Friday, April 03, 2015

An interesting confirmation of a troublesome truth

As far as I can tell, it has always been known that we all get on best with people like ourselves.  The whole history of tribalism, nationalism and xenophobia tells us that. Even Hitler knew it.

Have a look at the 1939 Nazi propaganda placard below (a Wochenspruch for the Gau Weser/Ems). The placard promotes one of Hitler's sayings. The saying is, "Es gibt keinen Sozialismus, der nicht aufgeht im eigenen Volk" -- which I translate as "There is no socialism except what arises within its own people". Hitler spoke a very colloquial German so translating that one was not easy but I think that is about as close to it as you can get.

Hitler saw that people are more willing to share and get involved with others whom they see as like themselves -- leading to the view that socialism will find its strongest support among an ethnically homogeneous population.  He wanted Germany to be racially homogeneous so that socialism could work

With their equality mania, however, modern-day Leftists have been  prone to deny or ignore that old truth.  They are good at denial.  Reality is so pesky for them that they need to be.

Eventually, however, realization of the reality seeped into the social sciences via the work of Robert Putnam.  Putnam was a committed Leftist but what he saw in his research made such a powerful impression on him that he could not deny it.  And it took him some soul-searching before he decided to publish his findings.  But publish them he did and it now seems to be generally accepted in the social sciences that social co-operation and involvement is highest among homogeneous groups of people.

That is awkward for Leftists as they are all for "unity".  They basically agree with Hegel that the ideal society is like an anthill with everyone agreeing with one another and everyone marching together in lockstep towards some utopia.  But the revelation that only the most homogeneous groups can approach anything like that degree of unity undermines the universalism that they also preach.  "All men are brothers" is thoroughly undermined by work such as Putnam's.  But Freud showed us that compartmentalization is a useful psychological defence so I guess that Leftists put Putnam into a mental compartment all by himself.  It must be trying to be a Leftist.  No wonder they get angry when conservatives pop their bubbles.

Anyway it seems that Putnam is now respectable so the recently published confirmation of his finding reproduced below is interesting.  It shows what a bad place the USA is in at present.  Not only racial diversity but also income diversity contributes to alienation between people.  The marked differences between the three major ethnic groups in America are bad enough for social amity and co-operation but when those three groups are also characterized by big average income differences, we have  to say:  "Houston, we have a problem".

So can anything be done about that?  With typical Leftist dullness, the author below thinks we should take more money off those white guys and give to to the black guys -- but that solution has surely been tried and found to do more harm than good.

So that leaves only the traditional human solution:  In order of severity that solution is:  Segregation, Apartheid and Ethnic cleansing.  Such words reek of the Devil in modern-day America however, so the agony of America's hostile race relations will stretch on on well into the future.

Fortunately, the informal segregation provided by white flight and black clustering in areas of high welfare availability will continue to offer some relief.  So legislators who wished to enhance social co-operation in their area could presumably cut welfare to the bone -- quite the opposite of what the unimaginative writer below recommends

Racial income inequality reduces levels of trust and social capital in communities

By studying survey responses on trust from 110 metropolitan areas from 1973 to 2010, the author finds that racial income inequality decreases trust within communities, and that this lack of trust is exacerbated when communities are more racially fragmented and as this inequality increases    

Andrea Tesei

Income inequality

During the last decade, policy-makers and scholars alike have become increasingly concerned about the social and economic effects of income inequality and racial diversity in the United States. One crucial concern is that diversity - both in race and income - seems to be associated with lower levels of social capital in society. Inhabitants of diverse communities, in particular, tend to withdraw from social life, participate less in collective activities, and trust their neighbours less. Since these dimensions of social life are considered key lubricants of the economic activity, the findings have spurred a public debate about the workings of the American melting pot.

Perhaps surprisingly, the debate has focused almost exclusively on the independent effects of income inequality and racial diversity, overlooking the fact that much of the income inequality in the US has a marked racial connotation. Still in 2010, the median Black and Hispanic household earned, respectively, only 58.7 per cent and 69.1 per cent of that of the median White household.

In a recent LSE CEP working paper, I contribute to the debate by emphasising the role of the income inequality between races (racial income inequality). This aspect of community heterogeneity turns out to be important. My results suggest that it is not racial diversity or income inequality per se which ultimately reduces the level of trust and participation of individuals in US metropolitan areas. Instead, what is key to understanding this lower participation in social life is the extent of racial income inequality in their community.


Figure 1 - Similar Characteristics but Different Trust

      Figures 1 and 2 help to illustrate the point. Figure 1 plots the average level of trust reported by citizens of 110 different U.S. metropolitan statistical areas (MSA), against the average level of racial diversity and income inequality in their MSA. The figure clearly corroborates previous studies, by showing that trust is lower in more racially diverse and income unequal communities. However, it also makes clear that racial diversity and income inequality alone cannot fully account for the difference in trust between similar cities, like San Francisco and Houston. In spite of their almost identical levels of racial diversity and total income inequality, citizens in the two cities have very different levels of trust: while 40 per cent of those living in San Francisco say they can trust others, only 31 per cent in Houston do so.

Figure 2 - Are They Really Similar?

