuine in his commitment to diversity in government, to improved learning in public school s, to immigration reform, and to doing more to help poor nations fight AIDS.” On the big questions of ideology in the 21st Century—globalism v. patriotism and elites using concern for the poor and diverse to exploit the middle class—Clinton and Bush (not to mention Gingrich and Obama) are mostly in agreement.

The plain fact is that the money is just too good for a public figure to displease global elites. More details: Since leaving the White House, Clinton has pocketed $75.6 million in speaking fees—with $44.9 million coming from abroad. Considering how much the international conference circuit loves both Democratic ex-Presidents and black mascots such as Archbishop Desmond Tutu, Obama has a shot at pocketing a billion dollars during his retirement.

Clinton claims that the Tea Party’s message is “You’re on your own”. In contrast, his motto is “We’re all in this together.”

Yet Clinton does seem vaguely cognizant that “We’re all in this together” hardly jibes with his expressions of fashionable utopian anti-nationalism. On p. 14, he writes, “Because the world is still organized around nations …” echoing his should-have-been notorious statement on September 10, 2001 that he “supported the ultimate wisdom of a borderless world for people and for trade.”

On his book’s back cover, Clinton expounds upon his philosophy of American exceptionalism:

“… America at its core is an idea—the idea that no matter who you are or where you’re from, if you work hard and play by the rules, you’ll have the freedom and opportunity to pursue your own dreams and leave your kids a country where they can chase theirs.”

This is the just the same jejune propositionism that George W. Bush put forward to con the gullible.

In contrast, the reality is that I don’t want my kids to have to compete with anybody from anywhere—especially if these foreigners are unlikely to follow the rules.

Turning the United States of America into the world’s swap meet sounds very good for the handful of people who lend Clinton their private jets, but not likely to be terribly good for me and mine—and most Americans.

Still, some of the more interesting proposals in Back to Work would be unsettling to the editors of The Economist magazine. For example, in a paragraph praising the sainted Steve Jobs, Clinton writes:

“… I think most Americans respect people like Steve Jobs, who made a fortune producing products or services they wanted to buy like the iPad and the iPhone (though we wish they were made in the United States).”

This parenthetical remark (my emphasis) might just be a jibe at his former Vice-President Al Gore, who is on the Apple board. But still it’s interesting—because it’s uncool. As a good globalist, you aren’t supposed to worry that Apple, a vastly fashionable and profitable company, does very little manufacturing in the United States. That’s just the fault of those useless American workers.

I would have liked to have seen Clinton take on the Apple cult by making the innocent suggestion that Apple should manufacture in America its highest margin products, such as the $2499 MacBook Pro with the 17” screen.

Similarly, Clinton twice brings up a bizarre but obscure recent incident in which the city of Los Angeles asked for bids for new high speed trains from European manufacturers. One offered to build a plant in Los Angeles and employ Los Angelenos, while the other intended to import the rail cars from abroad. [Rail car bid in doubt, firm makes new offer,by Maeve Reston, LA Times, May 28, 2009] But, to Clinton’s incredulity:

“… the federal government told Los Angeles that since federal money would pay for the fast trains, the very different impacts on the local economy of the two proposals could not be considered in awarding the bid! … This is nuts.”

Indeed.

That certainly counts as a peck at the globalism ideology. But it’s pretty pathetic.

Someday, some politician might finally say: “America is exceptional to me, because it’s my country.”

But I’m not holding my breath.

[Steve Sailer (email him) is movie critic for The American Conservative. His website www.iSteve.blogspot.com features his daily blog. His book, AMERICA’S HALF-BLOOD PRINCE: BARACK OBAMA’S “STORY OF RACE AND INHERITANCE”, is available here.]

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Amnesty 
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In his The American Conservative magazine, physicist-turned-entrepreneur Ron Unz has just offered a lengthy critique of what he kindly identifies as the Sailer Strategy: the idea that the GOP can only and could easily win by mobilizing its white base, by championing issues that would actually benefit working class whites, such as an immigration moratorium. (Immigration, the Republicans, and the End of White America, American Conservative, September 21, 2011]. We’ve been writing about this for years on VDARE.com: one post-Obama discussion is here.

Ron also treats respectfully VDARE.com’s central contention: there are mass immigration is causing problems, both politically (especially for the GOP) and economically (for example, worsening income inequality.) And he has succeeded in getting this concept discussed on national television, in Counterpunch [The Republicans, Immigration and the Minimum Wage, By Alexander Cockburn, September 30, 2011] and in National Review: Ron Unz on Immigration Part I,II,III,IV,V,etc(none of which acknowledged us, of course). Quite an achievement.

Heston As RichelieuWhile I quite enjoy being depicted as the evil brains behind the operation, rather like how Cardinal Richelieu is portrayed in The Three Musketeers, I must say that I was more struck by the second section of Ron’s article, in which he offers a fairly novel policy proposal.

But on the Sailer Strategy: my perspective is far less triumphalist than Ron makes it sound. I merely argue that the short-term electoral costs of taking steps to deal with the long-term electoral threats to the GOP posed by decades of mass immigration and Affirmative Action are more bearable than the eventual electoral costs of doing nothing … or of doing what the Democrats recommend.

The Democrats’ intention, as they’ve made clear in countless public venues, is literally to “elect a new people” who will turn the United States into Chicago writ large: effectively, one-party rule. Maybe the Democrats’ plan won’t work, but it’s hardly a secret that they expect to achieve permanent hegemony through demographic change.

This combination of mass unskilled immigration and Affirmative Action favored by the Democrats—a bizarre system under which foreigners, and their descendants unto the end of time, are legally preferred over American citizens—undeniably poses a severe threat to the long-term viability of the Republican Party.

My point: Republicans are better off dealing with this problem now rather than later. How, exactly, is this problem of hereditary privileges for illegal immigrants going to get better for Republicans by letting another generation go by?

In contrast, the conventional wisdom is largely driven by New York Times and Washington Post reporters calling up self-appointed Hispanic spokesmen who get right back to them with quotes saying, yes, indeed, the coming Hispanic Electorate Tidal Wave wants nothing more than more immigration.

In reality, that’s what people in the Hispanic Spokesperson racket want. Actual Hispanic voters are more ambivalent.

Bush strategist Karl Rove operated on the assumption, in effect, that it makes sense for Republicans to agree to massively boosting the number of Hispanic voters in the long run (i.e., post-Rove) in order to achieve a short-term, Rove-benefitting boost in the percentage of Hispanics who vote Republican.

