Wednesday, December 14, 2016

All kids are not equal: Some kids are born with dysfunctional brains and they become the problem people

Rather predictably, the lesson drawn from the findings below is that these damaged people should be "helped". It is however hard to imagine brain damage being "helped".  Isolating them as soon as they start to offend would be more realistic

A simple test at the age of three can predict if children will grow up to be a burden on society, scientists claim.

A study has found roughly a fifth of the population are responsible for 81 per cent of criminal convictions, 77 per cent of children brought up without fathers, two-thirds of benefits claimed and more than half of nights spent in hospital.

This small group of people drain the public purse, but researchers at King's College London say their troubled lives could be forecast from early childhood.

It takes just 45 minutes to give three-year-olds a battery of tests, on their language abilities, motor skills, frustration and impulsivity.

Decades after taking the test, children who scored low were far more likely to fall within the most burdensome group.

They were also more likely to smoke, be obese and take prescription drugs.

The findings, while controversial for indicating that someone's life path is set in their early years, suggests reaching these at-risk children young could turn things around.

Professor Terrie Moffitt, of King's College and Duke University in California, said: `About 20 per cent of the population is using the lion's share of a wide array of public services.

`The same people use most of the NHS, the criminal courts, the claims for disabling injury, pharmaceutical prescriptions and social welfare benefits.

The study was carried out within the New Zealand population, as there are `barriers' to accessing birth studies to compare with state records in the UK.

Researchers looked at more than 1,000 people born between 1972 and 1973, following them up to the age of 38.

The results show children with lower brain function aged three were 38 per cent more likely to claim benefits and 22 per cent more likely to be feckless fathers.

Their chances of being a smoker were 25 per cent higher and they were 15 per cent more likely to end up overweight.

This is based on four key tests, including the Peabody picture vocabulary test asking children to name images, and the Reynell test of speech, asking them to describe pictures in more depth.

Children's motor skills were checked by asking them to walk in a straight line or stand on one leg.

But crucially, during these tests, children were monitored for how well they managed their emotions while carrying out stressful tasks, including their frustration, restlessness, impulsivity and persistence.

Explaining the results, co-author Professor Avshalom Caspi, of King's College and Duke's University, said: `Essentially these children were functioning like a two-and-a-half year-old, they were six months behind.

`For these individuals, life is really an uphill battle, opportunities are limited and mastering new skills is not easy. These early difficulties have a snowballing effect.'

The finding that many of these children become the '20 per cent' most costly for society is based on the `Pareto principle,' which is also called the 80-20 rule.

Italian engineer and social scientist Vilfredo Pareto observed a century ago that 80 percent of wealth is controlled by 20 percent of the population and that this proportion applies to many other areas of life.

Josh Hillman, director of education at the Nuffield Foundation, which was not involved in the research, said the 20 per cent should be helped early in life.

He called for disadvantaged children to be signed up to nursery school with qualified teachers from an early age, adding: `These are the children who stand to benefit the most from the support of the education system.

`These are the children you can make the most difference with, in terms of the children themselves and the payback for the public purse.'



Has Trump discovered new trade truths?

Economic historian Martin Hutchinson below sees unrealism in pure free trade and finds virtue in Trump's tariff proposals

President-elect Donald Trump's deal with Carrier rescued some 800 jobs at a cost of some $7 million in additional subsidies. It was immediately attacked, often by commentators whose devotion to the free market had never previously been detected. In reality, the Ricardian free trade doctrine is an abstraction that does not work well in the real world, just as was Thomas Mun's mercantilism. If Trump structures some new rules, and doesn't just proceed case-by-case, he may develop new economic truths that will serve us better.

