Who Could Have Predicted It?

Islamist Group Is Rising Force in a New Egypt blares the headline in the Times.

In post-revolutionary Egypt, where hope and confusion collide in the daily struggle to build a new nation, religion has emerged as a powerful political force, following an uprising that was based on secular ideals. The Muslim Brotherhood, an Islamist group once banned by the state, is at the forefront, transformed into a tacit partner with the military government that many fear will thwart fundamental changes.

It is also clear that the young, educated secular activists who initially propelled the nonideological revolution are no longer the driving political force — at least not at the moment.

Huh...so those cosmopolitan, democratic activists speaking on behalf of those demonstrating in Tahrir Square aren't really in charge over there? Could it really be true that David Brooks might have miscalculated when he observed that "we’ve seen Arab people ferociously attached to their national identities. We’ve seen them willing to risk their lives for pluralism, openness and democracy."? Could he have possibly jumped the gun when he proclaimed Victor Davis Hanson flat-out wrong for claiming that Arab people "do not hunger for pluralism and democracy in the way these things are understood in the West."?

And Frank Rich is no longer with the Times, so we can't really expect him to apologize to Glenn Beck for ridiculing his negative view of the mideast 'democracy' movement: "[Beck's] strenuous recent efforts to portray the Egyptian revolution as an apocalyptic leftist-jihadist conspiracy have inspired more laughs than adherents." Well, that statement - about more laughs than adherents - might have been literally true at the time - but who's laughing now? Ok, I might be chuckling a bit, but it doesn't feel that good.

Hey, Where'd All the Rich People Go?

Barack Obama kicked off his presidential campaign imagining he could transform America into his vision - which is one where there's all kinds of rich people whose surplus incomes could be tapped to provide "opportunities" for the under-accomplished. But that vision was dealt a severe blow by the financial crisis.

Quite contrary to the massive taxes he thought he could garner to drive his transformative vision, taxes have actually cratered. But the weird thing is they seem to have cratered out of all proportion to the economy's contraction.

From FY 2008 to FY 2009, tax receipts dropped by over $400 billion - just about all of it personal ($230b) and corporate ($166b) income taxes. But as a proportion of GDP, these taxes in total dropped by over 3 percentage points. In contrast, between FY 1981 and 1982, during a similarly deep recession, these taxes remained flat both in absolute terms and as a percentage of GDP. So what happened this time around to cause such a steep drop?

Looking further at the details, we see that Social Security taxes dropped just 1%, a mere $10b. Personal income taxes, on the other hand, dropped 20%. So why the 20-fold difference in impact?

Social Security taxes are applied only to the first ~$100k in income while income taxes are applied to all income. Since SS taxes were only slightly affected by the recession, it seems likely that the big impact was on higher incomes and unearned income (investment results) - the very gravy train to which Obama was hoping to hitch his "Hope and Change" wagon. Even in FY 2010, with the economy recovering and the stock market scoring huge gains, tax receipts continue to be be down - modestly, but still down.

There is certainly some additional revenues for the taking by increasing tax revenues on the wealthy, but probably no more than about $100b per year. With annual deficits running well in excess of $1 trillion though, Hope and Change appear to be off the table.

Data reviewable here.

But What About the Kids?

Surprisingly, in the imbroglio over the plan to strip away collective bargaining rights from Wisconsin public employees (at least those without the guns and fire hoses), most of the overheated rhetoric has been about how terrible it would be for the workers themselves, rather than for the school kids. That might have something to do with schools having to be shut down so teachers could march in the capital.

But that hasn't stopped others from making such claims. There was that silly little chart showing how badly the five states without collective bargaining for teachers do in the all important "Combined SAT/ACT Rankings".* I can't even imagine how such a ranking could be compiled in any meaningful way - indeed, the inventor of the ranking admits as much* - it's a rather dodgy statistic.

Then of course Krugman got into the act, claiming that Texas has the worst graduation rate in the nation compared to Wisconsin's stellar rank. Again, graduation rate is a highly malleable statistic, even assuming the rankings Krugman claimed are even true. And of course he failed to even consider the impact of demographics in a comparison of two states where one (Texas) has lots of minorities while the other is overwhelmingly white. IowaHawk then took Krugman to task, comparing Wisconsing unfavorably to Texas on NAEP scores, disaggregated by race.