(This also happens to be what Democrats keep advising Republicans to do. Who do you think is better at coming up with a cynical strategy concerning Hispanics: Republicans or Democrats?)

Put like that, the Rove strategy doesn’t sound too sensible. So it usually comes with some claims about how the GOP will permanently boost their share of the Hispanic vote by doing an immigration deal now.

I find these claims implausible—Republicans in Congress voted for the 1964 Civil Rights Act at higher rates than Democrats, but blacks’subsequent attitudes have been (sensibly enough): “What have you done for me lately?”

Moreover, Hispanic political elites are 90% Democratic—so where is the impetus for radical electoral change going to come from? Most Hispanic elites have benefited from Affirmative Action, so naturally they gravitate to the party whose constituents are, inevitably, more favorable toward Affirmative Action. That tendency is simply not going to change.

But why have ordinary Hispanics consistently voted Democratic as far back as we have exit polls? Of course, the margins among Hispanics are not as utterly overwhelming as among blacks, but they are certainly what would be labeled “landslides” in a general election. At the peak of the subprime bubble in late 2004, George W. Bush managed to lose among Hispanics by only a Walter Mondale-like 58-40 margin. (The early report that Bush got 44% of the Hispanic vote has long since been discredited, although that doesn’t stop Rove repeating it).

And that’s as good as it gets with Hispanics for Republicans i.e. pretty disastrous.

Why? I think it only marginally involves immigration and even (to a greater extent) Affirmative Action. The fundamental problem for Republicans: Hispanics tend to be poorer than whites. Thus, it’s perfectly rational for more Latinos to vote for the tax and spend party than for the GOP.

Children In Poverty 1976-2010Documenting this, a new Pew Hispanic Center report last week was grimly entitled Childhood Poverty Among Hispanics Sets Record, Leads Nation.[PDF] According to 2010 Census data, 35 percent of Hispanic children are poor. That’s not quite as bad as the 39 percent among blacks, but it’s far worse than the 12 percent among whites.

Among the children of immigrant Latinos, 40 percent are poor. Among the children of American-born Latinos, only 28 percent are poor—but even that’s more than twice as bad as among whites and four-fifths as bad as among blacks.

Thus, for example, in 2002 with Karl Rove in charge of Republican messaging, GOP House candidates won 38 percent of the Hispanic vote (according to the long-lost 2002 exit poll data I tabulated). In 2010, with Russell Pearce of Arizona SB1070 fame the most forceful Republican voice on immigration, the GOP’s share of the Hispanic vote plummeted all the way to … well, it didn’t fall at all. It was still 38 percent.

What can possibly explain this?

Well, illegal immigrants can’t vote. And Latinos who can vote, it turns out, don’t show the black-like levels of ethnic solidarity that the Main Stream Media expects of them.

The difference between 2002 and 2010, however, was that Hispanics made up 5.3 percent of voters in 2002 and, according to last week’s newly released Census Bureau data, 6.9 percent in 2010.

That’s not a tidal wave of new Latino voters; it’s more like a tide. And this rising tide of Hispanic votes isn’t going to lift all boats. But it will, all else being equal, tend slowly to drown Republicans.

Still, it’s also crucial to remember that this future of Hispanic electoral dominance hasn’t gone through the formality of taking place yet.

Clearly, it would have been electorally easier for Republicans to take the hard decisions about immigration and affirmative action in 2003 than in 2013. But, on Rove’s watch, they signally failed. Yet, it will still be easier to do what needs to be done in 2013 than in 2023.

So if not now—when?

Now for Ron Unz’s minimum wage proposal.

Ron argues that immigration restrictionism will never fly politically … but it’s still a good idea for America! He writes

“Passing legislation to curtail immigration seems a political non-starter with both parties, and enforcing such legislation even if passed is equally unlikely. Yet as an almost inevitable consequence of the current system, the bulk of the American population—including the vast majority of immigrants and their children—falls deeper and deeper into economic misery …”

So, rather than restrict immigration to raise wages, he proposes to raise wages to restrict immigration.

Ron’s big suggestion is a “very substantial rise in the national minimum wage, perhaps to $10 or more likely $12 per hour.” Unz contends that a higher minimum would cause the least valuable and least assimilated to self-deport:

“Those most recently arrived, especially illegal ones with weak language or job skills, would probably lose their jobs, especially since many of these individuals are already forced to work (illegally) for sub-minimum wages. However, workers who have been here for some years and acquired reasonably good language and job skills and who had demonstrated their reliability over time would probably be kept on, even if their employer needed to boost their pay by a dollar or two an hour.”

Presumably, Democrats could be tricked into supporting this plot to encourage self-deportation because of the minimum wage’s historic ties to FDR.

But Ron might be underestimating how strongly devoted to diversity uber alles modern liberals are.

And raising the minimum wage is going to be difficult in the current state of the business cycle.

Still, I rather like the idea, both for its symbolic value and as one component in a “defense in depth” strategy against low-skilled immigration. Ron presents a higher minimum wage as an alternative to traditional immigration restriction, but it’s actually more of a complement. The more arrows we have in our policy quiver the better. We’re going to need them.

As a statement of national intent, raising the minimum wage to lower the profit from unskilled immigrants would send a message countering the Davos class propaganda that the MSM has so faithfully transmitted for the last few decades: “Low wages are good for The Economy.”

Superstitiously reifying “The Economy” as something that must be appeased by sacrificing American citizens’ welfare is now taken as the height of intellectual sophistication (“I got an A- in Econ 101!”). Actually it’s the depths of naiveté. The simple reality is that poor-paying employers, such as, say, lemon growers, profit by passing on the costs imposed by their immigrant workers to schools, emergency rooms, jails, and so forth: in other words, to you and me.

In the past, Americans took pride in their heritage of making tremendous leaps forward in productivity—the steam ship, the telegraph, the telephone, the moving assembly line, the computer. These allowed us to prosper without teeming throngs of drudge laborers. Automating farm labor with the reaper and the tractor was particularly emphasized in the history books.

Heston As Cheap LaborThus, when Edward R. Murrow’s Harvest of Shame documentary [YouTube] about the abuses of the Bracero guest worker program was broadcast in 1960, it was widely assumed that stoop labor should follow the same path of mechanization. In 1964, when the last braceros were removed from the fields, lemon pickers in Ventura County in Southern California were still using medieval technology, such as heavy wooden ladders. Growers then responded to their new need to employ expensive Mexican-American citizens by equipping workers with aluminum ladders and nylon bags. Productivity grew 147 percent in 13 years.

