Monday, January 09, 2012

The great American taboo again

I am glad I am not American. The way race must not be mentioned distorts thought even among very smart Americans. The article below fumbles around trying to explain why the American poor are more likely to stay poor than the poor in other countries. The obvious explanation that a large slice of the poor in America are blacks -- the great majority of whom lack the ability to rise in society -- is ignored. Any responsible social scientist should separate out statistics into separate groups for whites and blacks but that is largely taboo

“Americans enjoy less economic mobility than their peers in Canada and much of Western Europe.” That’s how the New York Times began a page-one news story yesterday.

It is a thoughtful story that offer a variety of explanations — some of them mitigating — for the so-called “mobility gap.” This subject merits attention because we should aspire to live in a society in which someone born in (relative) poverty can work his or her way up to better material circumstances, even if lower-income people are richer than their earlier counterparts.

Those who advocate the freeing of markets have no reason to receive the news of the gap defensively. If we are right about the breadth and depth of bureaucratic interference with the peaceful, creative activities of individuals, as well as the extent of government privileges for the well-connected – and we are – then drags on mobility are at least partly the consequence of that interference. In other words, the mobility gap can’t be the result of the free market because there isn’t one. The economy is systematically misshapen by intervention. (The Times cites concern about the gap among some conservatives.)

The Minimum Wage and Public Schools

When I think “limits to mobility,” two phrases immediately occur to me: minimum wage and public schooling. If you wanted to impede upward mobility, there could hardly be better ways than to scuttle job creation for the unskilled and to give poor people a bureaucratically produced “education.” Those are not features of the free market.

Nor are these the only ways government throws sand in the eyes of the those who start out with little. In the current issue of The Freeman, Gary Chartier discusses this matter at length: “Government Is No Friend of the Poor.” (For more, see Charles Johnson’s “Scratching By: How Government Creates Poverty as We Know It.”)

This will be readily conceded by free-market advocates, but some harbor a belief that the U.S. economy is much freer than Europe’s and Canada’s socialistic welfare states and so to make negative comparisons with those countries is to cast aspersions at freedom. Not so. The economies of America, Canada, and Europe are all variations of corporatism, in which government power primarily benefits the well-connected and well-to-do, with secondary interventions intended in part to ameliorate some of the harsher consequences of the primary interventions. As I wrote on another occasion:
In reality the debate [between America and Europe] is not between socialism and free enterprise. Rather it’s between two forms of corporatism, America-style and European-style. I don’t want either, but it’s not obvious to me a priori that the American variant is superior in every respect to the European variant. . . . One variant may indeed cushion the victims of political privilege-granting better than others. Considering who writes the rules over here, I see no grounds for thinking that we necessarily have it better than the Germans do in every possible way.

The Gap

Here are some particulars in the Times story:
At least five large studies in recent years have found the United States to be less mobile than comparable nations. A project led by Markus Jantti, an economist at a Swedish university, found that 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent) — a country famous for its class constraints.

Meanwhile, just 8 percent of American men at the bottom rose to the top fifth. That compares with 12 percent of the British and 14 percent of the Danes. [The study, in PDF format, is here.]

Despite frequent references to the United States as a classless society, about 62 percent of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Economic Mobility Project of the Pew Charitable Trusts. Similarly, 65 percent born in the bottom fifth stay in the bottom two-fifths. [See PDF here.] . . .

While Europe differs from the United States in culture and demographics, a more telling comparison may be with Canada, a neighbor with significant ethnic diversity. Miles Corak, an economist at the University of Ottawa, found that just 16 percent of Canadian men raised in the bottom tenth of incomes stayed there as adults, compared with 22 percent of Americans. Similarly, 26 percent of American men raised at the top tenth stayed there, but just 18 percent of Canadians.

Not the Whole Story

As usual, the statistics don’t tell the whole story, and Timesman Jason DeParle acknowledges this.
Skeptics caution that the studies measure “relative mobility” — how likely children are to move from their parents’ place in the income distribution. That is different from asking whether they have more money. Most Americans have higher incomes than their parents because the country has grown richer.

. . . A Pew study found that 81 percent of Americans have higher incomes than their parents (after accounting for family size). There is no comparable data on other countries. [Emphasis added. PDF here.]

Higher U.S. rates of poor single motherhood and of incarceration could also help explain the relative lack of mobility.

DeParle notes further that 1) “[s]ince they require two generations of data, the studies also omit immigrants, whose upward movement has long been considered an American strength,” and 2) “The income compression in rival countries may also make them seem more mobile.”
Even by measures of relative mobility, Middle America remains fluid. About 36 percent of Americans raised in the middle fifth move up as adults, while 23 percent stay on the same rung and 41 percent move down, according to Pew research. The “stickiness” appears at the top and bottom, as affluent families transmit their advantages and poor families stay trapped.

Any way we slice it, the mobility gap impugns economic intervention by the bureaucratic State. We have every reason to think that mobility would be maximized in a freed market.



How Egalitarianism Increases Inequality

Bryan Caplan

All else equal, people in respected professions make less money. The mechanism is simple:

1. People like to be respected.

2. People know that if they enter a respected profession they will personally enjoy more respect.

3. This increases the supply of people in the respected profession, which in turn drives down their wages.

So what happens to inequality when one profession becomes more respected? It depends. If people in the profession currently earn less than average, then giving them more respect increases inequality. But if people in the profession currently earn more than average, then giving then more respect actually decreases inequality.

Now for the fun part. Imagine people become more egalitarian, to the point where they heap scorn on the rich and successful. What is the effect on inequality? By the previous logic, the effect is directly counter-productive. The more you scorn rich people, the more people you scare away from high-income professions. The more you scare away, the lower their supply. And the lower their supply, the higher their income!