For the newly-free-marketer critics of Trump's Carrier deal, I have one question. If the $8,750 per Carrier job (actually $875 per year for 10 years) Carrier subsidy is so obviously bad, why was the net $11.2 billion loss ($162,000 for each one of the company's 69,000 U.S. jobs) or the gross $49 billion cost ($710,000 per job) of the 2008-09 General Motors bailout acceptable, It would seem to me that a high-skill manufacturing job at Carrier is just about as valuable as a high-skill manufacturing job at GM, so if those jobs can be saved for the United States at a small fraction of the cost per job of the GM bailout, that is surely desirable.

Of course, in principle one would not subsidize companies to put jobs in particular places. Similarly, David Ricardo's Doctrine of Comparative Advantage is correct in claiming that if widgets can be made cheaper in country A and grommits in country B, then country A should specialize in widgets and country B in grommits, whatever the effect of that decision on the inhabitants of each country. But both statements are of a mathematical ideal, in a world economy with no friction, no nationalism, no subsidies by other countries and no externalities. In the real world, friction, nationalism, foreign subsidies and externalities all exist, so a hard no-subsidies rule and pure Ricardian optimization do not work very well.

That's not to defend the opposite positions, of government subsidization based on political criteria and rampant Smoot-Hawley protectionism. The failure of General Motors was a huge political embarrassment, but a subsidy of hundreds of thousands of dollars per U.S. job was unnecessary and unjustifiable. Even worse was the $185 billion bailout of AIG, where relatively few jobs were involved, and the collateral activity of bailing out the CDS market and providing a spurious $13 billion to Goldman Sachs has weakened Wall Street's incentives for decent behavior even further. If subsidies and tariffs are decided on a political basis, they will be badly decided and economically very costly.

There is thus a logical Trumpian position on bailouts and subsidies: if through a bailout or subsidy of less than say 10% of the salaries of the workers involved, a company can be bailed out of prevented from leaving the United States, that bailout is probably justified. At that level, the tax and social security contributions payable by the workers, and the unemployment, retraining and disability benefits avoided, almost certainly add up to more than the cost of the subsidies. In addition, there would seem little problem in the President or local Governors jawboning companies that are seeking to outsource production from the United States. Adding a Public Relations hit to the other costs of outsourcing seems a reasonable thumb to place on the corporate decision makers' scales.

For trade as a whole, the trade-offs are more complex but equally comprehensible. Ricardian optimization, allowing the forces of global commerce to place manufacturing in the countries in which it can be carried out most cheaply, ignores a number of problems. For one thing, the Ricardian optimum is not stable. It may be attractive to source in Brazil one year but the following year, when Brazil has elected a leftist who bashes business, the equation may be different. Even simple movements of exchange rates, which can often be of 20% or more in less than a year, can flip the optimum from one country to another.

There are thus "menu changing" costs that should not be ignored. It may be cost-effective at present to move production of a particular item to China, but with Chinese wage costs increasing much more rapidly than those in the U.S., who is to say that the move to China will go on being cost-effective over the life of a new factory. Foxconn, the giant Taiwanese electronics fabricator, has found itself moving production out of China over the last few years, as Chinese costs escalate and other production locations become more attractive.

It may be objected that companies are able to take these decisions on their own, using the criteria of long-term profit maximization as their guide. Unfortunately, in the last two decades of "funny money" and stock options fueled by an ever-rising stock market, long-term profit maximization is not the goal for many corporate managements. Instead those managements, especially in the U.S., want the stock price boost that comes from a short-term fillip to earnings, whatever the long-term cost, because in the long term they will be retired.

Location and trade decisions in any case involve high levels of externalities, costs that are imposed upon the economy as a whole, but not on the company making the relocation decision. Employees who lose their jobs, even if they find another one, suffer disruption from loss of earnings during the inevitable gap, may find their skills eroded or of no interest to their new employer, and may suffer psychological or health problems due to the stress of losing their job. France has shown us that preventing companies from reallocating their workforces is horrendously expensive and itself increases unemployment (because companies are reluctant to hire.) However, it seems appropriate to discourage companies from reallocating productions due to temporary factors, or to impose moderate taxes on them for the cost of their doing so.