But in recent decades, the cult of diversity has rewritten this history to assign credit for America’s wealth, not to our relative lack of population, but to the “huddled masses.” This interpretation is assumed to be progressive and egalitarian. Yet, funny thing, the assumed policy implication (bring in some more huddled masses, pronto!) always turns out to benefit big employers.

Today, you only rarely hear anything bad about the stoop labor business. After all, it’s a steady source of diversity. And diversity is our strength!

For example, consider how the story of union boss Cesar Chavez has been completely revamped—from anti-illegal immigration union boss to the patron saint of illegal immigrants—in such a way that just happens to favor the financial interests of the growers financial interests of the growers whom Chavez spent his prime years scheming against. It’s one of the more ironic stories in American history. But nobody gets the joke.

Defense in depth has been successfully used by Finland to resist illegal immigration despite having an 816-mile border with Russia. Besides a fortified frontier, Finland has a wide range of internal identity checks. Moreover, every employer has to pay union wages, so there is reduced economic incentive to import less-skilled foreigners. If you have to pay everybody as if they are Finns, you might as well hire Finns.

Boosting the minimum wage is a not uncommon form of low-profile resistance to low-skill immigration. And it’s not just effete Europeans. Affable, manly Australians do it, too. Ron cites booming Australia, where the minimum wage is currently $15.51 per hour in Australian dollars, or about $15 American. Yet, Australia’s unemployment rate in August was 5.1 percent.

Australia is a big, sunny, empty, resource-rich place: California with duller scenery. It would attract many tens of millions of poor Third Worlders if the Aussies ever stopped coming up with excuses for keeping some of them out. Sure, the Australians could strip-mine their continent faster and sell all their minerals to the Chinese cheaper if they opened the floodgates to millions of coolies. But, what’s the hurry? What’s in it for the average Aussie?

In the U.S., the federal minimum wage is $7.25 per hour, but some states set their own higher minimums. Tellingly, the state of Washington leads the country at $8.75 (going up to $9.04 in January). The second highest minimum is in Oregon, at $8.50.

What do these two whiteopian, but not hugely wealthy, states share? Most famously, a strong urge to resist Californication: the influx of millions of outsiders.

Sure, if the minimum wage were $1.25 per hour lower, Portland might have a few more jobs (“Portland: where young hipsters go to retire“). Yet Oregonians seem to understand that favorable long run demographics are more important than negative short run economics.

Portland’s combination of a relatively high minimum wage with intense environmental restrictions on development attracts educated young white people and repels illegal immigrants.

The people of Portland seem pretty happy with that situation.

Of course, there are several problems with raising the minimum wage substantially, even if the implementation were delayed until the next economic boom cycle (whenever that might be).

Recall the old joke in which the starving economist on the desert island trumps the physicist and chemist in their debate over how to open a can of beans: “Assume we have a can-opener.”

Ron’s suggestion implies: “Assume we have the rule of law.” Of course, we don’t anymore—at least not in labor markets corrupted by decades of illegal immigration. The honest Finns can pass legislation about employment with some confidence that the law will be obeyed. But we have depleted that ancestral patrimony. So a new law would mostly just put out of work law-abiding American citizens.

Now, a higher minimum wage could be adjusted with, say, a lower rate for American citizens or for American teenagers.

Unfortunately, the most useful exemption—a lower minimum wage for African-Americans to encourage employers to take a chance on hiring that least employed and most imprisoned group of American citizens—would be absolutely unthinkable today.

That’s racist!

But I’ll be back next week with a list of other policy proposals that Karl Rove would never, ever think of.

(Republished from VDare by permission of author or representative)
 
• Category: Economics, Ideology • Tags: Ron Unz, Sailer Strategy 
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The novelist William Faulkner once said: “The past is not dead. In fact, it’s not even past.”

I was reminded of that last week while reading what is likely the best narrative history so far of the causes of the current recession: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morgenson and Joshua Rosner.

The book focuses upon the Washington-Wall Street-southern California connections that corrupted the mortgage business’s traditional credit standards. It recounts the excuses bandied about by these crony capitalists to justify their self-enrichment. Of particular interest is Reckless Endangerment’s documentation of the role played by that most sacred of contemporary rationalizations for the pursuit of power and money:diversity.

Although Reckless Endangerment concentrates upon events from 1991 through 2008, this story is far from over and done with. Last Friday, June 3, 2011, the Congressional Budget Office estimated that the taxpayers will have to shell out another $42 billion in the bailouts of Fannie Mae and Freddie Mac, the quasi-governmental mortgage market giants whose role in the meltdown is the chief focus of Reckless Endangerment.

Moreover, the role played by diversity in the Minority Mortgage Meltdown and the ensuing Diversity Recession is still just not understood in the conventional wisdom. Thus, earlier in the week, two New York Times reporters had scratched their head in amazement over how

“unusual alliances have sprung up in opposition to tighter lending standards. Advocacy groups like the N.A.A.C.P. and the National Council of La Raza, a Latino civil rights organization, on the one hand, and the American Bankers Association on the other, are joining together to fight rules they say could make home loans less affordable for minority and working-class Americans.”

[Advocates and Bankers Join to Fight Loan Rules by Edward Wyatt and Ben Protess, June 1, 2011]

Hmmm. Who could imagine Wall Street and Mean Street ever teaming up to fleece Main Street?

These NYT reporters would have been less amazed if they had read this new book co-authored by their own assistant editor Morgenson. Reckless Endangerment documents how often ethno-activists, politicians, and money men teamed up for mutual profit ever since the notoriously misleading Boston Fed report of 1992 that alleged pervasive discrimination by mortgage lenders.

Morgenson won a Pulitzer Prize in 2002 for her coverageof Wall Street for the NYT. She had previously been a reporter at Forbes, where she did so well that her colleague, Peter Brimelow, now Editor of VDARE.com, made a bet that she would be Forbes’ editor one day. (This didn’t happen, and Forbes appears on the edge of extinction).

Morgenson brings a political perspective that has been out of fashion for years. I have no idea what her partisan registration is, but, judging from Reckless Endangerment,I would describe her as an old-fashioned Green EyeshadeRepublican.

Back in Dwight Eisenhower’s day, the GOP took pride in being the Sharp Pencil Party, the natural home for people with suspicious squints who like to add up all the numberstwice to make sure nobody is pulling a fast one with otherpeople’s money. The GOP had a self-confident MainStreet wing that was suspicious of Wall Street.