And surely, if there are negative effects on education from denying teachers collective-bargaining rights, then we would see it in the NAEP scores. The NAEP gives the same test across the country to 4th grade, 8th grade, and 12th grade students. If lack of collective bargaining leads to poor educational results, I can't imagine these wouldn't be reflected in 8th-grade reading performance. So I looked at those. Of course we have to separate out the effects of race, since that one variable has such a profound statistical impact. Here are the results for white 8th-graders on the 2009 NAEP Reading tests by state:

I've highlighted the top 4 - the wealthy Eastern seabord states - and the bottom state, West Virginia for context. The 5 states without collective bargaining are in light green. Wisconsin is in light blue. As you can see, 2 of the 5 score rather well - Texas is 12th and Virginia is safely in the top half. Wisconsin trails these two, just above one of the other 5, North Carolina. Georgia and South Carolina, the other two, are in the bottom half, but far from the bottom. It's pretty tough to argue - especially if you're from Wisconsin - that lack of collective bargaining has negative effects on education.

But what about for African-American children? Again, there's no evidence of a poor effect of lack of collective bargaining on black childrens' education, either.

Again, I highlighted the top 4 - though here it's not quite so predictable - look who's #1! But this time 3 of the 5 non-collective-bargaining states are in the top half, and again the other two are far from the bottom. But look who is almost at the bottom - Wisconsin! Only Arkansas has worse reading results for African-American students (I guess that head start they got in desegregation didn't take).

I fully support teachers having a union, by the way. As a parent, I have seen how a few politically savvy parents can get real chummy with the school administration and get their way. I wouldn't care to see the fate of teachers in their hands - so there's nothing like a teacher's union to fend off such meddling. However, I don't think a very good argument can be made that collective bargaining provides any kind of educational benefit.

Also, I find it unlikely that Wisconsin teachers are themselves to blame for any of this - there are many compounding factors. For example, Steve Sailer pointed out in a Marginal Revolution thread on this (that I can't find) that generous welfare benefits in Wisconsin could have drawn a different minority population - one more interested in handouts than working - than Texas, with its limited welfare benefits. Texas might have more high-tech industry, drawing smart parents (and their smart kids). Generally, I'm pretty sure that what we measure as "quality education" is little more than a measure of how smart the kids are to begin with.

* He has also compiled what he calls the State Enlightenment Rankings - it's rather amusing to anyone who has heard of Daniel Patrick Moynihan's quip about "proximity to the Canadian border."

The source for the data is of course the NAEP - specifically the Data Explorer. It's a simple on-line application to select the data you want - try it out some time. One question you might have is "what about other tests and grades?" Well, I don't thing the 12th grade tests are worth much due to the distorting effects of dropouts. I took a quick look at the other tests and didn't find any surprises - you're welcome to look of course, but I doubt you'll find anything materially different from the above. The specific data behind these charts are shown here.

Hey, Cut the Guy Some Slack

The poor guy I'm talking about is James C. McKinley, NY Times Houston Bureaus chief. He had the unenviable task of covering the sensational story of the gang-rape of an 11-year old girl in a small Texas town called Cleveland by around 18 men. Those arrested all all black and the victim is Hispanic. The town itself is a bit more than half white, and the remainder split approximately evenly between black and Hispanic.

McKinley has been getting his butt roasted over the tone of his reporting, notably from the leftish and feminist side of the blogosphere, for blaming the victim, making excuses for the attackers, and generally for showing more concern over the perpetrators' fate than the victim. And then, to add insult to injury, the Times's public editor, normally so unsympathetic with those who question the paper's objectivity, unceremoniously throws Mr. McKinley under the bus.

But what's a Times reporter to do? Perhaps had the victim been white he could have safely ignored the story as just another lurid, local crime unworthy of the great paper's attention. But regardless, having chosen to cover the story, the standard N.Y. Times rules for reportage would now prevail.

What are these rules? First and foremost, in reporting on crimes committed by African-Americans (indeed, by African-Americans - from anywhere), perspectives from victims are inherently uninteresting. Second, the perpetrators are never wholly - or mostly - responsible for their actions. All manner of deprivations, indignities, social forces and historical injustices must be called upon to explain the crime. Third, the actual guilt must be called into question and, in particular, the motivations of those investigating and prosecuting the crime must at least to some extent be impeached.

So Mr. McKinley simply reported the story the way he has learned that the New York Times expects such stories to be reported - from the viewpoint of the "devastated community" - which by definition is the African-American community, which by definition is always the true victim of any tragedy. What was he supposed to do to provide "context", quote national crime statistics on rates of crime by race? Of course not - he provided context the only way he knew how - by airing the "grievances" of the "afflicted" community and providing descriptions of the area's poverty ("in the neighborhood where the assault occurred, well-kept homes sit beside boarded-up houses and others with deteriorating facades").

