Attacking Inequality

Bill de Blasio's clueless quest to reduce inequality in NYC is of course laughable, unless his secret agenda is to secretly drive out all its wealthy denizens, which I seriously doubt. And Obama's harping on it is downright annoying, as he never proposes anything to actually reduce it. Both men seem to sincerely think that "universal Pre-K" is the answer, and that's rather comical.

If we as a nation are truly interested in reducing inequality in America, there are some very immediate steps we could take to put a serious dent in the problem. If we're serious.

1. Punitive marginal tax rates. Back in the day, we had very high marginal tax rates (up to 90% on unearned income at times). There were lots of loopholes, for sure, but it really put a damper on super high salaries. Marilyn Monroe lived in, like, an apartment and Joe Dimaggio lived in a nice house. If either Marilyn or Joe were alive today, they'd be making $30 million a year, minimum. But back then, you didn't get to keep much of your income over $100k. Even CEO's of major corporations made around $5 million in today's dollars - good coin but what a run-of-the-mill senior VP makes today.
2. Import Restrictions. Lots of the big bucks today are earned as bonuses when corporate executives off-shore jobs. So we not only have the big bonuses but also the unemployed workers who almost certainly will never get jobs as good as the one they lost. If we were to charge import duties with the intent of equalizing the cost of doing business abroad with that of the U.S., there would be a lot more people working for a lot better pay. Of course people's standard of living would also take a hit due to flat-screen TV's now costing $66 an inch rather than $33, but that's the tradeoff.
3. Immigration Restriction. This is a no-brainer, yet is the least mentioned solution to the inequality crisis. Immigrants tend to be either low-skilled workers who decimate salaries at the lower end, or semi-skilled professionals who put a damper on the aspirations of the middle class. And then there's the small % of immigrants who become filthy rich - doing nothing really that special - how does that help the situation?
4. Aggressive Anti-Trust enforcement. As little as the above are discussed, this one is really off the radar. But this was a powerful tool a century ago to reduce inequality. I don't know about Berkshire-Hathaway, but surely Facebook, Microsoft, Amazon and Google should at least be under investigation for engaging in restraints of trade.

Unfortunately, there's no one politician who would support all of these initiatives. Elizabeth Warren would go for 1 and 4, other Democrats would go for 1 and 2, some Republicans might favor 2 and 3, but most would oppose all 4. Obama has shown no interest in any of them.

But if we really want to reduce inequality, I can't think of any other policies that would actually do that.

Chicken Kiev

I have no idea what the hell is going on in the Ukraine, beyond the vague notion that Ukrainians are generally fearful and resentful of Russia and her past aggressions and that there is no doubt a sizable bloc of Russian-ethnic Ukrainians who feel otherwise, and that President Yanukovych is somewhat caught in the middle, trying to forge a profitable relationship with the west while maintaining a non-threatening bond with Russia.

And another vague notion I have is that those in charge of the U.S. Government don't have any better idea of what's going on there than I do.

But boy we sure do feel confident enough to just start calling the shots over there. Here's a report from NPR veteran Cory Flintoff on the situation on the ground. So mass protests have formed in the streets (while some have taken over government buildings) demanding the current government's ouster and the government has pretty much let the protesters alone...until the other night, when a large show of force moved in to try to force push them out while avoiding any kind of deadly force. It failed, and so the protests continue.

Despite these very tame responses from the government (how do you suppose our government would react if thousands of Tea-Partiers took over streets and government offices in D.C.?), the State Department has responded harshly. Cory Flintoff breathlessly reports on Washington's involvement:

One of the reasons I think the U.S. was so angry about this was that it happened under the nose of the top American diplomat who'd come here to try and establish a dialogue between the government and the opposition. And that's Assistant Secretary of State Victoria Nuland. She was here. She immediately expressed support for the protesters this morning by going to the square and meeting with the opposition. And then, Nuland had a two-hour meeting with President Yanukovych, during which she apparently had very sharp words for him. She described it as a difficult meeting. But she came out saying, and I'm quoting her, "I made it absolutely clear to him that what happened last night is absolutely impermissible in a European state, in a democratic state." [EA]

So who is the Victoria Nuland who is bullying the Ukrainian president into seeing things our way?