You can still see a lot of this attitude in Tea Party folks. Unfortunately, Americans don’t really have a vocabulary anymore for expressing the concept of being against anybody pulling fast ones.

Over time, political thinking in America has simply deteriorated into partisan ideologies based on Who?Whom? Instead of being against chicanery, we’resupposed to be against chicanery by the other side’s guys. Democrats are now supposed to assume that government can’t be corrupt because it’s governmentand therefore, by definition, good. Republicans are supposed to assume that for-profit companies can’t be corrupt because they are policed by the magic of the market.

Morgenson, who is for both honest, effective business andfor honest, effective regulation, cleverly gets around thesecontemporary prejudices by making her history’s arch-villain the Crony Capitalist-in-Chief, James A. Johnson. Johnson, chairman during the crucial years 1991-1998 of that disastrous private / public hybrid Fannie Mae, was the man who, more than anybody else, set the mortgage meltdown in motion.

Is Johnson a businessman, a politician, or a public servant? None of the above, really. He was the ultimate Washington insider.

Johnson is a seemingly bland figure, harder to notice than his colorful allies in the degradation of credit norms—like Congressman Barney Frank, 1990s Secretary of Housing Henry Cisneros, or Countrywide president Angelo Mozilo. The son of a Minnesota politician, Johnson is a Prairie Home Companion-type who was Vice President WalterMondale’s chief aide and 1984 campaign manager.

Johnson was appointed CEO of Fannie Mae in 1991 because he could pull strings in Washington to protect Fannie’s lucrative privileges. While Fannie Mae hadpreviously been seen as something of a sleepy publicutility, Johnson envisioned it as a money machine. Herealized that the implicit backing of the U.S. Treasury tobail out this government sponsored enterprise (a government-established but publicly traded for-profit company) meant billions per year in lower capital costs. Some of this vast sum could be passed on to homebuyers in lower interest rates, but another fraction could be passed on to Fannie Mae’s stockholders.

And if a few crumbs wound up in Jim Johnson’s pocket (Reckless Endangerment: “Indeed, over his nine years at the company, he took out roughly $100 million in pay), well, he knew how to forestall complaints in modern Washington.

To protect that kind of political-financial power, you have to spend money to make money. But when you have as much money as Fannie Mae, it’s remarkable how relatively little it takes to turn potential critics into supporters. By diverting relatively trifling sums, Johnson made lots of power brokers very happy with Fannie over the years.

Does Congressman Barney Frank’s boyfriend Herb Moses need a job? Put him in charge of “relaxing FannieMae’s restrictions on home improvement loans”(e.g., for gay gentrifiers).

Does the Congressional Hispanic Caucus need a donation?How does a million bucks sound?

Do housing economists need academic journals in which to publish so they won’t perish? Create two journals and give stipends to friendly economists.

Is ACORN protesting in the streets? Give them a grant! Bring them, and dozens of other racial racketeers, inside the tent. There’s plenty of money for everybody.

Have you hired all the best-connected lobbyists in Washington, but are worried that your rivals will hire the second-best? Money can fix that, too. RecklessEndangerment: “The company even paid lobbyists to agree not to lobby against it”.

Is Steve Forbes running in the 1996 New Hampshire Republican Presidential primary against the tax deductibility of mortgage interest? (Morgenson had beenhired by Forbes to be his press secretary for the campaign—a Peter Brimelow prediction that actually came off.) Well, Fannie can fix that by running ads in the Manchester Union-Leader against him.

Do politicians, such as Senators Chris Dodd (D-CN) and Barbara Boxer (D-CA), want a mortgage at below market rates? The notorious Friends of Angelo [Mozilo] loans from Countrywide Financial were usually Friends of Fannie, too. Reckless Endangerment:

“That many of these recipients were friends of Jim Johnson was no coincidence. Indeed, he often acted as a kind of super-powered mortgage middleman; upon hearing of a friend’s home-loan needs, he would call Mozilo on his private line and provide the particulars.”

Johnson never forgot a friend or forgave an enemy. The velvet fist of Fannie Mae made sure that the GSE’shard-to-defend privileges were not imperiled by Congress or their hapless nominal regulator, the intimidated Office of Federal Housing Enterprise Oversight.

Fannie Mae was hardly the only culpable party, though. Morgenson and Rosner observe:

“Of all the partners in the homeownership push, no industry contributed more to the corruption of the lending process than Wall Street.”

When Johnson retired from Fannie Mae in 1998, he went on the board of directors of investment bank Goldman Sachs. Hank Paulson, Goldman’s CEO (and future Treasury Secretary under George W. Bush), liked his style so much when it came to his own salary that he made Johnson head of the Goldman board’s compensationcommittee, which set Paulson’s pay.

One hand washes the other.

Washington corruption is as old as the city, but Johnson’s peculiar genius was that he made it hugely respectable. Johnson used Fannie’s lucre so adroitly that by 1997 he was chairman not only of Fannie, but also of two other Washington institutions of great prestige: the Kennedy Center for the Performing Arts and the Brookings Institution liberal think tank.

One key to Johnson getting away with all this for so long (he never suffered a reversal until the summer of 2008, when he had to resign his post vetting Barack Obama’s Vice President possibilities because the Friends of Angelo loans became public): this Norwegian-American repeatedly and shamelessly played the Race Card.

Did Johnson loudly hop on the diversity bandwagon for lowering credit standards to protect Fannie’s perquisites or to grow his portfolio? Probably both.

When he took over Fannie Mae in 1991, Johnson made a $10 billion commitment to lower-income borrowers. Morgenson and Rosner report: “The idea, according to former employees, was to finance so much low-income housing that Fannie Mae’s government perquisites could never be taken away.”

In 1992, the Democratic majority in Congressed passed (and George H.W. Bush signed) the reassuring-sounding “Federal Housing Enterprises Financial Safety and Soundness Act”. Reckless Endangerment:

“But the law had another key element that would, more than any other single act, lead to the disastrous home lending practices of the 2000s … While historically Fannie and Freddie supported housing by buying safe mortgages when other sources of capital for borrowers dried up, now the companies’ focus on soundness was diluted by the requirementthat they serve the housing needs of ‘low-income and underserved families.’”

Johnson invited Fannie’s new ally ACORN to help advise the Democrats to set quotas of 30 percent for inner cities.