What he forgot is that this is one of those intersecting stories where liberal sympathies are unresolvably in conflict. So I feel for the guy - I really do.

Even the New Deal Was a Better Deal

A few days ago I posted on our Bogus Recovery (which thanks to a Derb link has had a whole lot of hits). The point is that our deficit spending, which is supposed to have the counter-cyclical effect of putting money in people's pockets and snapping us back into shape, is far exceeding any growth in the economy, and so we're just digging ourselves a bigger hole.

But what about the Great Depression? Surely the massive New Deal spending would have swamped any growth during the recovery?

There are no quarterly data on GDP and deficits from back then (at least none I could find), but there are annual numbers (here - Deficits on Table 1.1, GDP on Table 1.2). The last year of negative growth was 1933, so we'll count the recovery starting from then. In 1934, the deficit and GDP growth were identical at $3.6b - but from there it wasn't even close - GDP growth far outstripped the accumulated deficit.
So even compared to the New Deal, our current profligacy is overwhelming.

How does this compare with current projections? Let's look at an optimistic view - the White House's own projections:

Not looking too good.

Data reviewable here.

Krugman: The Middle Class is Toast

Paul Krugman basically comes out and admits it: This whole "invest in education to stay competitive" mantra is a sham. Oh no, he doesn't quite say it that way, because that would be debunking Obama's most articulated vision. But he comes close. "What we can’t do is get where we need to go just by giving workers college degrees, which may be no more than tickets to jobs that don’t exist or don’t pay middle-class wages."

In a way though he's being either too pessimistic - or perhaps a bit disingenuous (Krugman? Never!). The key is of course intelligence - those who have the brains that can process information beyond routine tasks will have jobs. Sure, having lawyers pore through tens of thousands of documents looking for gotchas in massive discovery exercises is a terrible waste of precious higher education dollars. But then again such an endeavor is a terrible waste of society's resources however it's done. So if you're a lawyer unable to provide much value added over a search engine and some fundamental legal principles, well you should expect to be at risk over the coming years.

And that goes for any line of work. If you're not able to add value by, basically, thinking on your feet, nimbly responding to business opportunities and challenges, then your job can be done by a computer or a foreigner.

Given that he's only just discovered this problem, I can forgive him for not having thought about the solution very much. His knee-jerk suggestion is to have stronger unions. But how is that going to help? That will only hasten the carnage as businesses close down entire offices and ship jobs overseas to avoid union interference in business practices. Look at how well unions have worked out in the U.S. auto industry - 2 of the big 3 bankrupt.

Does immigration even pop into his head for just a moment? If so, he leaves no trace of it. Yet, with what he notes is the hollowing out of the American middle-class, it would seem particularly relevant to consider the effect of low-skill immigration on further eroding wages. Wouldn't it be important that Americans be given a chance to man these lower-skill occupations at a living wage?

And speaking of low-skill work, he fails to note why getting a college education is so important these days: without it, the odds are really stacked against you. Thirty years ago, a smart high-school grad could make a very nice career for himself in a white collar job. But today no company is going to hire a college graduate for any kind of cognitive work. That's primarily to avoid disparate-impact lawsuits. The college degree, being a significant milestone above high school, requires some degree of intelligence and conscientiousness and thus provides a signal to employers that you're likely to be employable. The approach formerly used, of just giving a test to see how smart the applicant is, presents some serious disparate-impact risks for the employer.

So, while college for the vast majority of students may not mean all that much in the aggregate, it means an awful lot to each student, who is doomed without it. And so the waste continues. Karl Denninger points out today that the increase in consumer credit for January appears to be primarily driven by increases in student loans, a truly depressing observation.

In Just One Month, It's All Good

The giddiness over the wave of 'protests' spreading thru the Mideast has been a constant source of annoyance. But David Brooks's latest in the Times is particularly bizarre. Brooks has concluded - based solely on the events of the past month, that the muslim peoples of the Middle East have just the same vision for their societies that people on the West have - there is no cultural divide.

Brooks describes Samuel Huntington's thesis in his classic "Clash of Civilizations" (which I admit I haven't read though I've read a lot about it), and declares him to be quite simply "wrong."

He argued that people in Arab lands are intrinsically not nationalistic. He argued that they do not hunger for pluralism and democracy in the way these things are understood in the West...Over the past weeks, we’ve seen Arab people ferociously attached to their national identities. We’ve seen them willing to risk their lives for pluralism, openness and democracy.