That's what Wikipedia is for. She got into the State Department during the Bush Administration, so she's probably not some wide-eyed liberal nut. In fact she's married to Robert Kagan - that's a familiar name, isn't it. Robert and brother Fred seem to have strategically implanted themselves in key policy-making positions within the Democratic and Republican party apparatus. Robert is embedded at Brookings, while Fred is ensconsed at AEI. It's a beautiful thing, America 2.0 (or is it 3.0 - can't keep track).

A Moment in History

It will be impossible to find these photos in the future, so I just want to save the link. But what a great set of photos of Obama under the coquettish spell of the Danish Prime Minister, and Michele not one bit amused. Of course the photographer afterwards denies the story his pictures tell, but I'll believe my lying eyes, of course.

http://www.dailymail.co.uk/news/article-2521146/Nelson-Mandela-memorial-service-World-leaders-gather-South-Africa-remember-president.html

Ron Unz's $12 Minimum Wage

I hate it when the dogmatic-free-market side of me emerges, because I've really tried hard to repress it lately. But I'm rather skeptical of Ron Unz's proposal to raise the national minimum wage to $12.

Unz's logic is appealingly simple - if we want to raise the incomes of the poor, then let's just raise their wages! And while this would be a pretty dramatic raise for current minimum-wage earners, it would only raise Walmart's costs, for example, by an average of 1.1% spread across it's sales. So what's the big deal?

One big deal is the assumption that this increase would just be passed on to the consumer. But the issue of how cost increases are absorbed is far from well understood. The logic here is that since it's across the board - i.e., everyone has to pay the increased wage - then there's no competitive pressure to keep prices down. If you unilaterally raised your worker's wages 65%, you'd have to eat that increase, since you couldn't get away with raising your prices while your competitor's kept theirs in place. But if everyone raised their payrolls at the same time, then hell, let's just raise the prices!

But it's not that simple. In the case of Walmart - where no one who doesn't own Walmart would mind if the increase came out of profits - could no doubt get away with raising prices. Would it really be a big deal if they charged $8.73 for a Chinese-made hammer vs. $8.59? But for smaller businesses, it may be tough to get away with raising their prices. More likely, the impact of the wage increase will be shared: owners will see lower profits, customers will see higher prices, and some workers will be laid-off.

Still, no big deal. The total increase in wages among the unskilled after the increase would no doubt (in my mind, anyway) exceed the loss of wages among those fired after the increase. At least at first. But..but..well I hate to state the obvious, but this does nothing to change the underlying socio-economic conditions that have led to this sad state of affairs where so many workers earn so little. The ruthless quest for those very same profits will not be quelled by a mere change in a posted wage minimum.

Low wages can only result from one or both of two things: low demand for labor and high supply of labor.

The easiest of these to tackle is supply. We can dramatically reduce the supply of low-skilled labor by sharply reducing the level of immigration and by aggressively deporting as many current immigrants as is feasible. Of course President Obama, the man allegedly so concerned about inequality, is bound and determined to do just the opposite.

The best way of course to increase demand is to grow the economy at a considerably faster pace - but no one seems to know how to do that. We could, however, try to increase demand "artificially." One way would be via import restrictions - tariffs and the like. This would require more goods to be produced domestically. Prices would of course go up rather noticeably, but so would employment. On the down side, our exports would be affected as well. But since the U.S. runs a massive trade deficit, there would undoubtedly be a net gain from increased domestic manufacturing. Here again, Obama is moving in the opposite direction, pressing for yet more free-trade agreements.

A less obvious benefit of both immigration and trade restrictions would be an increase in national cohesiveness. Less immigrants would  mean less cacaphonous discourse from multi-lingual communities, less ethnic conflict, less ghetto-ized neighborhoods from rootless migrant laborers. Fewer imports would mean a greater sense of pride in a "Made in America" ethos. Samsung is a fine company, no doubt, but I think it would be better for America if the centerpiece hanging on the wall the American home were actually made in America.

I like that Mr. Unz is trying to do something about this problem that does not involve yet more socialistic engineering, but I don't think it's going to work.

The Coming de Blasio de Bacle

Oh boy.

The Democratic mayoral candidate admitted that he overslept this morning, keeping dozens of supporters, elected officials and reporters waiting more than an hour for a get-out-the-vote rally on the Upper West side that had been scheduled for 11:30 a.m.