Then, in October 1992, the Boston Fed released a report that, in Reckless Endangerment’s summary, “showed that black and Hispanic loan applicants were far more likely to be rejected by banks than were whites”. [Mortgage lending in Boston: Interpreting HMDA data (Working Paper 92-7)]

This finding of disparate impact was rapturously received. But, as Morgenson and Rosner note:

Forbes magazine was among the few media outlets to question the study’s findings. For an article published on January 3, 1993, staffers Peter Brimelow and Leslie Spencer interviewed [Alicia] Munnell, who revealed yet another problem with the analysis. Munnell told Forbes that in preparing the study, Fed researchers looked at default rates across census tracts and found that minorities do not tend to fail more often on their loans than whites.

“What we found was, there was no relationship between the racial composition of the tract and the default rate,” Munnell told Forbes. “So it wasn’t true that tracts with large minority populations had higher default rates.”[VDARE.com note: See The Hidden Clue, By Peter Brimelow and Leslie Spencer, Forbes ,January 4, 1993]

“Such a finding should have been a signal to the researchers that their discrimination findings were off base, Forbes contended.After all, if bias were at work in minority neighborhoods, default rates in those areas would have been lower than among white areas, indicating that bankers were refusingloans to legitimate minority borrowers.

“Munnell agreed that discrimination against blacks should show up in lower, not equal, default rates. ‘You need that as a confirming piece of evidence,’ Munnell told the Forbesreporters. ‘And we don’t have it.’”

(For Peter Brimelow’s rueful retrospective on the totalindifference with which this devastating refutation wasgreeted, see here. By an amazing coincidence, Richard F. Syron, who as CEO of Freddie Mac was my own Johnson-type candidate for architect of the disaster, was at the time president of the Boston Fed, where he hailed the study with the arrogant announcement: “Comports with common sense, no more studies needed.”

(Syron “earned” $38 million in 5 years at Freddie Mac. In 2004 he rejected a memo from Freddie’s chief riskofficer, David Andrukonis, saying that Freddie’sincreasingly shoddy underwriting standards were threatening to destroy the firm. But I now think that Morgenson and Rosner make a fairly good case that Johnson was the more central, more historic figure.)

Black politicians, needless to say, began to complain that Fannie was abetting bank discrimination by buying racist mortgages. Morgenson and Rosner:

“James Johnson saw the opportunity for Fannie Mae in this potential problem: Lending to minorities could help his company’s expansion effort as well as its image. He was soon fanning the flames lit by the Fed’s report. ‘We see evidence that there are a significant number of prospective homebuyers in this country whose only barrier to achieving their dream of home ownership is not their economic status, but their racial status …’”

Johnson gave ACORN and La Raza grants and had them join with bankers and realtors on an advisory council:

“Fannie Mae offered to begin buying new types of mortgages to expand its affordable housing reach. This allowed the company to grow its operations, and its earnings, whilepositioning itself as a do-gooder. … These[credit] standards had for decades acted as a kind of governor on lax lending among banks interested in selling loans to Fannie. But amidcries of racial discrimination, risk-averse practices were jettisoned.”

As Morgenson and Rosner write, “down-payment requirements were the first to go”, from thetraditional 20 percent to “5 percent or less”:

‘Affordable housing was the price they would have to pay keep their benefits,’ recalled one industry official who was on handduring the legislative process.”

In lending, there had traditionally been a hierarchy of respectability based on the trustworthiness of borrowers. At the bottom were loan sharks, pawnbrokers, payday firms, subprime lenders and other dubious operators. At the top, Fannie Mae was considered staid but eminently respectable because, ever since its creation by the Roosevelt Administration in 1938, it had aimed at serving the average American homebuyer. (In passing, it’s worth noting that New Deal reforms worked better than subsequent liberal innovations because they were primarily aimed at helping average Americans—not at subsidizing minorities.)

Under Johnson, however, Fannie began using its prestige to encourage risks. Morgenson and Rosner:

“Because Fannie was the leader in housing finance, its actions set the tone for private-sector lenders across the nation. ‘They were omnivores,’ the former executive said. ‘The further they moved out on the risk curve, the more they pushed the market to follow.’”

What Morgenson and Rosner are reporting isn’t wholly a new story. Nearly two years ago on VDARE.com, I reviewed Alyssa Katz’s insightful (but sadly overlooked) book Our Lot recounting this same 1990s history, but from a more liberal point of view. Looking back from 2009, Katz asked:

“How did Fannie Mae and Freddie Mac … turn into the world’s biggest funders of Wall Street-backed subprime mortgages? … It all started with the best of intentions, with … the activists who demanded bank loans for the poor and urban.”

To Jim Johnson, his campaign to lend one trillion dollars to ten million incremental homeowners was “nothing less than a civil rights crusade”.

Especially disastrous was the symbiotic relationship Johnson cultivated with Countrywide’s Mozilo.

In 1995, Mozilo agreed with HUD secretary Henry Cisneros to make Community Reinvestment Act-like pledges to lend to minority communities. Mozilo became the leading private sector enthusiast for the ClintonAdministration’s National Homeownership Initiative. In 1998, Morgenson and Rosner report,

“Jim Johnson had agreed to charge Mozilo’s company far lower guarantee fees than its rivals on mortgages Fannie Mae bought from the company and sold to investors. … Countrywide soon became the single biggest seller of loans to Fannie Mae. … Countrywide supplied 26 percent of the loans purchased by Fannie in 2004 …”

Morgenson and Rosner argue: “More than any other mortgage lender, Countrywide was at heart a Fannie Mae clone”:

“Mozilo’s friendship with Johnson had given him a front-row seat for the Fannie Mae way—the deep political focus, the co-opting of regulators, the manipulation of public opinion,and extensive granting of favors to friends and potential foes.”

Morgenson deserve credit for repeatedly emphasizing the role that racial politics played in justifying the credit debacle. In contrast, we saw a couple of weeks ago that Peter Wallison’s dissent to the financial crash report to Congress avoided mentioning the M-word (“minority”),merely saying the quotas were aimed at “lower income”borrowers. To their credit, Morgenson and Rosner use farfewer PC euphemisms.

They also make clear that, while the system of mortgage backscratching perfected by Johnson was very good for racial organizers like ACORN and La Raza, it wasn’t good for the average black or Hispanic in the long run—or even in the short run.

The “diversity” rationale empowered boiler room operators like Countrywide to target, in the name of closing the racial gap, innumerate blacks and Hispanics with exploitative subprime loans. One former Countrywidebroker told Morgenson that Countrywide barely broke even on loans in Santa Monica, a high IQ white community home to screenwriters and Hollywood agents. In contrast, at Countrywide’s Slauson office—in the ‘hood under the LAX flight path—brokers were expected to pile on points in the fine print because the borrowers seldom crunched the numbers themselves.