Lesson: If you really want a materially more equal society, stop beating up on the 1%. Do a complete 180. Smile upon them. Admire them. Praise them. Sing songs about how much good they do for the world. The direct result will be to raise their status. But the indirect result will be to pique the envy of status-conscious people, increasing the competition among the top 1%, and thereby moderating income inequality.

On the other hand, if you want to increase material inequality, by all means heap scorn on the rich and successful. Try to fill them with guilt and self-loathing. The 1% who remain will find that living well is the best salve for their consciences.



Wisconsin points the way

Faced with a $9.2 billion budgetary shortfall next year, California Gov. Jerry Brown has not surprisingly reached for the only tool in the Democratic shed — more taxes. Via The New York Times:

Gov. Jerry Brown called on California voters Thursday to approve $6.9 billion in temporary new taxes, including a surcharge on big earners, as part of yet another bad-news budget proposal, this one for 2012. He warned that without those tax increases, California would be forced to impose severe cuts in public schools that could reduce the school year by three weeks.

There is another way to address budgetary woes, of course, the one taken by Wisconsin’s Scott Walker — structural reform. On January 5, Gov. Walker explained the success of his collective bargaining reform law passed last year to a gathering of journalists and academics at the American Enterprise Institute in Washington, D.C. As a result of these reforms, claimed Walker, Wisconsin is in far healthier fiscal condition than it was last year.

And it’s not just Walker touting the reform’s success. Even the editors of the Milwaukee Journal-Sentinel, who had opposed the law, on December 31 were forced to admit:

The governor did balance the budget with fewer gimmicks than in the past; he did reduce the structural deficit significantly; he did put a lid on property tax increases; he did give schools and municipalities more control over their budgets than they’ve had in years. And his efforts at economic development through corporate tax breaks and a revamped Commerce Department (now the public-private Wisconsin Economic Development Corp.) look promising.

And what has been Walker’s reward for righting his state’s fiscal ship without drastic cuts to government services or draconian tax hikes? Unions, furious over being asked to contribute more to their pension and health care plans, have vowed electoral vengeance, and are gathering signatures to force a recall election. Walker seemed calmly resigned to the fact that such an election will happen this summer. He did not give odds on his chances, but seems prepared for another tough fight.

The danger if Walker is recalled and his reforms overturned is this: Many local politicians may well conclude that the union grip on political power in this country is simply too strong to contest. They will look at Jerry Brown, who keeps getting reelected in spite of favoring policies that have transformed the once-great Golden State into a banana republic, and then look at Scott Walker, brutally punished for pursuing a reasonable, prudent course that resulted in a resounding success. Then they will look at the federal government’s $15 trillion worth of red ink, and ask themselves:

Why bother being brave?



NAACP Plantation Masters Play Race Card Again

Rick Santorum must be “racist” because he thinks all people, regardless of ethnicity, should have the dignity of self sufficiency. At least that’s how the NAACP sees it.

Talking about pushing back against those in government endlessly trying to expand welfare programs because they make money off them, Santorum said, “I don’t want to make black people’s lives better by giving them somebody else’s money; I want to give them the opportunity to go out and earn the money.”

NAACP president Benjamin Todd Jealous called this “…outrageous...race-based stereotypes about public assistance.”

Santorum was talking about Medicaid. The more states expand their Medicaid programs, the more federal funds they get. So they have a perverse incentive to keep growing these programs. It is unfortunately analogous to drug pushers who get richer with each new addict.

If indeed Santorum did single out blacks, it’s not unreasonable because they are disproportionately on Medicaid. Blacks comprise 12 percent of the population but they constitute 30 percent of those on Medicaid.

Medicaid is government monopolized socialized medicine for the nation’s poor. Not surprisingly, its spending is out of control while delivering increasingly shoddy care. The program cost taxpayers $118 billion in 2000. By 2010 it was almost $300 billion and is projected to reach almost $500 billion by 2020.

Forty percent of physicians won’t see Medicaid patients because the reimbursements they get don’t cover their costs.

According to studies reported in the Wall Street Journal, the chances of a Medicaid patient dying in the hospital are double that of patients on private insurance and Medicaid patients are 59 percent more likely to have complications after heart surgery than privately insured patients.

Now it’s about to get worse. Despite over 60 million Americans now on this program that is bankrupting states and delivering substandard health care, Obamacare expands it to add another 16 million.

Given the disproportionate exposure of black Americans to this horrific program, wouldn’t anyone who cares about these folks want to seek better options for them? Not the NAACP.

The NAACP wants to keep Medicaid as it is and opposes efforts to reform it to improve its efficiency....

Any well meaning white conservative like Rick Santorum, honest enough to state the truth about the destructiveness of welfare state programs on black Americans, can look forward to a press release from the NAACP calling him or her “racist” or the equivalent.

They then have to spend weeks doing media to apologize and carry the stigma forever.

There is no reason to apologize for telling the truth. Failing to do only so, or apologizing, just hurts blacks and the whole nation and leaves the sharp weapon of racial intimidation always ready for use in the hands of the plantation masters.




Buchanan out indefinitely at MSNBC: "Conservative commentator Pat Buchanan has been suspended indefinitely from MSNBC, according to a statement from that network’s President Phil Griffin. An Associated Press article on blames reaction to Buchanan’s latest book Suicide of a Superpower for his ouster from the cable network, as well as a campaign by the advocacy group, Color of Change." [His defense of Christian civilization was intolerable, apparently]

Crony capitalism? Blame the Progressives: "The Occupy Wall Street (OWS) movement has focused a lot of attention on private wealth creation through the exercise of government power -- what we might more familiarly call 'crony capitalism.' These protesters and I may differ on a whole lot of things -- perhaps even most things -- but we share the same disdain for this sort of individual enrichment through one’s access to government."

There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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