      The explicit focus on racial income inequality helps to understand this difference. Figure 2 now shows on the horizontal axis the share of total income inequality due to differences between racial groups. Under this dimension, the two cities turn out to be actually very different. The share of total inequality due to differences between races is twice as large in Houston as in San Francisco. This in turn is related to the level of trust in the two cities. In San Francisco, where the probability of meeting an individual of a different race but similar income level is relatively high, the level of trust is higher than in Houston, where belonging to a different race is also likely to be associated with a difference in income.

This same pattern of apparent similarity, which is in reality masking an additional dimension of heterogeneity, is repeated over different pairs of cities in the US My empirical analysis documents the pattern in a systematic way, exploiting answers from 20,000 respondents to the US General Social Survey (GSS) between 1973 and 2010. The survey contains a variety of indicators on the respondents' political views, social behavior and socioeconomic characteristics. Crucially, it also asks respondents whether they think that most people can be trusted. I match their answers to this question to their socioeconomic and demographic characteristics, and to the level of racial diversity, total income inequality and racial income inequality in the MSA of residence.

Negative effect

I start out by showing that racial diversity and total income inequality have a statistically significant, negative effect on individual measures of trust, a result that is consistent with previous studies. But I then find that these effects become statistically insignificant once I account for the income inequality between racial groups, which instead remains negatively and significantly associated to the level of trust of the respondent.

I then show that the negative impact of racial income inequality on trust is larger in more racially fragmented communities, and that members of minority groups reduce their trust towards others more, when racial income inequality increases. These results are consistent with a simple framework in which individuals can be similar in both race and income, and trust towards others falls at increasing rates as individuals become different in both dimensions.

Overall, my results suggests that racial diversity is more detrimental when associated with income disparities between races and that, similarly, income inequality is more harmful when it has a marked racial connotation. This in turn suggests that policies aimed at reducing income disparities along racial lines might be particularly effective in increasing the level of social participation and trust in US communities.



Higher Minimum Wage Leaves Working Poor Without Childcare

Oakland’s voters who approved the March 1 increase of the minimum wage to $12.25 apparently drank the Kool-aid that it would “help the poor.” Tell that to the working poor parents who will now be scrambling to find good, affordable child care:

Workers who benefit from Oakland’s minimum wage hike might soon lose a service that enables them to work in the first place. It turns out the well-intentioned law is putting a financial squeeze on Oakland’s child care industry, leading some providers to panic.

“Panic” may help sell newspapers, but those who have to keep their doors open deal more in Cold Hard Facts:

Revenues < Expenses = Bankruptcy

So when its main expense (labor) increases by more than 36% overnight (from $9 to $12.25 per hour), Cold Hard Facts say: Increase Revenues or Decrease Expenses.

For a non-profit early childhood development center in Oakland which had recently garnered the highest rating in the county, the only way “out” is decreased costs. Parents of the 63 children cared for there—all working poor—pay little to nothing for the care provided five days a week, every week of the year. Because it is a nourishing environment—providing professional care, guided recreation, stories, socialization and pre-school instruction—it is by definition very labor intensive. And much of that labor is provided by minimum-wage teachers’ aids. The immediate, first-year budget shortfall to meet the mandated wage increase: $146,500

But it’s really more than that: in practice, a rise in the minimum wage puts upward pressure on the pay of those employees who had been earning above minimum wage, but whose relatively higher pay has now disappeared with the mandated minimum-wage increase—so the amount needed to keep everyone equal “relatively” is actually closer to $200,000.

Unfortunately, as a non-profit, it can’t raise “prices” and it doesn’t have an angel it can tap to write a check, so cuts are the reality to keep the doors open.

Infant care, which demands a higher teacher:child ratio, will be discontinued, and staff let go accordingly.

Bottom line: the elimination of care for 11 infants of the working poor, and the jobs of three teacher aids.

This means working poor parents of infants in Oakland now have fewer sources for their care, with higher costs. And three formerly minimum-wage workers are now unemployed.

And that’s just one childcare center. The story is similar across the sector, as reported by the San Francisco Chronicle. Will parents be able to re-juggle their household budgets and work schedules to ensure their children are well cared for while they work?

San Francisco also raised its minimum wage, and on both sides of the bay the immediate effect has been the close of a popular science fiction bookstore, restaurants—from highest rated to humble Chinatown establishments—and worsened job prospects for youth.

In any case, it’s time to wake up and face reality: raising the minimum wage is a lousy way to “help the poor.” As noted here:

…minimum-wage workers are typically not in low-income families; instead they are dispersed evenly among families rich, middle-class and poor.

Virtually as much of the additional earnings of minimum-wage workers went to the highest-income families as to the lowest. Moreover, only about $1 in $5 of the addition went to families with children supported by low-wage earnings. As many economists already have noted, raising the minimum wage is at best a scattershot approach to raising the income of poor families.

Just another tragic tale of those for whom “Sorry, Your Minimum Wage Law Is a Nightmare.”



Harry Reid -- Another Master of the BIG Lie

In 2012, Senate Majority Leader Harry Reid took to the Senate floor and made a serious and unsubstantiated allegation about Republican presidential candidate Mitt Romney: "Let him prove that he has paid taxes, because he hasn't." Reid knew this was a BIG Lie, which would gain traction for the Left's class warfare game.

Asked this week for his thoughts on that episode -- specifically that his remarks had been called "McCarthyite" -- Reid shrugged and replied, "Well, they can call it whatever they want. Romney didn't win, did he?" Reid's smug gloating is beyond unmitigated arrogance, and speaks volumes about the Left's approach to politics. The ends always justify their means.



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