Was this predatory lending? Sure!

But, remember, it was also predatory borrowing,predatory brokering, predatory securitizing, and so forth.

In general, Morgenson and Rosner’s perspective is quite similar to the one I’ve been offering since 2007-2008. (Neither I nor VDARE.com are cited).

But this brings me to a criticism of Reckless Endangerment. In Johnson’s defense, he was a more prudent crony capitalist than those who came after him in the Bush II years. Johnson maintained a certain level of cynicism that kept him from, say, pushing hard for ridiculous excesses such as zero down-payment mortgages.

Like Katz’s 2009 book, Reckless Endangerment focuses upon how Democrats like Johnson had slowly undermined the system in the 1990s.

But the Housing Bubble didn’t get supersized until after George W. Bush’s October 15, 2002 “White House Conference on Increasing Minority Homeownership”. There, the Republican President recklessly denounced down-payments as the foremost hurdle to closing the racial gap in homeownership.

That turning point has disappeared down the memory hole—Reckless Endangerment doesn’t mention it—perhaps because it doesn’t fit anybody’s narrative.

But, as I’ve pointed out repeatedly, it was the Democrats in the 1990s who loaded the gun, but, more than anybody else, it was George II who pulled the trigger.

So we’re still waiting for the book that will give us the inside story on the Bush Bust—the Republicans’ catastrophic 2000s—and its contribution to the Crash of 2008.

[Steve Sailer (email him) is movie critic for The American Conservative.

His website www.iSteve.blogspot.com features his daily blog. His new book, AMERICA'S HALF-BLOOD PRINCE: BARACK OBAMA'S "STORY OF RACE AND INHERITANCE", is available here.]

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Housing 
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The May issue of the conservative magazine American Spectator features The True Story of the Financial Crisis by Peter J. Wallison, [Email him]an American Enterprise Institute fellow and one of the ten members of Congress’s Financial Crisis Inquiry Commission, which reported in late January. Wallison dissented [PDF] from the final report. His article demonstrates the strengths and weaknesses of mainstream conservatism in the Obama Era.

Wallison explanation for his dissent is all too credible:

“There was no alternative. The Commission’s management—particularly its chairman, Philip Angelides, a former Democratic treasurer of California and unsuccessful gubernatorial candidate—would not allow the staff to pursue any theories about the causes of the financial crisis other than those embodied in the standard left-wing narrative. And in the end a majority of the commissioners—never having been presented with any contrary evidence—signed on to a report that said the financial crisis could have been avoided if there had been better regulation of the private sector.”

(Helpful VDARE.com links added to quotations throughout).

Wallison notes acidly:

“The question I have been most frequently asked about the Commission is why Congress bothered to authorize it at all. Without waiting for the Commission’s report, Congress passed and the president signed the Dodd-Frank Act (DFA), far-reaching and highly consequential regulatory legislation that I believe will have a strong adverse effect on U.S. economic growth in the future. In enacting the DFA, Congress and the president acted without seeking to understand the true causes of the wrenching events of 2008, perhaps following the precept of the President’s chief of staff—’Never let a good crisis go to waste.‘”

The Obama Administration is now suing more banks for not lending enough to minorities—inevitably weakening credit standards in the process, which was exactly the mistake that both Wallison and I believe led to the Crash of 2008. As a member of the Establishment Beltway Right, Wallison could be an important voice in opposing this farcical, but apparently inevitable, rerun of history.

But, unfortunately, Wallison wimps out on explaining exactly what these “housing policies” were about: getting more mortgage money into the hands of blacks and Hispanics. What the U.S. had in 2007-2008 was a”Minority Mortgage Meltdown“, and it precipitated our first “Diversity Recession“. Wallison cannot bring himself to be so frank.

Overall, Wallison puts forward an argument similar to what I’ve been making since subprime mortgages went south in early August 2007: the cause was the degradation of traditional mortgage credit standards. Traditional credit standards were overridden on the grounds that they were just excuses for racial discrimination (although VDARE.com Editor Peter Brimelow and Leslie Spencer had exploded the Boston Fed’s alleged proof of this discrimination in ForbesMagazine back in 1993, to no applause).

Wallison writes:

“So, for example, while one in 200 mortgages involved a down payment of 3 percent or less in 1990, by 2007 it was one in less than three. Other credit standards had also declined.”

As we saw in newspaper headlines at the time, bad mortgages led to the 2008 crash. A domino effect ran from dubious mortgages, primarily in the four Sand States, to the whole world through the newly-invented mechanism of financial derivatives. Wallison recounts:

“The inquiry has to begin with what everyone agrees was the trigger for the crisis — the so-called mortgage meltdown that occurred in 2007. That was the relatively sudden outbreak of delinquencies and defaults among mortgages, primarily in a few states –California, Arizona, Nevada, and Florida…”

Unfortunately, Wallison puts too much confidence in the good faith of liberal pundits when he continues:

“No one disputes that the losses on these mortgages and the decline in housing values that resulted from the ensuing foreclosures weakened financial institutions in the U.S. and around the world and were the precipitating cause of the crisis.”

Actually liberal pundits like Paul Krugman or Brad DeLong quite commonly do dispute exactly that, when challenged about the impact of federal interference in the mortgage markets. They imply that the worldwide spread of the crisis means that the history we watched unfold didn’t really happen.

It’s pettifoggery as ridiculous as somebody arguing that because the worst fighting during World War I was in France and Belgium, then what could the assassination of the Archduke Franz Ferdinand in Sarajevo have to do with starting the war? But it often works on the gullible.

There are three main differences between my analysis and Wallison’s:

In Wallison’s retelling, however, the Community Reinvestment Act and the Fannie Mae and Freddie Mac quotas were solely about making mortgages more available to “low-income” borrowers.

That’s an airbrushing of the history that’s readily available to anybody with a web browser and a search engine. But it’s characteristic of cowardly mainstream Republican thinking in the Obama Era.

  • Second, Wallison pushes his own argument beyond the bounds of plausibility by claiming “nothing else” but federal housing policies caused the 2008 collapse.

Wallison is certainly right to direct attention to the baneful impact of the feds in initiating the disaster. Nevertheless, why does he feel the need to make the unlikely assertion that nothing else was responsible? That’s like saying that the assassination of the Archduke Franz Ferdinand and nothing else was responsible for World War I, or that Pearl Harbor was the sole cause of American involvement in World War II.