Now I fully admit that I'm not a morning person myself, but getting myself out of bed in time for an 11:30 event on the first morning of Standard Time when everyone gets an extra hour is something even I could pull off - and I'm not expecting to run the Financial Capital of the World.

I don't know how NYC operates - what sort of management infrastructure exists and to what extent it's on autopilot. Bloomberg, of course, became a billionaire by building a tech empire where he managed to put a technological stranglehold on the brokerage business, of all places. So it's a fair assumption that he's probably at least a couple sigmas above average in the managerial-skills department. And of course he's notorious as a morning person.

Again, I'm not a morning person myself, but "management" is not exactly my scene, shall we say. And looking at de Blasio - has he ever distinguished himself for running anything? He was Hillary's 2000 Senatorial Campaign manager, and that was a well run campaign. But did he really run it? I'm skeptical because it doesn't seem he was tapped for anything very grandiose after that, instead settling for being on the City Council and then Public Advocate - not real challenging executive positions. Perhaps more disturbing is that he has pretty much been a full-time advocate for the "powerless" and "disenfranchised" and the "voiceless" blah blah blah, and never seems to have given any consideration to what people who actually make the city operate might need to keep functioning.

So what does it actually take to run NYC and does de Blasio have it? My guess is that it's a pretty daunting task to keep that place going in an effective manner, and that de Blasio has no clue how that's done. Things will probably operate on their own pretty well for a year or so, but then things could get ugly pretty quick.

The Shadow Constitution

An article in the Wall Street Journal discusses the trouble certain wedding-service businesses are getting into by refusing to work with gay couples due to religious objections. Now it seems pretty cut-and-dry. The right to freedom of expression and religious practice is right there in the First Amendment - and that the 1st Amendment applies to state governments via the 14th amendment has been settled law for nearly a century. So one wonders how could the first amendment's guarantee of religious liberty be trumped by state anti-discrimination laws?

It's the Shadow Constitution at work. It's like a hidden track on an album - the hidden amendment, that pretty much over-rides everything else in the constitution. Since it's hidden, the text is not publicly known, but I'm pretty much it reads something like:

No one may, for any reason, discriminate against anyone in a group which is currently favored by the enlightened members of society.

Thus, the First Amendment, however revered it may be, can't really help these businesses out much. Plus there is the obvious limitation to religious freedom in that it doesn't allow every wacky, over-the-top religious practice that every fringe sect wants to practice. And what could be more fringe-like behavior than discriminating against gays?

Low Bandwidth

The latest meme in the rationalizing the low socio-economic status of certain segments of society (SES-cuses, let's call them) is "low bandwidth". The idea is that the poor have so damn much on their minds - just from the stress of being poor - that they make poor decisions as a result. So poverty itself keeps them poor by causing them to do self-destructive things.

Other recent SES-cuses are "stereotype threat", where students perform badly in school pursuant to negative vibes from authority figures who expect them to do badly due to stereotypes; and the bad outcomes that result from the failure of parents to speak enough words to their children in those ever critical years of ages 5 to 7 3 to 5 0 to 2.

But wouldn't this result in a death-spiral of poverty - something we don't see? And is this phenomenon exceptional to our current generation, where class mobility is low, vs. previous generations where mobility was high?

That's hard to believe, given the realities of today. Compare a typical middle-class family to an impoverished one - who has more bandwidth issues on a given day? For both, the day begins with getting the kids off to school. The middle-class mother needs to get the kids dressed - what to wear? "No, I don't like those pants! I wanna wear the Mighty Super Morphing Ranger Power pants!" "No, you're not wearing those to school - those are for play" "Waahhh!" Then breakfast - oh crap, there's no milk. French toast - but we need the bread for lunch. Oh shit, lunch - what do we have? "Can you buy lunch?" "No, the lines are too long!!" "Ok, well it's baloney - tough, that's all we have." Then of course there's soccer practice, car pools to arrange, etc. etc. Sounds like overload to me.

How about the poor family? You get the kids up and dressed - they wear uniforms in the urban school district, so no decisions there - on goes the uniform. How about breakfast? Nothing to worry about there - they get breakfast when they get to school, courtesy of good ol' Uncle Sam. Lunch - ditto. Soccer? What soccer!? Now that's more like it - life is simple - what's the problem?