Moderate tariffs may thus beneficial, in encouraging domestic production when the cost disadvantage compared to importing is only minor or temporary. If trading partners remain committed to full free trade, it can also provide a country with unearned benefits - the classic case being the United States between 1862 and 1914, when it gained sector after sector of the world's manufacturing business against Britain, which was subjected to policies of foolish unilateral free trade. That's why the World Trade Organization is needed - the only international agency that has any useful purpose. Through it, countries can together achieve the benefits of lowering tariffs and trade barriers, without being subjected to destructive and unfair competition from their more protectionist trading partners.

There is an additional benefit from tariffs: they provide revenue. The Ricardian ideal of universal trade assumes that government is small, and that means can be found to finance it that are less damaging than tariffs. In reality, government these days is gigantic, and there appears to be little or no popular will to reduce its size. In such circumstances, moderate tariffs can be beneficial, if they prevent excessive fiscal concentration on income taxes and social security contributions. Equally, export bounties and production subsidies are doubly pernicious, because they both distort trade from the optimum and reduce the government's revenue.

We may now have reached a position where a tariff is fiscally necessary for the United States. The budget is permanently at least $500 billion in deficit, and likely to be pushed further out of balance by Trump's programs of infrastructure spending and defense rebuilding. In addition, the U.S. social security and Medicare systems are becoming increasingly in deficit, with trust funds (fictional though they are) likely to run out in a few years. Trump can solve this problem, by imposing a modest tariff on imports, with the proceeds being used to rebuild the social security and Medicare trust funds.

Trump's proposed 35% tariff is far too high, but a 10% tariff would impose only modest additional costs on U.S. consumers, would go far to closing the chronic U.S. balance of payments deficit, and provided other countries reacted only with modest tariffs of their own, would be only very mildly distorting to world trade. The best precedent is the British Imperial Preference 10% tariff of 1932, which gave Britain a much pleasanter 1930s than the United States, distorted trade far less than the much higher Smoot-Hawley Tariff imposed by the U.S., and would have allowed Britain to rebuild its economy more quickly after the war had it not been disgracefully given away by Maynard Keynes in the 1944 Bretton Woods negotiations.

With the new modest tariff, Trump would have rebalanced the U.S. economy and deterred U.S. companies from unnecessary outsourcing. It would also solve the social security/Medicare deficits problem without either increasing already excessive U.S. income and payroll taxes or cutting benefits - thereby fulfilling a core Trump election promise. It would also render unnecessary many subsidies of the Carrier variety, which themselves reduce government revenues. If foreign production for the U.S. market was cheaper even after the barrier of a 10% U.S. tariff, then the outsourcing should probably go ahead - at least the fisc will gain some extra revenue to offset the job losses. However, if the production being outsourced was destined for third countries, a modest job-retention subsidy would probably remain appropriate.

By these means, a modest tariff, modest but capped job retention subsidies, and extensive Presidential jawboning, Trump would violate the principles of Whig free trade theory, and make academic economists across the entire country from Harvard to Stanford denounce his policies. He would nevertheless benefit U.S. workers, the U.S. fiscal balance and the U.S. economy in general. This column is not Cobdenite, it is Liverpudlian.




From my Twitter feed:

Ann Coulter: Putin said he got the idea to use fake news to influence the election one day while watching CNN.

Amy Moreno: British Diplomat, "I have met the @wikileaks informant and they're NOT RUSSIAN"

Steve Goddard: "McCarthyism of the left? Clinton supporters use anti-Russia rhetoric to bash opponents"


For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, AUSTRALIAN POLITICS, and Paralipomena (Occasionally updated),  a Coral reef compendium and an IQ compendium. (Both updated as news items come in).  GUN WATCH is now mainly put together by Dean Weingarten. I also put up occasional updates on my Personal blog and each day I gather together my most substantial current writings on A WESTERN HEART.

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