With events of this historic magnitude, there are always going to be multiple roots. Yet it’s fair to say that Pearl Harbor was the direct cause of America going to war.

And without overstating the role of Pearl Harbor, America learned a crucial lesson from it: don’t allow sneak attacks.

When I think back on my life, it’s striking how much of the energies of people close to me were devoted to preventing another Pearl Harbor. My uncle spent much of WWII as a weatherman in the godforsaken Aleutian Islands keeping an eye out to make sure the Japanese fleet didn’t follow a storm front across the North Pacific as they had in December 1941. Four decades later, my brother-in-law was in even more remote Thule, Greenland watching radar monitors of big Soviet Bear bombers playing games over the Arctic. My father worked for years on the Lockheed F-104, a minimalist “missile with a man in it” fighter designed to intercept these Soviet nuclear bombers.

America took Pearl Harbor seriously. And guess what? We actually learned lessons. For almost sixty years after December 7, 1941, the U.S. spent a fortune to detect, deter, and defeat any more sneak attacks, and it worked.

But there’s no evidence that anybody has learned much of anything from the mortgage meltdown.

  • Third, Wallison puts most of the blame on the Clinton Administration. In contrast, I see the Clinton Administration (along with the first Bush Administration) as loading the gun. But the second Bush Administration pulled the trigger.

The Democrats’ 1990s efforts to funnel more mortgage money to their minority and lower income constituents have been detailed in two books, both nearly universally ignored. Alyssa Katz’s 2009 work Our Lot, described, from the perspective of an abashed liberal, how Clinton’s Housing and Urban Development secretaries Henry Cisneros and Andrew Cuomo (now governor of New York) and Fannie Mae chairman Jim Johnson had tilted the credit evaluation system in favor of minorities. Paul Sperry’s 2011 book The Great American Bank Robbery recounts this history from a conservative perspective.

Still, the Clinton Administration felt it had to keep its minority mortgage machinations on a small scale to avoid attack from Republicans. But when George II took power, other Republicans took their eye off the ball, trusting their man in the White House to look after their interests.

Uh-oh.

Bush apparently really believed he could bring Hispanics into the GOP, despite overwhelming evidence to the contrary. A major feature of his campaign was the”ownership society“, especially expanding homeownership among minorities.

It seemed like a free lunch: just pass the word to regulators and lenders that the President looked favorably on firms taking bigger risks to lend more to minorities, and the magic of the market would turn Democratic Hispanics into home-owning Republicans. What could go wrong?

Bush’s role in the mortgage meltdown has been almost universally overlooked—because Republicans like Wallison want to blame it on Democrats, and Democrats don’t want any blame associated with minorities.

George W. Bush himself, however, recently conceded a fair amount of my case against him. On p. 449 of the ex-President’s bestselling memoir Decision Points, Bush writes:

“At the height of the housing boom, homeownership hit an all-time high of almost 70 percent. I had supported policies to expand homeownership, including down-payment assistance for low-income and first-time buyers. I was pleased to see the ownership society grow.”

Bush doesn’t mention that he had entitled the main venue for promoting expanding homeownership the White House Conference on Increasing Minority Homeownership. There, on October 15, 2002, he called for 5.5 million additional minority-owned homes by 2010.

On the other hand, Bush’s misbegotten effort had largely disappeared down the memory hole, so I must say that I’m impressed that he dredges it up in order to accept some of the blame. He writes:

“But the exuberance of the moment masked the underlying risk. Together, the global pool of cash, easy monetary policy, booming housing market, insatiable appetite for mortgage-backed assets, complexity of Wall Street financial engineering, and leverage of financial institutions created a house of cards.”

That’s a pretty reasonable list of causes Bush gives, especially compared to Wallison’s excessively narrow focus.

I would add to Bush’s list the Hispanic population growth that the President’s tolerance of legal and illegal immigration and his push for more home construction facilitated. The rising population made it seem for a while as if all that home construction in the exurbs actually made sense.

Bush concludes:

“This precarious structure was fated to collapse as soon as the underlying card—the nonstop growth of housing prices—was pulled out. That was clear in retrospect. But very few saw it at the time, including me.”

Bush’s list of causes sounds old-fashioned for a Republican, in that it attributes a role to market excess. During the Obama Era, in contrast, a peculiarly dogmatic free market ideology seems to have become popular among many Republicans.

Why?

As demographic change slowly turns the Democratic Party into the Nonwhite Party, the GOP is becoming, by default, the White Party (relatively speaking). There are worse things a party could be. Yet this is considered by the GOP elite to be too horrifying to admit.

To rebuff the Democrat’s intolerable charge that white Republicans look to the GOP to protect the interests of themselves and their posterity—to adapt the preamble to the U.S. Constitution, a wholly white creation—many white Republicans during the Obama Era have embraced the idea that they act solely on ideological principles.

In this worldview, the private sector can only go wrong when the government holds a gun to its head.

But I spent many years in the business world. I find this an overly flattering view of my own and my former colleagues’ prowess. We regularly fell for extraordinary popular delusions and the madness of crowds, even when we weren’t being prodded along by the government.

Some Republicans looking for an ideology have turned to the late novelist Ayn Rand. Yet, while the recent low-budget movie version of Atlas Shrugged may have flopped at the box office, it was a welcome reminder that Rand herself held a more three-dimensional view of the potential culpability of individuals in all walks of life.

Atlas Shrugged is full of crony capitalists who corrupt the politicians and bureaucrats as much as the government corrupts them. Rand would have been outraged by bankers who promoted bad loans in the name of diversity, such as Angelo Mozilo of Countrywide, Kerry Killinger of Washington Mutual, and Roland Arnall of Ameriquest.

Wallison, apparently, is not. And that leaves his Republican Party ominously vulnerable, not just to race hustlers, but to the same corporate con-men whose blind quest for cheap labor drove the Bush Administration to its disastrous amnesty defeats of 2006 and 2007.

 

[Steve Sailer (email him) is movie critic for The American Conservative. His website www.iSteve.blogspot.com features his daily blog. His new book, AMERICA'S HALF-BLOOD PRINCE: BARACK OBAMA'S “STORY OF RACE AND INHERITANCE”, is available here.]