I'm not entirely unsympathetic to the concern that poor people have bandwidth problems, but I suspect they're more cause than effect when it comes to poverty. When I think of the successful people I know, I'm struck by how many stressful activities they can juggle throughout the day. Meeting with clients, making deals, hiring/firing/disciplining employees, making major purchases, financing initiatives - all deeply agita-inducing actions that must be taken on to have a successful business. Sure, we all have to do these things, but to my observation successful people are able to handle a number of these simultaneously.

But apparently, according to the authors of the study proposing this bandwidth problem, to a poor person just hearing about a hypothetical $1500 auto-repair bill is enough to send them reeling into a low-IQ stupor. The authors seem to feel that being poor causes this inability to handle a lot of stress. My guess is that easily suffering brain overload at the slightest conundrum is one predictor of poverty, while deftly managing multiple dilemmas at once is a predictor of success.

Predictions

First off, as California native Steve Sailer guessed, preliminary analysis suggests my prediction regarding California's NAEP performance is probably a losing bet...but more on that anon.

But trends can confound even the most obvious expectations. Thirty years ago, one very safe prediction I would have made would have been that bank branches would be very rare if not totally disappear. Already, by then, ATM's were springing up everywhere and growing exponentially. Even then you could deposit money in them. Clearly, the hand-writing was on the wall - the bank-branch's days were numbered.

Yes what has happened? Here in my neck of the woods, there are more bank branches, not less. When you walk into the bank, it seems there are just as many tellers as there were in 1983. The only difference is there aren't long lines of customers at each window - but the tellers are still there.

So what happened? I asked an accountant friend of mine and gave me some explanation about bringing in customers and blah-blah, but I still don't get it. Sure, my wife is down at the bank at least once a week, but she has her own small business and is lucky she can log onto Gmail. But in the 70's, everyone had to go to the bank once a week - now, very few ever need to visit in person. And yet, there's still all these bank branches everywhere.

Son one prediction I'm inclined to make now is that in 10 years most fast-food operations will be automated. I expect one or two employees to manage customers and check on operations - but surely all these other simple-minded operations can be automated.

But why should I have any faith in that prediction, when the no-brainer prediction of disappearing bank branches was so far off the mark?

Let's Charge Him Now Before They Start Protesting

Sounds like the white cop in Charlotte, NC might be getting railroaded. The chief, who is black, had him arrested almost immediately with apparently very little investigation and without the blessing of prosecutors.

But from the information that is starting to come  out, the poor kid who was shot seemed  to be acting maniacally after his car wreck. This will be an interesting case to watch unfold.

Predictions - Anyone Wanna Bet?

In the spirit of the famous Simon/Ehrlich bet, here are some predictions for 2023. Any takers?

• Real GDP growth will average less than 2.5% per year over the next decade
• The Gap - as measured by NAEP 8th grade math scores among black and white students nationwide - will be greater than 0.9 standard deviations.
• California's performance on the 8th grade math NAEP will not improve relative to the U.S. mean (in standard deviation units) over it's 2013 performance.
• The price of oil - despite decreased demand - will be no lower than the average price during 2013.
• The Social Security revenue estimates of the CBO with regard to the 2013 Comprehensive Immigration Reform act will prove to be too optimistic (as a % of GDP). The CBO estimates of the immigrant population in the U.S. as of 2023 will prove to be too low.
• The share of total income earned by the bottom 20% of American families (measured in terms of family income) will be lower than it is today; this will also hold true for wealth.
• Neither Libya nor Egypt will have a functioning democracy.
• Average global temperature, as measured by the GISS, will not be lower than today.
• The per capita GDP of Brazil, measured in $PPP, relative to that of Switzerland in terms of dollar difference, will not be improved.

Fast Food Workers Unite!

Why are there fast-food workers? Back in the American Graffiti - Fast Times  at Ridgemont High era, fast-food work  provided a kind of rite of passage for teens into college/adulthood. But now, we are told, people are supposed to be making a living off this work. And isn't it interesting how the typical news report on this topic never mentions immigration?

But is there any function in the fast-food work stream that a machine couldn't do better? Perhaps you might want an assistant manager there to monitor things and deal with non-technical customers. But overall the industry just seems ripe for an automation revolution, particularly in the wake of this strike.