Well there you go - in just a little over a month's time, a millenium of history wiped away. What could Brooks be seeing that makes him so sure? What about the foment of the last 6 weeks made him feel he was looking into a mirror, seeing Western democracy play out before his eyes?

Is it mobs of people shutting down a city demanding the ouster of a constitutionally mandated representative government? Waves of insurgents occupying whatever symbol of authority they can grab hold, either without leaders or led by shadowy forces that dare not announce themselves? What part of Western heritage does this evoke in Brooks's mind? Jefferson writing the Declaration of Independence? Washington at Valley Forge? The Restoration? Or is it more like Paris, 1789, Russia, 1917, or Germany, 1918?

Huntington minimized the power of universal political values and exaggerated the influence of distinct cultural values...But it seems clear that many people in Arab nations do share a universal hunger for liberty. They feel the presence of universal human rights and feel insulted when they are not accorded them.

Not clear what Brooks is seeing, but actual facts do not appear to be in his line of sight.

Razib has already debunked another Times Op-Ed columnist (Roger Cohen) over his fact-less optimism along a similar vein. So let's look at some of these democratic "aspirations" in the Mideast that are apparently so palpable. The World Values Survey has a series of questions asking how important certain things are to democratic society. They have a series of 10 such questions asked among 52 nations, to which people were asked to assign importance on a 10-point scale. I compared results on the two questions that were most negatively correlated - How important to democracy is it that "Religious authorities interpret the law" and that "Women have the same rights as men"? These are pretty good questions as they touch on two items very important to modern democracies - secularism and the rights of women. Here's how the people responded by nation:

If you click on the chart, you'll see how the various nations cluster. Most are in the slightly North-West quadrant - Scandinavian countries conspicuously off in the most secular/feminist corner. But then you'll see a group of countries way off by themselves in the South-East quadrant - Mideast Muslim countries - Egypt, Jordan, Iraq (along with some Muslim-dominated Sub-Saharan countries), with Iran and Morocco just barely outside the main clustering of nations. It sure doesn't look like these countries share the democratic aspirations of modern Western-style democracies.

I next looked at the two questions that had the lowest correlation (and which weren't the two asked above). These were how important to democracy is it that "The army takes over when government is incompetent" and "Civil rights protect people's liberty against oppression"? These two answers have a correlation of 0.05, which is pretty uncorrelated. Here's how the nations answered these:

Again, off by themselves are the Arab nations of Egypt, Jordan and Iraq. What's notable in these charts isn't necessarily the answers themselves, but the relative positions of the nations to each other, and how they cluster. The relatedness of the Arab nations - and their isolation from other nations (and in particular their distance from Western-style democracies - is striking.

But I guess we're supposed to ignore this information in favor of Brooks's super-human insight.

Source Data.

Doing More with Less

Less workers, that is. The BLS released preliminary 4th quarter productivity results today. Manufacturing productivity rose at an annual rate of 5.9%. Output rose 4.4% while hours worked went dropped 1.4%. You can see how hard it is to improve the labor market by growing our manufacturing sector. Our plants just keep getting more efficient, needing less and less additional workers to produce more goods.

The Industrial Revolution was essentially defined by the automation of work - beginning with the textile industry in England as steam-powered looms replaced hand operated looms. But the IR actually created more jobs, as the increased output created demand and markets for the goods produced. Because of the assembly line, employment in automobile manufacturing exploded in the early part of the 20th century. Henry Ford's innovation made jobs rather than destroy jobs.

We seem to be have past the point where technological innovations are providing more work. Or maybe when it does happen, the jobs are being created overseas. Computer Aided Design (that's starting to sound rather quaint, itself) may have increased manufacturing jobs by making it much easier to design manufacturing processes, but there doesn't seem to be many such jobs being created in the U.S.

The great engine of blue-collar job growth over the last 30 years has been construction, but of course that's completely stalled out. Yet I see no reason construction should be completely immune from this trend of needing less-and-less workers. Once residential construction starts to pick up again, I wouldn't be surprised if a significantly greater share of it consists of manufactured homes. Is it really necessary to send a whole team of workers out to a site somewhere to frame-out a home? Manufactured homes might seem a bit declasse now, but in the "new normal" that will emerge out this mess we're in, far fewer might be turning up their noses at the thought.

I find this all rather depressing - vast hordes of able-bodied men underemployed, performing demeaning service work and paid a pittance with lousy benefits, or working for the government, adding to the roles of those gnawing away at our tax dollars. Why do we never see a dystopian fantasy - besides Idiocracy, of course - that plays out this scenario?