(Republished from VDare by permission of author or representative)
 
• Category: Economics • Tags: Housing 
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One century ago today, May 15, 1911, the Supreme Court upheld the federal government’s lawsuit under the heretofore unused 1890 Sherman Anti-Trust Act against the Standard Oil near-monopoly in refining. The company founded in 1870 by John D. Rockefeller was broken up into 34 companies, including ones that eventually became Exxon and Mobil.
Of course, today they are back together again as ExxonMobil.
One of the less expected changes in public life over the last third of a century has been the growing apathy over the subject of antitrust (known outside of America as “competition law”). For example, the proposed merger of AT&T and T-Mobile, reducing the number of national cell phone network competitors from four to three, isn’t popular in the Senate, but it doesn’t seem to be a big news story with the public.

The last time I can recall anybody trying to make a big deal out of antitrust was in the mid-1990s when Pearl Jam, the most popular rock band of the period, sick of the absurd fees that Ticketmaster adds to concert ticket prices, tried to run a successful national tour without venues dominated by Ticketmaster.

Pearl Jam failed. People seemed to take away the message that, well, sure, Pearl Jam might have seemed cool and their crusade public-spirited. But their economic failure just shows that, deep down, they are losers. What’s really cool is having a monopoly.

It’s hard to explain to today’s youth what a big deal trust-busting was just a third of a century ago. Alternatively, it’s hard to figure out why nobody cares much anymore about cartelization.

When I was majoring in economics at Rice in the late 1970s, monopoly was a massive topic. I took a semester-long course devoted to propounding the emerging libertarian line that there was very little to worry about. Competition would tend to rapidly eliminate monopolies. This popular idea of businessmen getting together in smoke filled rooms to agree to keep prices up was a stereotype. I got a very good grade in that course. I believed. 
The young professor making these arguments against antitrust law in the late 1970s saw himself as a rebel against orthodoxy. Today, though, his free market ideas seems to have become conventional wisdom, or at least nobody cares that much to argue against them.
The funny thing was that when I got a job with a young company, however, it turned out that competition, from the perspective of owners and employees holding stock options, was awful. It’s like Adam Smith said, in a genuinely competitive market, it’s hard for a business to make more than the risk-adjusted cost of capital, which is not much fun at all. Why go through the immense amount of hard work to invent a new, better way of doing business if that’s all you’ll end up with? To make good money, the kind of money the stock market demands you make, you need some kind of quasi-monopolistic edge. 
The founder of the company, as strong a competitive personality as you could want, looked at the high fixed cost economics of this submarket of marketing research and quickly sold the firm to our chief competitor for a lot of money. But the Reagan Justice Department shot the deal down because our clients whined so much. That began a price war that quickly drove the third firm in the industry out of business, and kept the two survivors from making decent profits all through the prosperous ’90s. As I had jobs over time with both competitors, I came up with various novel ways to reduce competition, but top management, knowing the government was keeping an eye on them from their earlier merger attempt, was unenthusiastic. So, years of minimal profits rolled on.

This dreary fate did not befall most other industries, though. The Dow Jones average is about an order of magnitude higher than when I started to work in late 1982, because profits are vastly higher. It’s easy to understand the high profits of, say, Apple, but why does Procter & Gamble make so much off toothpaste and detergent these days?

One difference is that in the inflationary 1970s, it was common for members of the public to suspect that rising prices were caused by monopolistic practices. With the prices of manufactured goods stable or even falling in much of the time since the 1970s, however, it’s common to assume that anticompetitive activities can’t be a problem because, say, cell phones or TVs keep getting awesomer. Psychologically, it’s hard to worry much about whether prices should be falling even faster.

(Republished from iSteve by permission of author or representative)
 
• Category: Economics 
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Here’s a long article by Benjamin Wallace-Wells on Paul Krugman’s personality, such as it is. Economists have been called “worldly philosophers,” but a lot of them come across as being awfully out of touch. For example, this article uses Krugman’s long relationship with Larry Summers to help explain Krugman. By contrast to Krugman, when it comes to being a people person, Summers is practically Oprah. Yet, Summers was a notorious failure in the fairly easy job of being president of Harvard. 
Wallace-Wells does do a good job of zeroing in on Krugman’s best piece of writing:

Back in 2006, when he was writing The Conscience of a Liberal, Krugman found himself searching for a way to describe his own political Eden, his vision of America before the Fall. He knew the moment that he wanted to describe: the fifties and early sixties, when prosperity was not only broad but broadly shared. Wells, looking over a draft, thought his account was too numerical, too cold. She suggested that he describe his own childhood, in the ­middle-class suburb of Merrick, Long Island. And so Krugman began writing with an almost choking nostalgia, the sort of feeling that he usually despises: “The political and economic environment of my youth stands revealed as a paradise lost, an exceptional moment in our nation’s history?…” 

Krugman remembers Merrick in these terms, as a place that provoked in him “amazingly little alienation.” “All the mothers waiting to pick up the fathers at the train station in the evening,” he says, remembering. “You were in an area where there were a lot of quiet streets, and it was possible to take bike rides all over Long Island. We used to ride up to Sagamore Hill, the old Teddy Roosevelt estate.” The Krugmans lived in a less lush part of Merrick, full of small ranch ­houses each containing the promise of social ascent. “I remember there was often a typical conversational thing about how well the plumbers—basically the unionized blue-collar occupations—were doing, as opposed to white-collar middle managers like my father.”

This starting point, which is awfully similar to where I’m coming from (see my post above about Mildred Pierce’s L.A., in which Benjamin Schwarz eloquently describes our shared appreciation of the Paradise for the Common Man), potentially opened up for Krugman the opportunity to develop a more wide ranging critique of What Went Wrong. Was it merely tax cuts? At times, he’s dipped his toe in the heretical possibility that, say, massive immigration wasn’t wholly an unmixed blessing to somebody with his vision of the Good Society, only to quickly run back up on the beach.
Now, obviously, even Paul Krugman is under a lot of career pressures to Not Talk About Unpleasant Topics. But, Wallace-Wells could have pointed out the important effects of Mrs. Krugman, a blue-eyed, long-haired woman who strongly self-identifies as black, has had on keeping Mr. Krugman on the politically correct straight and narrow, and pushing him toward his present view that racism is the root of all Republican evil. There was a period in the 1990s, when Krugman appeared to be developing in an interesting direction intellectually (here’s his excellent attack on Stephen Jay Gould). But the advent of Mrs. K. seems to have coincided with putting the kibosh on his tendencies toward crimethink.
(Republished from iSteve by permission of author or representative)
 
• Category: Economics 
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Steve Sailer is a journalist, movie critic for Taki's Magazine, VDARE.com columnist, and founder of the Human Biodiversity discussion group for top scientists and public intellectuals.


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