Ah, the NY Times Again

The link headline blares it out: A Coach Joins a Short List by Announcing He’s Gay.

But, then you click on the link where there's a picture and you'll never, ever in a hundred billion years guess which sport he works in. When it comes to pushing the narrative there's just no story too mundane for the Times.

The Perfect NY Times Op-Ed Opening

Every Times op-ed could start this way, regardless of topic - what could be more, well, NYTimesy:

My husband and I are about the same age and build, wear the same clothes and share the same gender...

You could then complete the sentence as the topic requires - the possibilities are endless. This one was about stop-and-frisk, so it introduced even a more delicious twist: "...but I am far more likely to be stopped by the police. This isn’t because I have a criminal record or engage in furtive movements. Nor is my husband a choirboy. Statistically speaking, it’s because I’m black and he’s white." That's pure NYTimes gold there - what would be the greatest abomination imaginable in the old South than a same-sex, bi-racial couple? And what makes life more satisfying than rubbing those old loser's noses in it? It never gets old.

And speaking of crime and punishment, I predict Eric Holder's new policy of avoiding mandatory sentences won't have much of an impact on the Federal prison population. I seriously doubt federal prosecutors are currently wasting time prosecuting hapless, small-time drug-dealers. Anyone getting prosecuted is either getting a plea-down or is a really bad actor for whom selling drugs is the only crime prosecutable due to lack of evidence for his more serious crimes. Sure, there are no doubt a relative handful of tragic cases where some bit player gets caught in a major case and goes to jail for 10 years for delivering a package. But is that really that common?

Getting Riled up over Obamacare

Obamacare sure does seem to be a big mess of a law and no doubt has many annoying features, as federal laws tend to have. But I just can't seem to get myself up-in-arms over it.

I'm betting that the cost of my health care is going to go up because of it. But then again, my employer has been pretty regularly pumping up that cost over the last 30 years anyway - not sure I'm going to notice the Obama bump.

If you run a big enough business that the law is going to affect you, then I'm sure this law sucks big time, but you're used to that, having to deal with all the other 5,000 regulations you need to follow. Conversely, if you work full time for a big-enough company that doesn't have health insurance, then you're probably going to find your income will drop since your hours are going to be cut to under 30 to avoid the employer mandate.

And speaking of mandates, we're really supposed to get upset over the Individual Mandate, which requires each person to have health insurance - meaning if you're not covered under some group plan, you have to buy an individual plan for yourself. That's supposed to make the whole thing work - that all these healthy young people who don't have insurance now are going to be buying policies now, and thus helping to subsidize insurance for the sickly folk who really need health coverage.

But what kind of person doesn't have health insurance? Are we really supposed to believe that there are hoards of strapping young folk walking around uninsured? Who are they? Poor, no doubt. Remember, individual coverage is going to be subsidized for lower income people, so to make it worthwhile, there has to be lots of high-income young people without insurance, but that doesn't seem too likely, does it?

At any rate, it sure doesn't affect me - I have health insurance, and couldn't imagine not having it unless I were really poor. It'll suck for people who currently purchase their own individual policy, make a decent living, and will now have to pay a lot more to subsidize low-income insureds. But, what the hell, another tax hike. Overall, you're still probably better off than if the Bush Tax Cuts had never gone into effect.

The biggest potential mess with Obamacare is that if Comprehensive Immigration Reform (CIR) is passed, it will almost certainly exempt immigrants from the employer mandates, which means businesses will be even more eager to hire them over American citizens. But if CIR is passed, that will be the least of our problems.

The Obama Coalition Holds Tight

One of the more fascinating aspects of the George Zimmerman brouhaha is that no Hispanic of note within the MSM has sprung to George Zimmerman's defense. Zimmerman's mom is Peruvian, as everyone should know by now, and is surely as legitimately Hispanic as any number of Hispanic advocates out there. Yet in this battle Hispanic pundits have lined up against him.

What that tells me is that among Hispanic opinion-makers, viewing the "establishment" as the enemy takes precedence over protecting one's own. Zimmerman, as part of the "establishment" - i.e., a homeowner, a law-and-order advocate, falls more naturally into the enemy camp vs. Zimmerman as a fellow Hispanic.